Database Case: Sichuan Xing Investment Co., Ltd. v. Chengdu Fa Real Estate Co., Ltd.
Where a legal representative signs and performs a contract in the company's name within the scope of representative authority, the contract is not automatically ineffective against the company merely because the representative privately carved the company seal for personal gain and may have committed a crime. Company liability should be assessed in light of the registered status, the outward appearance of the transaction, performance, and the counterparty's good faith.
Holding
Where a legal representative signs and performs a contract in the company's name within the scope of representative authority, the contract is not automatically ineffective against the company merely because the representative privately carved the company seal for personal gain and may have committed a crime. Company liability should be assessed in light of the registered status, the outward appearance of the transaction, performance, and the counterparty's good faith.