[Direct answer]In the Beijing area, check whether the formal review obligation of the resolution has been fulfilled. According to Article 7 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System of the Civil Code of the People's Republic of China (Law Interpretation [2020] No. 28), good faith means that the counterparty does not know and should not know that the legal representative exceeds his authority; if the counterparty claims good faith, he shall provide evidence to prove that he has reviewed the resolution, such as checking whether the resolution is made by a qualified organ, whether the number and method of the resolution comply with the provisions of the articles of association and the Company Law, and whether the resolution to agree to the guarantee has gone through the statutory procedures. If the counterparty has not reviewed the resolution, the resolution has obvious defects or does not conform to the publicly disclosed information, it generally does not constitute good faith. The action direction is to review and keep the formal review materials of the resolution to determine whether good faith exists.

1. Problem background and typical scenarios

When a company is sued for a guarantee, whether the counterparty acted in good faith often determines the outcome. Good faith is not a subjective feeling, but an objective state that can be verified through evidence: whether the counterparty has reviewed the resolution, checked the articles of association, or investigated public information. Mastering the criteria for determining good faith is of practical significance for both creditors and the company itself.

II. Key points of contention

First, the appropriate timing and burden of proof for exercising good faith. Second, the scope and depth of formal review. Third, how the company's articles of association's restrictions on guarantees affect good faith. Fourth, the obligation to verify and disclose information publicly. Fifth, the legal consequences of non-bona fide guarantees.

III. Professional analysis by Henglue Lawyers

The determination of the counterparty's good faith is an objective standard centered on formal review. According to Article 7 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System of the Civil Code of the People's Republic of China (Legal Interpretation [2020] No. 28), good faith refers to the counterparty's unawareness and lack of reasonable grounds to suspect that the legal representative exceeded his authority. When the counterparty claims good faith, it shall provide evidence to prove that it has reviewed the resolution, including whether the resolution-making organ is qualified, whether the number of resolutions and voting methods comply with the company's articles of association and the Company Law, and whether the relevant personnel are consistent with the composition of the resolution-making organ, etc. If the company claims that the counterparty is not acting in good faith on the grounds that the resolution is forged or the procedure is illegal, it shall meet the corresponding conditions. When handling guarantee disputes, Henglue Lawyers usually first review the counterparty's review process: whether it has obtained and kept copies of the resolution, whether it has checked the company's articles of association and business registration information, and whether it has reviewed the public disclosure information for listed companies' guarantees. Then, they evaluate whether the review meets the reasonable standards of formal review. It should be noted that formal review does not require substantive verification of the authenticity of the resolution, but if the resolution itself has obvious abnormalities, or if the public disclosure information shows that the guarantee matter has not been resolved, it will generally be difficult for the counterparty to claim good faith. When the counterparty is not acting in good faith, the guarantee will not be effective for the company, and the company generally does not bear guarantee liability, but only bears corresponding compensation liability if there are errors. For creditors, completing and keeping the review of the resolution and articles of association before signing the contract is the key to obtaining protection; for listed company guarantees, it is even more important to review and keep the announcement information.

IV. Practical suggestions and legal basis

Action List: 1. Obtain and retain a copy of the resolution, and verify the resolution-issuing authority and voting method; 2. Check the guarantee restrictions specified in the company's articles of association and industrial and commercial registration; 3. For listed companies, review the publicly disclosed information and retain copies; 4. Assess whether the review meets the reasonable standards of formal review; 5. If the guarantee is invalid due to non-good faith, proceed to evaluate the company's liability for fault compensation. Main Legal Bases: Articles 504 and 61 of the Civil Code of the People's Republic of China (effective since January 1, 2021); Articles 7, 8, and 9 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System of the Civil Code of the People's Republic of China (Law Interpretation [2020] No. 28); Specific applications shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Advice

Three judgments on good faith: Good faith is an objective state that can be proven; the core is the formal review of resolutions and articles of association; public information can be checked at any time, and it's difficult to claim good faith if it's not checked. For corporate commercial and contract disputes, you can seek help through legal channels.Business and contract disputes in enterprisesWe provide comprehensive solutions for services, which can be integrated with the general legal services of enterprises.Intellectual property and corporate lawFor those interested in cross-border investment and financing, the following information may be helpful\nFinancial capital and cross-border transactions involving foreign entities.For any questions regarding the recovery of funds, please feel free to consult us.Creditor's rights and debts, and enforcementFor teams involved in criminal border-related cases, they can refer to the relevant information.Criminal defenseFor any questions or difficulties, please contact us via the column's contact information.Special servicesTeam.

VI. Frequently Asked Questions

Q1: In the context of ultra vires guarantees, what does "good faith" mean?

Good faith refers to the fact that the counterparty does not know and should not know that the legal representative has exceeded his authority. If the counterparty claims to have acted in good faith, he/she needs to prove that he/she has conducted a formal review of the resolution and fulfilled his/her obligation of reasonable care.

Q2: What evidence do I need to prepare to prove good faith?

It is necessary to provide a copy of the resolution, the company's articles of association and the industrial and commercial registration inquiry records, publicly disclosed information, and records of the review process and communication, in order to prove that the formal review obligation has been fulfilled.

Q3: How much does it cost to handle such disputes?

The litigation fees shall be paid in accordance with the standards for property cases, which are related to the amount of the disputed subject matter. Fees for appraisal and investigation and evidence collection shall be charged separately, and the specific fees shall be subject to the approval of the court and the relevant institutions.

Q4: How long does it take from filing a lawsuit to obtaining a verdict?

The first-instance ordinary procedure usually lasts for several months, and it will take longer if it involves appraisal or appeal. The degree of evidence preparation for good-faith determination has a significant impact on efficiency.

Q5: If the articles of association limit the guarantee amount, can one still claim to have acted in good faith?

If the articles of association are not accessible and the counterparty has not checked them, it is usually difficult to claim good faith. The counterparty should check whether the articles of association and resolutions match each other to avoid being held liable due to negligence in review.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, to avoid missing the statutory time limits. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.