★ Zhou Xiangen

The case of Zhejiang Wulian Construction Co., Ltd. (hereinafter referred to as Zhejiang Wujian Company) requesting confirmation of the invalidity of the land use right transfer contract between Hainan Changtai Materials and Fuel General Company (hereinafter referred to as Changtai Company) and Fang was made a first instance judgment by the Taizhou Intermediate People's Court (hereinafter referred to as Taizhou Intermediate Court). After the judgment in this case, neither party appealed; The basic situation of the case is now introduced as follows:

1、 Basic facts of the case

In October 1997, the People's Government of Linhai City signed an agreement with Changtai Company on the reclamation of the Hongjiaoyan Phase II tidal flat. The agreement stipulated that Changtai Company would invest in the reclamation of 2400 hectares of the Hongjiaoyan Phase II tidal flat. After successful reclamation, Changtai Company would have a 70 year land use right to the reclaimed tidal flat. After the agreement was signed, Changtai Company contracted out some of the reclamation projects to Shanghai Tunnel Engineering Co., Ltd. (hereinafter referred to as Shanghai Company) and Zhejiang Wujian Company for construction. The reclaimed beach was evaluated by Linhai Land Appraisal Office in June 1999, with a valuation of 49.6 million yuan and a validity period of six months. In July 2000, due to the failure of Changtai Company to pay the project payment as agreed, Shanghai Company filed a lawsuit with the Taizhou Intermediate People's Court and filed a lawsuit preservation application in accordance with the law, requesting the closure of 2400 acres of reclaimed sea land. For this reason, the Taizhou Intermediate People's Court issued a lockdown ruling. During the lockdown period, in May 2001, Changtai Company transferred the land use rights of the reclaimed sea beach to Fang, with a transfer price of RMB 4.18 million. It was agreed that Changtai Company would be responsible for the evaluation of the transferred land, and the claims and debts related to the reclaimed sea beach were not related to Fang; According to the agreement reached with Fang, Changtai Company has evaluated the transfer of land use rights in accordance with the law, with an evaluation price of over RMB 5.31 million. In June 2001, the Land Management Bureau of Linhai City, based on Fang's application, issued the Lintu Fa (2001) No. 5 document, determining the disputed land use right to Fang; In July 2001, the Land Management Bureau of Linhai City revoked the above-mentioned documents on the grounds that Fang had concealed facts and engaged in fraudulent behavior. In June 2001, the dispute over the engineering contract between Changtai Company and Shanghai Company was decided in first instance by the Taizhou Intermediate People's Court. Due to Changtai Company's failure to fulfill its obligations within the effective judgment period, Shanghai Company submitted an application for enforcement to the court. In November 2001, Shanghai Company and Changtai Company reached an enforcement settlement agreement. At the same time, the Taizhou Intermediate People's Court, based on the application of Shanghai Company, lifted the property lockdown for the preservation of the reclaimed coastal litigation. According to the decision of the Taizhou Intermediate People's Court to lift the seal, the Land Management Bureau of Linhai City issued the Lintu Fa (2001) No. 13 document in December 2001, confirming the right to use the reclaimed coastal land involved in the lawsuit to Fang. In April 2002, Fang obtained the certificate of use for the reclaimed coastal land involved in the lawsuit.

In August 2001, Zhejiang Wujian Company sued the Taizhou Intermediate People's Court in accordance with the law due to Changtai Company's failure to pay off the engineering funds of Zhejiang Wujian Company. The case was mediated by the Taizhou Intermediate People's Court and a mediation agreement was reached between the two parties in April 2002; After the mediation agreement came into effect, Changtai Company had no property available for execution. Therefore, Zhejiang Wujian Company requested the court to confirm the invalidity of the land use right transfer contract signed between Changtai Company and Fang, citing Changtai Company's avoidance of debt, extremely low transfer price, and transfer of seized property. At the same time, during the trial of this case, the court entrusted an evaluation agency to evaluate the use rights of the coastal land involved in the case, with an evaluation price of RMB 17.62 million.

