[Case Summary]This case involves a dispute over the transfer of equity. The plaintiff, Yang Xiao's father, Yang Dashan, and the defendant, Zhou Zhiqiang, are cousins. Yang Xiao successively acquired a total of 13% of the equity of A and B Transportation Companies. In July 2019, she signed a "Share Withdrawal Agreement" with Zhou Zhiqiang, agreeing that Zhou Zhiqiang would acquire the 13% equity for 228,000 yuan and pay the full amount before November 30, 2019. Before the payment, Zhou Zhiqiang would pay a monthly dividend of 2,500 yuan. However, Zhou Zhiqiang only paid the dividend but delayed the payment of the transfer fee. Yang Xiao has a level 3 mental disability, and her guardian is her father. Yang Xiao entrusted the Beijing Henglu Law Firm to handle the case.Tian JiayanThe lawyer filed a lawsuit. The core disputes include the validity of the agreement signed by the mentally disabled patient, whether the guardian ratified the agreement, and the breach of contract and interest. Applicable legal provisions: Articles 509, 579, and 584 of the Civil Code of the People's Republic of China. The court ruled that Zhou Zhiqiang should return 224,000 yuan and pay interest at an annual rate of 4.15%.

I. Review of the case

Shareholders often search for questions like "What should I do if the other party refuses to pay after signing the withdrawal agreement?" "Is the agreement signed by a mentally disabled person valid?" and "How to calculate the interest on the equity transfer payment?" The plaintiff, Yang Xiao's father, Yang Dashan, and the defendant, Zhou Zhiqiang, are cousins. On February 1, 2017, Zhou Zhiqiang presented the "A Transportation Company Equity Transfer Agreement", transferring a 5% stake in A Transportation Company to Yang Xiao for 110,000 yuan. Subsequently, Yang Xiao received dividends of 1,500 yuan per month for 24 months.

On March 10, 2019, the third party, Liu Hao, transferred an 8-percent stake in B Transport Company for 114,000 yuan, leaving Yang Xiao with a total shareholding of 13% and receiving dividends of 4,500 yuan per month for three months; both transfer payments were transferred to the third party, Zhang Quan, as instructed. In July 2019, Yang Xiao and Zhou Zhiqiang signed a "Share Withdrawal Agreement", stipulating that Zhou Zhiqiang would acquire a 13-percent stake for 228,000 yuan and make a lump-sum payment by November 30, 2019. Before the payment was made, Zhou Zhiqiang only paid dividends and delayed the transfer payment. It is worth noting that Yang Xiao was diagnosed with a third-level mental disability on January 31, 2019, and her guardian was her father, Yang Dashan.

After failing to collect the debt, Yang Xiao's father entrusted the Beijing Henglu Law Firm to handle the matter.Tian JiayanThe lawyer protects the client's rights and interests.

II. The focus of the case

  • Focus 1: The issue of the effectiveness of the agreement.Yang Xiao has a level 3 mental disability. Are the "Share Transfer Agreement" and the "Withdrawal of Share Agreement" that he signed legal and valid?
  • Focus II: Contract performance and breach of contract.Whether Zhou Zhiqiang's failure to return the transfer payment as agreed constitutes a breach of contract, and whether the calculation of interest is reasonable.
  • Focus Three: The issue of guardians' subsequent recognition.Does Yang Xiao's parents' payment and collection actions before and after the agreement constitute the guardian's subsequent approval of the agreement?

III. Professional intervention by Hengluo Law Firm

The party involved (the plaintiff) claims that:Yang Xiao claimed that according to the "Share Transfer Agreement", Zhou Zhiqiang should pay the transfer price of 228,000 yuan and interest. His payment of dividends but not the principal constitutes a breach of contract. He requested the return of the transfer price and the payment of interest and litigation fees.

The defendant's (Zhou Zhiqiang's) position:Zhou Zhiqiang did not appear in court to defend himself; the dispute focused on the interest rate standard and the validity of the agreement.

