[Direct answer]Check whether the creditor is acting in good faith. When a company guarantees for others, it must obtain the resolution of the board of directors or the shareholders' meeting in accordance with the articles of association; if the legal representative signs the contract beyond his authority without the resolution, it constitutes an act of exceeding his authority as a representative. If the creditor has fulfilled its obligation of reasonable review (verified the guarantee resolution), the guarantee is effective for the company; if the creditor accepts the guarantee knowing or should have known that there is no resolution, it does not constitute acting in good faith, and the guarantee is not effective for the company, but the company may bear some compensation liability. There is only one exception: in the case of providing guarantees for the company's own debts, etc., which do not require a resolution, the legal representative's signature is sufficient for the guarantee to take effect.

I. Problem Background and Typical Scenarios

The legal representative used the company's official seal to guarantee for his friend's company, signing and stamping the contract in one go, without informing the shareholders. The creditor sued the company with the stamped guarantee contract. The company protested: "We never held a meeting!" The creditor countered: "The seal is genuine, and the person is the legal representative!" The debate over the validity of the unauthorized guarantee lies in striking a balance between these two "injustices".

II. Key points of contention

First, the resolution process requires: the allocation of guarantee authority and the obligation to conduct inquiries as stipulated in the articles of association. Second, the criteria for identifying bona fide third parties: what level of review of the resolution is considered reasonable. Third, the allocation of responsibilities after the guarantee is invalidated: the compensation shares of the company and the over-authorised representative. Fourth, exceptions where a resolution is not required.

III. Professional analysis by Henglue Lawyers

Based on Henglue Lawyer's experience in handling corporate guarantee disputes, the liability determination for ultra vires guarantee cases follows four steps: 1. **Verifying the Company Charter and Resolution Requirements** - The company charter serves as the review basis for the guarantee amount and the resolution authority. - For related-party guarantees provided to company shareholders or actual controllers, a shareholders' resolution is required. Ordinary guarantees must follow the company's charter and be approved by the board of directors or shareholders' meeting. 2. **Assessing the Creditor's Due Diligence** - The creditor must review and verify the guarantee resolution (formal review: resolution authority, voting ratios of signatory shareholders or directors) to demonstrate reasonable diligence. - Accepting guarantees without reviewing the resolution or accepting obviously forged resolutions constitutes a breach of due diligence. Judicial practice sets low formal review standards, but a proper resolution copy serves as a creditor's safeguard. 3. **Determining Legal Effect and Liability** - If the guarantee complies with due diligence, the representative's actions are valid and the company bears liability. - Otherwise, the guarantee contract is ineffective against the company, and the creditor may claim compensation from the company and the at-fault legal representative (typically, the company bears partial liability for the debtor's unpaid portion) based on their respective faults. 4. **Identifying Exceptions** - Situations such as the company guaranteeing its own debts (e.g., mortgaging its own loans), simple cases approved by a majority of voting rights holders, or a sole-member company guaranteeing its sole shareholder do not require separate resolutions—the legal representative's signature suffices. **Risk Management Checklist for Companies**: - Clearly define guarantee authority in the company charter. - Separate management of the company's official seal and the legal representative's authorization. - Regularly inform major counterparties about guarantee resolution procedures. **Checklist for Creditors**: - Always require a resolution before accepting guarantees from the company. - Verify the signatory's voting ratio and retain copies for future reference.

IV. Practical suggestions and legal basis

The first step is to retrieve the company's articles of association before accepting the company's guarantee, and determine the guarantee resolution authority and the required limit. The second step is to require the provision of the original resolution or a verified copy, check the voting ratio and the signatory parties, and retain the review records. The third step is to identify any unauthorized guarantees, distinguish whether they are in good faith, and assess the contract's validity, while simultaneously holding the legal representative accountable. The fourth step is to establish a guarantee resolution database and a graded use system for the company's official seal in corporate governance. Main legal basis: - Article 15 of the Company Law of the People's Republic of China (amended on December 29, 2023 and effective from July 1, 2024), which stipulates the procedures for company guarantee resolutions; - Article 61 of the Civil Code of the People's Republic of China (effective from January 1, 2021), which stipulates the legal representative's representative authority and Article 504 on the validity of contracts entered into without authorization; - Article 7 of the Interpretation of the Supreme People's Court on the Application of the Civil Code to the Guarantee System (effective from January 1, 2021), which stipulates the validity of unauthorized guarantees; - Specific application shall be subject to the currently effective provisions.

5. Henglu Law Firm's Reminder

Three key points regarding guarantees exceeding authority: The resolution is the passport for the guarantee, and the creditor's review of the resolution is necessary to establish good faith; guarantees exceeding authority are not necessarily invalidated in their entirety, and the apportionment of fault allows the company and the signatories to bear responsibility respectively; the company should manage the seals and personnel, and the creditor should adhere to verification and retention to avoid pitfalls on both sides. Those involved in disputes over guarantee contracts can seek legal assistance through the following channels:Business and contract disputes in enterprisesWe provide a comprehensive solution for services, which includes corporate governance and internal accountability mechanisms that can be integrated with each other.The company and commercial disputesFor disputes related to guarantee contracts, the following materials may be referred to for reference:Contract disputesFor any questions regarding the execution of guarantees, please feel free to consult us.Creditor's rights and debts, and enforcementTeam.

VI. Frequently Asked Questions

Q1: If the creditor only looked at the business license but not the resolution, is that considered acting in good faith?

Generally, it is not considered valid. The company's resolution on external guarantees is a reasonable subject of review by creditors. It is difficult to determine whether the signing with the legal representative's identity and the company's official seal is done in good faith; however, transaction practices and the company's scale will affect the discretion of the review standards.

Q2: The resolution is forged. Is the guarantee still valid?

If the creditor does not have any fault after the formal review, it will not affect the effectiveness of the guarantee; if the creditor knowingly or should have known that the document was forged but still signed the contract, it does not constitute good faith; if the company subsequently raises a defense of forgery based on a resolution, the court will comprehensively review the process and the extent of the forgery to make a judgment.

Q3: If the guarantee is invalid, does the company not bear any responsibility at all?

Not necessarily. When the guarantee does not take effect for the company, the creditors who are at fault shall bear the responsibility respectively, and the company who is at fault shall still bear the liability for compensation for the part that the debtor cannot pay off. The proportion shall be determined by the court, and it is a rare situation that the company can be completely exempted from liability.

Q4: Does the legal representative have to bear the responsibility for the company's unauthorized guarantee?

Yes. If the over-authorised representative causes losses to the company, the company may seek compensation from him/her; if the guarantee is not effective and the creditor suffers losses, the legal representative shall bear compensation liability according to his/her fault, with internal accountability and external compensation running in parallel.

Q5: Does a one-person company need a resolution to provide a guarantee for its shareholders?

According to the interpretation of the guarantee system in the Civil Code, a one-person company providing guarantees for shareholders is not subject to the general rules of resolution review, but the shareholders need to prove prerequisites such as independent property. In practice, it is still recommended to keep written documents to avoid disputes over property confusion.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the interpretation of judgments in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

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

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available 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.