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Company A and Company B have long-term business relations. To secure debt recovery and simplify procedures, Company A requires the guarantor to issue a general guarantee undertaking, covering all debts between the two companies. Although this practice is similar to the “maximum amount guarantee” stipulated in the “Civil Code”, the differences are obvious: the latter requires a definite term and generally sets a maximum limit on the creditor’s claim. Then whether Company A’s requirement is valid? In judicial practice, the key to determining the validity lies in whether there is an identifiable main contract or fundamental principal claim. Firstly, if…

Article 40, Item 3 of the “Labor Contract Law” stipulates: “If the objective circumstances on which the labor contract was concluded have undergone material changes, rendering the labor contract unperformable, and the employer and the employee fail to reach an agreement on amending the labor contract through negotiation, the employer may rescind the labor contract by notifying the employee in writing 30 days in advance or by paying the employee an additional month’s salary.” However, how to define the “material changes in objective circumstances” has long been a difficult issue in practice, and employers are often anxious about rescinding labor…

In commercial activities, parties often record their phased opinions in the form of meeting minutes or memorandums before entering into a formal agreement. To avoid being deemed to have concluded a contract, some parties may add a clause to the memorandum stating that it “shall not be binding on either party”. However, in most cases, the memorandum is without such clause. In such circumstances, is a memorandum legally binding? From the perspective of judicial practice rules, a memorandum is generally deemed legally binding if it has the following characteristics: Firstly, it contains the essential terms of a contract. Some parties…

In practice, some companies may provide additional benefits to employees, such as additional annual leave, enterprise annuities, and so on. Many people believe that such additional benefits are not statutory obligations of companies, so companies could grant, adjust or revoke those benefits at their own discretion without any legal risks. This perception is incorrect. If handling additional benefits improperly, companies may encounter troubles and burdens. Then how to handle additional benefits properly? Firstly, it is recommended to formulate clear rules for additional benefits. These rules should cover the eligible recipients or eligibility criteria, specific content, payment methods and timelines of…