2、 Opinions on the dispute in this case

During the trial of this case, there were several different opinions among the parties regarding the validity of the contract:

1、 Zhejiang Wujian Company's request to confirm the invalidity of the contract is reasonable and legal, and should be supported in accordance with the law. This is because: 1. When Changtai Company signed the contract with Fang, the court had already sealed up the land. According to Article 37 (2) of the Urban Real Estate Management Law, the land use right cannot be transferred in accordance with the law, which violates the mandatory provisions of laws and administrative regulations. According to Article 52 (5) of the Contract Law, It should be confirmed that the contract is invalid. 2. After being evaluated by an evaluation agency commissioned by the court, it was found that the transfer price of the land use right in this case was too low, which harmed the interests of other creditors. According to Article 52 (2) of the Contract Law, it should also be confirmed as invalid.

2、 Zhejiang Wujian Company's application requires the court to confirm that the contract is invalid and lacks factual and legal basis. Its application should be rejected in accordance with the law. The reasons for this are: 1. The court's seizure of the land use right in this case only restricts the exercise of property rights by the parties, and does not mean that the parties have no right to distribute the property rights; With the release of the court's seal on the preservation of property, the parties have full power to dispose of the property. Therefore, the key to determining the validity of the contract lies in whether the transferor has the right to distribute the land use right when signing the land use right transfer contract between the transferee and the transferor. 2. The process of signing the agreement between the parties in this case indicates that Changtai Company's transfer of the land use rights involved in this case was voluntary, and Fang was not aware that the land use rights in this case had been seized at the time of signing the contract. 3. In this case, Zhejiang Wujian Company requested confirmation of the invalidity of the contract based on Changtai Company's avoidance of debt and exceptionally low transfer price, without legal basis. Even so, Zhejiang Wujian Company should also file a lawsuit for revocation. However, since Zhejiang Wujian Company has exercised its revocation right for one year, even if the lawsuit request is changed, it will not receive court support.

3、 Comment on the opinions of this case

（1） On the Validity of Transfer Agreements

The land use right transfer contract between the party in this case and Changtai Company does not have any invalid facts or legal basis, and the reasons are as follows:

1. From the signing of the agreement to the confirmation of the land use right, it can be proven that the land use right transfer contract involved in this case is a true expression of intention between both parties. (1) When the two parties signed the land use right transfer agreement in May 2001, their intention was true. As Fang, when accepting the transfer of the land use right of the plot, he was unaware that the plot had been seized by judicial authorities. (2) During the execution of the case between Shanghai Company and Changtai Company by the Taizhou Intermediate People's Court, a conversation was held with the legal representative of Changtai Company and a written record was formed, which proves that Changtai Company has always recognized the land use right transfer contract signed with Fang. (3) When the land use right confirmation management department finally confirmed that Fang had the land use right to the transferred plot, it was determined based on the fact that the legal representative of Changtai Company had re recognized the land use right transfer contract and the Taizhou Intermediate People's Court had lifted the lockdown.

2. The process of confirming the rights of the land management department indicates that the transfer contract for the land use right is legal. The reasons are as follows: (1) Due to the fact that the land was seized by the court during the first confirmation of the rights, the Land Use Right Registration and Certification Office of Linhai City issued Document No. 12 of Lintu Fa (2001) and decided to withdraw the "Confirmation Notice on the State owned Land Use Right of Hongjiaoyan Phase II Surrounding Area" No. 5 of Lintu Fa (2001), which is a manifestation of the issuing department's lawful exercise of powers, After the legal representative of Changtai Company re recognized the original land use right transfer contract and the Taizhou Intermediate People's Court lifted the sealing of the land plot, the issuance office issued the Lin Tu Fa (2001) No. 13 document, confirming that Fang had the land use right to the disputed land in this case, which was also exercised by the issuance department in accordance with the law. (2) The Land Use Right Confirmation Notice No. 13 (2001) issued by the issuing department indicates that both parties have re formed a new legal relationship for the transfer of land use rights in the form of recognizing the original contract for the same content. The re formation of this legal relationship does not have any factual basis for the exercise of the transferor's rights to be restricted, nor does it have any judicial authority The factual basis for administrative authorities to restrict the exercise of both parties' rights.

