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In practice, it is common for companies to have a registered address and another actual business address. The reasons are various, such as, a company has been relocated, but it forgot to change the registered address in time; or a company sets its registered address in a specific district for special preferential policies, and sets another actual business address in a more convenient district, and so on. From the perspective of administrative management, such arrangement is allowable. However, such inconsistency would still bring some negative effects to enterprises. Regarding the litigation, there are 2 main negative impacts: (1) If a…

Many companies have signed a Non-competition Restrictive Covenant (the “NCRC”) with employees. However, the issues related to the economic compensation have been ignored in many cases, due to which many disputes arise. This article is aimed to sort out the relevant common misunderstandings and consequences for companies’ reference. Misunderstanding No.1: There is no agreed amount of the economic compensation. Analysis: If there is no agreed amount of economic compensation, the NCRC is still valid, and the specific amount shall be determined by the judicial authorities. Article 6 of the “Interpretations of Supreme People’s Court on Several Issues Relating to Laws…

A Japanese Company M appointed Mr. A to serve as the head of the R&D department of its subsidiary in China. Just few months later, Mr. A created a significant invention. Company M and its subsidiary had different opinions on the ownership of this invention, the amount of the remuneration, and the payer. Article 6 of the “Patent Law” stipulates that a service invention is an invention completed by an employee in the course of performing duties for the employer or completed by substantially using the material and technical conditions of the employer. The employer shall have the rights to…

In August 2020, a bank employee released a real-name statement on Weibo, claiming that he had suffered long-term mental torture from his leader, such as, he was ordered to stay at the pantry next to the elevator for three consecutive months, and he could only go out for dinner and go to the bathroom during working hours; if he disobeyed this order, the security personnel would force him to go back to the pantry. Following with this piece of news, the topic of “Power Harassment” (commonly known as “Workplace PUA”) becomes a hot topic again. “职权骚扰” derived from its English…

Both “Contract Law” (repeal on 1 Jan. 2021) and “Civil Code” (effective from 1 Jan. 2021) stipulate that either the commissioning party or the commissioned party may terminate the commission contract at any time, which is the right of termination without any reason. “The law stipulates either party could terminate the commission contract at any time, because the foundation of such contract is the personal trust. Once such trust is vanished, the necessarity of the contract is vanished as well, and the parties should be allowed to terminate the contract.” (Refer to the Supreme People’s Court (2013) Min Shen Zi…

Article 3 of the “Labor Contract Law” stipulates that the conclusion of a labor contract shall follow the principle of good faith. Furthermore, Article 26 stipulates that a labor contract which is concluded by use of fraudulence is invalid. The above-mentioned provisions are the main legal basis for the application of the principle of good faith in employment. However, if an employee has provided fraudulent information while concluding a contract, when his employer found out such fraudulence, and claimed the contract is invalid, or rescinded the contract with the reason that the employee had violated the internal rules and regulations,…

In recent years, the revised “Trademark Law”, “Copyright Law”, and “Patent Law” have added punitive damages clauses and raised the upper limit of statutory damages. However, the guidance on applying punitive damages clauses is not clear. On March 2, 2021, the Supreme People’s Court issued the “Interpretation of Supreme People’s Court on the Application of Punitive Damages in Hearing Civil Cases of Infringement upon Intellectual Property Right ” (Fa Shi [2021] No. 4, hereinafter referred to as “Interpretation of Punitive Damages”), which has been implemented on March 3, 2021. The “Interpretation of Punitive Damages” has 7 articles, and the key…

Compared with the previous “Guarantee Law” and the relevant judicial interpretations, the “Civil Code” which came into force on Jan. 1, 2021 has amended the guarantee term. According to the “Civil Code”, where there is no agreement in the contract between the creditor and the guarantor on the guarantee term or such agreement is unclear, the guarantee term shall be six months from the date of expiration of the term for performing the principal obligation. Meanwhile, according to Article 32 of the “Interpretation of Supreme People’s Court on Application of the Security System under the Civil Code”, where a guarantee…