Recently, the case of sale and purchase contract dispute between a food company, a plaintiff, and an educational institution and an educational consulting company, a defendant, represented by Ms. Feng Yun-insan and Mr. Li Ao, a trainee attorney, has achieved a successful result, and the court ruled that the defendants and their shareholders should bear joint and several liabilities, which successfully safeguarded the client's legitimate rights and interests.

“The counterparty to the sale contract, an educational institution, no longer had the ability to perform the debt, and it was difficult to realize the customer's claim.”

In this case, the counterparty to the sale contract, an educational institution, was in operational difficulties and was no longer capable of fulfilling the debt. If only sued an educational institution, it is very likely to cause the client's claim into the implementation of the difficulties, and ultimately can not get the full amount of liquidation. After full communication with the client, the attorney finally formulated the additional purchase and sale contract counterparty of an educational institution's shareholders (an educational consulting company) as a co-defendant of the agency program. In the end, by proving the existence of mixed personality between an educational institution and an educational consulting company, the legal personality denial system was applied to require an educational consulting company to be jointly and severally liable for the debt of an educational institution.

“Breaking the deadlock of the case through key evidence”

Legal personality denial system, also known as “piercing the corporate veil”, is an exception to the independence of corporate personality and limited liability of shareholders, according to the relevant provisions of the law, the burden of proof to prove the existence of personality mixing between the company and the shareholders of the creditors of the educational institution, i.e., the plaintiff in this case, a food company. In practice, confined to the creditor's status as a general contractual counterparty, the debtor's internal governance and mixed facts difficult to obtain evidence, and litigation to prove the existence of personality between the debtor and its shareholders mixed standard of proof is high. For difficult to obtain evidence, high standard of proof, the lawyer submitted to the court many times to investigate the evidence, but the court did not initially start the investigation and evidence collection procedures, the case was at an impasse. “There is no way out of the darkness of the village”, the key time, the attorney through the analysis of the second defendant's business records, interviews with an educational institution after the departure of the staff to obtain important clues. On the basis of this clue, the lawyer through the study and analysis of the two defendants to provide additional evidence materials, successfully obtained the case of the two defendants there is a mixture of personality key evidence, and accordingly again to the court to apply for evidence, the court finally agreed to start the investigation and evidence collection procedures. Thereafter, the attorney carefully sorted out, item by item comparison of the evidence of the two defendants and the court retrieved evidence materials. After comparing and analyzing a large number of evidence of similar cases with the evidence of this case, the agent lawyer judged that the existing evidence of this case was sufficient to prove that there was a high degree of mixing of property and business between the two defendants and the cross-service of the management personnel, etc. According to Article 20 of the Company Law of the People's Republic of China (as amended in 2018), if the shareholders abused the independent status of the company's legal person and the limited liability of the shareholders, evaded the debts, and seriously harmed the interests of the company's creditors, they should be liable for the company's debts. shall be jointly and severally liable for the company's debts.

“After several court hearings, a judgment in favor was obtained”

During the trial of this case after several court hearings and on-line and off-line conversations, the attorney break through the difficulties, take the “fight and find” strategy, “leverage”, clever use of the contradictions and differences between the two defendants, closely around the conflation of the relationship between the evidence, debates. The judge found in the judgment that a certain educational institution was not a good choice for the case. Eventually, the judge in the judgment that an educational consulting company as a shareholder, in an educational institution during the operation of the counterparty from the operation of the direct receipt of operating income, the two sides there are property, personnel and business of the mixed situation. An educational consulting company shall be jointly and severally liable for the arrears of an educational institution during the operation of the case. After the above judgment was delivered, neither the plaintiff nor the defendant appealed, and the attorney successfully saved the client's contract losses.