Consideration was originally the principle of validity in Anglo-American contract law. Its original intention is to exchange another person's promise to do something. What someone pays is not necessarily the price of money, but perhaps the price of buying some kind of commitment. A contract is invalid without consideration. From the perspective of legal relationship, consideration is a kind of equivalent paid promise relationship, and one person's promise is exchanged for another person's promise. From the perspective of law and economics, consideration is the condition to realize Pareto improvement when both parties to the conflict are in Pareto optimal state. In the case of conflict of legal relationship between equal individuals, the solution of efficiency can only be solved through the compromise relationship between equal individuals. In the process of coordinating the conflicting legal relations between equal subjects, as long as the conditions of consideration, freedom and timely compensation are met, the efficiency from Pareto optimization to Pareto improvement can be realized.
The concept of consideration appeared in the merger agreement signed by Beijing Tian Fei, a wholly-owned subsidiary of China Petrochemical, and Beijing Yanhua at the end of last year. According to this agreement, China Petrochemical will integrate Beijing Yanhua through the absorption and merger of Beijing and Tian Fei. Beijing Tian Fei paid cash to the shareholders of Beijing Yanhua to cancel all H shares, and at the same time issued the newly-increased registered capital of Beijing Tian Fei to China Petrochemical, the sole shareholder holding all domestic shares of Beijing Yanhua. In the end, Tian Fei paid a cash consideration of about HK$ 3.846 billion for the agreement.
In China's judicial practice, contracts are often divided into paid contracts and unpaid contracts according to whether the parties have the price (consideration) of obtaining rights. A paid contract is a transaction relationship, an exchange of property between the two parties, and an exchange of consideration. A gratuitous contract has no consideration, not an exchange of property, but a payment of property or services by one party (payment of services can be regarded as payment of property benefits). Gift contract is a typical free contract.
There is no concept and provision of consideration in China's contract law, but domestic legal researchers believe that this does not mean that there are no adjusted legal provisions, but only from the perspective of rights and obligations. For example, in the case of obvious imbalance of rights and obligations, Anglo-American law considers whether there are unfair facts such as fraud and coercion behind the lack of consideration from the perspective of consideration theory, so as to determine whether there is consideration in the contract; The contract law of our country can also analyze and determine the validity of the contract from whether there is fraud, coercion and other similar situations. If there is no such illegal situation, the parties may also exercise the right to modify and terminate the contract on the grounds of obviously unfair.
In the previous discussion on the reform of non-tradable shares, the price at which non-tradable shares obtain the right to circulate has always been one of the focuses of debate. The pilot reform of non-tradable shares adopts the principle of case-by-case handling and scheme negotiation, which makes the final consideration inevitably become a price acceptable to both parties.