Lesson 9
( Young and Mary are trainees at ABC Law Firm. Mary is from the U.S.A and Young is Chinese. The big boss of the law firm is Mr. Jeff Honest. )
Jeff: The training is coming to the end now. In order to better assess your performance, I'd like you two to taken an oral quiz.
Young&Mary: All right. We’re almost ready.
Jeff: That's good. The first problem is for both of you. Listen. When Mr. A went abroad, he left his laptop computer in the control of his nephew, B. B is a college student aged 20. A failed to indicate whether or not the computer is a gift to B. A year later, B sold the computer to one of his classmates C at a fairly low but not terribly low price. When later A learned about the sale, he asked C to return the computer. Is C obliged to return it?
Young: No. C is the legitimate owner of the computer now, for he is a bona fide purchaser.
Mary: He is a purchaser in good faith. He didn’t know or shouldn’t have reason to know that the contracted computer belonged to someone else other than B.
Jeff: That’s easy, isn’t it? Let’s try a harder one. Here you go. A and B co-run a restaurant as general partners. C was a good chef and worked for A and B. but C didn’t receive monthly payment for his work and instead, got paid every half year. The amount he received each time usually equaled 16% of the profit made in the previous half year. Then three years later, C died from a car accident. C had a son, D. what would you advise D to do?
Mary: I think, well, C was a cook hired by A and B but in fact, he wasn't treated as an employee.
Young: He was treated as a partner by A and B and he didn’t object to it, so the law will recognize him as a general partner.
Mary: Acts speak louder than words.
Young: Uh-huh. In that case, as C's heir, D may inherit the partnership interest C had in the partnership.
Mary: That's approximately 16% of the partnership property.
Young: Yes. And D may only become a partner with approval of A and B.
Jeff: Good job. Problem three is as simple. A is a member of the board of directors of a listed company B. A learned on April 3rd that B was to take over company C in the near future. A communicated the information to his wife, and then in turn his wife tipped the information to her brother D. D subsequently purchased large quantities of outstanding shares of C within a period of a little over a month. After B published its intention to acquire C, D sold the shares and made a profit of RMB 360,000. the question is: Does A’s act constitute insider-trading itself? Why or why not?
Mary: It sure does. That B is about to buy out another company is undoubtedly inside information. As a tippee, D obtained the information and traded on C's outstanding shares. That constitutes insider-trading.
Young: I'm not going to totally agree with you there, Mary. As a matter of fact, it's pretty controversial in China because the Securities Law of the P.R.C. is vague on this issue.
Jeff: So it's tough to you. I’m sorry. OK, ladies, one more problem before lunch.
Young: I'm starving.
Mary: I'm hungry too.
Jeff: What's the smell?
Mary: Deep-fried chicken?
Jeff: All right. This isn't supposed to be a formal examination anyway. Go and enjoy chicken. We'll continue later in the afternoon.
*Words and Expressions
Bona fide purchaser 善意购买者
Good faith 善意
General partner 普通合伙人
Partnership interest 合伙份额
Partnership property 合伙财产
Board of directors 董事会
Listed company 上市公司
Insider-trading 内幕交易
Inside information 内幕消息