Legal opinion of Hengluo Law Firm:Tian JiayanThe lawyer reviewed the evidence: retrieved the transfer vouchers of Yang Xiao's mother, the "A Transportation Share Transfer Agreement" issued by Zhou Zhiqiang, the "Share Transfer Agreement" and the "Share Withdrawal Agreement" signed by the third party to confirm the payment facts; collected the disability certificate, guardian certificate, and WeChat collection materials from the father to prove that the guardian had actually ratified the agreement when signing it; and organized the WeChat dividend records and bank statements to corroborate part of the contract performance. The lawyer argued: Although Yang Xiao was a third-level mentally disabled person at the time of signing the agreement, her parents had actually ratified the agreement through payment of funds, collection of dividends, and collection of debts, making the agreement legally valid. According to the "Share Withdrawal Agreement", the repayment time and breach of contract liability were clearly defined. Zhou Zhiqiang's failure to fulfill his main obligations constituted a breach of contract, and he should return the principal and pay interest on the use of funds. Combined with the loan interest rate, the lawyer claimed that the interest should be calculated at an annual rate of 4.15%. The defendant did not appear in court, and the court accepted all the evidence and claims presented by the lawyer.

IV. Outcome of the case

The court found that the "Withdrawal of Equity Agreement" was legal and valid, and Zhou Zhiqiang's failure to fulfill his repayment obligation constituted a breach of contract. The court ruled that he should repay Yang Xiao the equity transfer amount of 224,000 yuan and pay interest at an annual rate of 4.15% from December 1, 2019 to the date of actual repayment. The defendant shall bear the case acceptance fees. The legal basis includes Article 509 of the Civil Code of the People's Republic of China (fulfillment of obligations in full), Article 579 (request for payment of monetary debts), and Article 584 (compensation for losses due to breach of contract, including foreseeable benefits) etc.

5. Henglu Law Firm's Reminder

This case is handled by Beijing Henglu Law Firm.Tian Jia YanThe attorney (practice certificate number: 11101202111381309, subject to the certificate issued by the judicial administrative organ) acts as an agent. Beijing Hengluo Law Firm specializes in representing clients in various civil, commercial, administrative, and criminal cases, and has a team of experienced professional lawyers. If you need legal assistance, you can contact the firm to obtain targeted protection solutions.

VI. Common Questions about Equity Transfer Disputes - FAQ

  1. Q: What should I do if the other party refuses to pay after signing the withdrawal agreement?
    A:You can sue based on the agreement and payment, and evidence of collection of overdue payments, demanding the return of the transfer payment and the payment of interest on the occupied funds. If the other party breaches the contract, you can also claim breach of contract liability.
  2. Q: Is the agreement signed by a patient with mental disabilities who is restricted in civil capacity valid?
    A:A contract is effective if it only benefits the party or is commensurate with their capabilities; for others, the contract requires the guardian's consent or subsequent approval. If the guardian subsequently approves the contract through actions such as making payments or urging repayment, the contract will be deemed valid.
  3. Q: What is the standard for calculating the interest on the equity transfer payment?
    A:If there is an agreement, the claim shall be based on the agreement; if there is no agreement, the claimant may claim for the loss of funds occupied. The court often supports the claim by referring to the loan market quotation interest rate or a reasonable annual interest rate (such as 4.15%) during the same period.
  4. Q: Is it permissible to transfer the payment to a third party who is not a party to the case?
    A:It can be considered as fulfillment of the obligation to transfer the money to the designated account according to the agreement or the other party's instructions, but evidence of the instructions should be kept to avoid disputes with the payment recipient in the future.
  5. Q: Will the defendant's failure to appear in court affect the verdict?
    A:If the defendant refuses to appear in court without a valid reason after being legally summoned, the court may proceed with the trial in his absence. If the plaintiff's evidence is sufficient, the court will still accept and support the reasonable claims made by the plaintiff.