3. The collection of land use right transfer funds from Fang during the execution process by the Taizhou Intermediate People's Court indicates the legality of the land use right transfer.

4. In the current relevant laws and administrative regulations, there is no explicit provision prohibiting the parties from transferring the seized land use rights through agreement; In this case, both Zhejiang Wujian Company and Changtai Company only mentioned the illegality of the transfer behavior in this case, but there is no legal or regulatory basis to prove what legal provisions were violated; At the same time, illegal acts are not necessarily invalid civil acts. This has been confirmed in Article 52 (5) of China's Contract Law, as contracts can only be confirmed as invalid if they violate mandatory provisions of laws and administrative regulations. Meanwhile, this case also does not apply to the Urban Real Estate Management Law, as it only applies to the transfer and transfer of state-owned land use rights in urban planning areas, and this case does not belong to urban planning areas; Although this law stipulates that the transaction of state-owned land use rights outside the urban planning area shall refer to the provisions of this law, the Contract Law does not provide for the reference to mandatory provisions of laws and administrative regulations as the reason and legal basis for the invalidity of contracts.

5. From the perspective of legal theory, the seizure of a certain property by judicial authorities is only a restriction on the exercise of property rights by the property owner, but it cannot prohibit the owner from exercising their rights forever; The violation of mandatory provisions of laws and administrative regulations stipulated in the Contract Law, as long as the parties are unable to exercise their rights during the existence period of the laws and administrative regulations, indicates that the transfer of seized property by the parties is considered invalid and lacks legal theoretical basis.

（2） Can the low price of the land use right transfer contract signed between Fang and Changtai Company serve as a basis for the invalidity of the contract

1. The Contract Law does not specify that low prices are the reason and basis for invalidity of contracts.

2. If the creditor believes that the price is too low to harm the realization of their creditor's rights, the parties may exercise the right to revoke the contract, but cannot request the people's court to confirm the invalidity of the contract; And in this case, Zhejiang Wujian Company has no basis to prove the fact that the price was too low when Changtai Company transferred the land use right; The land management department has reconfirmed the land use right and issued a certificate, indicating that the government functional departments recognize the rationality of the transfer of land price. If it is not reasonable, according to Article 26 of the "Interim Regulations on the Transfer and Transfer of Urban State owned Land Use Rights", the county-level people's government has the priority to purchase; The county-level people's government waives the right of first refusal, indicating that the price of the land it transfers is not significantly lower than the market value.

（3） During the trial, the court reassessed the price of land use rights, which could not achieve the purpose of the trial, as this case is a dispute confirming the invalidity of the contract; Instead of disputes over revocation rights.

4、 Court Judgment and Result

After trial, the Taizhou Intermediate People's Court held that although Changtai Company transferred the land use rights during the lockdown period of this court, with the lifting of the disputed land use rights by this court, Changtai Company had no right to dispose of the land use rights involved in this case and restored its right to dispose of the land use rights. After receiving the court's notice of lifting the seal, the Land Management Bureau of Linhai City confirmed the land use right in accordance with the law and issued a certificate, confirming the effectiveness of the land use right. The land use right transfer contract signed between Changtai Company and Fang is voluntary and does not violate the mandatory provisions of laws and administrative regulations. Therefore, this transfer contract is legal and valid. Zhejiang Wujian Company claims that Changtai Company's request to confirm the invalidity of the contract lacks legal basis for evading debts and transferring it at an extremely low price, resulting in the inability to realize its creditor's rights. Even if the transfer price is exceptionally low, it does not necessarily lead to the invalidity of the contract; If the parties believe that the extremely low price damages their rights and interests, they can only exercise revocation and cannot request the court to directly confirm the invalidity of the contract. At the same time, during the litigation process, our court has notified Zhejiang Wujian Company to change its lawsuit request. Due to Zhejiang Wujian Company's refusal to change, the lawsuit cannot be established, and Zhejiang Wujian Company's lawsuit request is rejected in accordance with the law.