In October 2008 Ronger Properties Joint Stock Co successfully issued corporate bonds of RM

RMB 20 million yuan for its expansion programme. Yado Steel provided its office building as property mortgaged for the debt, and made the registration as required. Mr Ding, one of the shareholders of Yado Steel, placed a guarantee letter of general liability in favour of Industry Bank.

Due to poor performance, Yado Steel failed to repay the debt when it came to maturity. Meanwhile, Industry Bank, under a restructuring plan, transferred the credit of RMB 20 million yuan together with the right of pledge to Oriental Assets Management Co (OAM). It also made a written notice to Yado Steel and Mr Ding, but failed to transfer the right of mortgage to OAM. On the contrary, Industry Bank concluded an agreement with Yado Steel before it went bankrupt, and settled other debts owed by the latter through the sale of the office building as mortgaged for the loan. Having found this fact, OAM, as a transferee of the credit, requested the court to order Mr Ding to bear its guarantor’s liability for the debt. Mr Ding asserted that he was a pledger with a general liability and would be responsible for the debt only if the things mortgaged could not satisfy the debt.

Required:

Answer the following questions in accordance with the relevant provisions of the Property Law and the Contract Law, and give your reasons for your answer:

(a) State whether the defence of Mr Ding should be supported by the court. (6 marks)

(b) State what was the cause of this dispute between OAM and Industry Bank. (4 marks)

In relation to corporate behaviour and legal liabilities:

(a) explain the term controlling shareholder under the Company Law of China; (3 marks)

(b) explain how the creditors may take legal action against the shareholder of a company for abusing the independent legal entity, and the doctrine of law for such legal action; (3 marks)

(c) explain the civil liabilities of the controlling shareholder for the damage of the company through affiliate trading. (4 marks)

In relation to the Enterprise Bankruptcy Law of China:

(a) state the various circumstances under which a creditors’ meeting shall be held; (4 marks)

(b) state the major functions and duties of the creditors’ committee. (6 marks)

mited liability company.

In relation to the Contract Law of China:

(a) explain the term withdrawal of an offer; (2 marks)

(b) explain the term revocation of an offer; (2 marks)

(c) distinguish between withdrawal of an offer and revocation of an offer; (4 marks)

(d) state whether a contract is formed where an offer and a notice of withdrawal of the offer reach the offeree simultaneously. (2 marks)

In relation to the Property Law of China:

(a) explain the legal basis for creating legitimate possession, and the rules for determining the matters arising from possession; (3 marks)

(b) state the right of claim of a LEGITIMATE POSSESSOR against various tortuous activities that infringe upon or impair the possession, or damage the immovable or movable property under a legitimate possession; (4 marks)

(c) state the rules of compensation to a RIGHT HOLDER for any immovable or movable damaged, destroyed or lost by a possessor. (3 marks)

In relation to the basic legal system of China:

(a) (i) explain the term judicial interpretation; (3 marks)

(ii) explain the legal basis for the Supreme People’s Court to issue a judicial interpretation. (3 marks)

(b) Article 428 of the Contract Law of China provides that upon the implementation of this law, the previous contract laws shall be simultaneously abolished. Based on this provision, the Supreme People’s Court has issued a Judicial Interpretation on the Application of the Contract Law.

In relation to this Judicial Interpretation, state the rule of the applicable law to deal with a contractual dispute brought to the people’s court after the date of implementation of the Contract Law but the contract was concluded before that date. (4 marks)

ach provided capital to establish the business as follows:

The partnership agreement stated that all profits and losses were to be divided in proportion to the capital contribution.

After 18 months Geo provided the partnership with a loan of ￡3,000 in order to finance the purchase of more stock. The loan was to be paid back from the profits of the business.

Unfortunately the business was not successful and the partners decided to dissolve the partnership rather than risk running up any more losses. At the time of the dissolution of the partnership its assets were worth ￡20,000. Its external debts were ￡7,000 and none of the debt to Geo has ever been paid.

Required:

Advise the partners as to how the financial aspects of the dissolution will be conducted and how the assets will be distributed.

For the year ended 30 April 2009 Fan plc’s financial statements showed a loss of ￡2,000 for the year.

For the year ended 30 April 2010 Fan plc made a profit of ￡3,000 and, due to a revaluation, the value of its land and buildings increased by ￡5,000.

As a consequence, Dee and Eff recommended, and the shareholders approved, the payment of ￡4,000 in dividends.

Required:

Advise Dee and Eff as to:

(a) the legality of the dividend payment; and (6 marks)

(b) any potential legal liability in regard to the dividend payment. (4 marks)

In January 2009, Amy started a business as an independent website designer.

To give her a start in her career, her brother Ben, who ran a retail business, said he would give her ￡1,000 if she updated his business website. At the same time, her friend Che asked her to do work for his business, also for a set fee of ￡1,000.

However, by the time Amy had completed the two projects her design business had become a huge success and she had lots of other clients. When Ben and Che discovered how successful Amy’s business had become they both felt that they should not be asked to pay for the work they had commissioned.

Ben said he would not pay anything as he had only offered the work to help his sister out. Che said he would not pay anything either, on the basis that he had only given her work to do on the basis of their friendship.

Required:

Advise Amy as to whether she can insist on Ben and Che paying the full amounts of their initial promises.