Court: The Gift Contract Cannot be Revoked for the Donee Has Assumed Corresponding Consideration

[Case Review]

Wang, who is studying in a domestic university, wants to study abroad after graduation, but he lacks funds. So he thinks of the property his father gifted to him when his parents divorced. But the property is not owned by Wang alone, but is shared by Wang and his grandfather. When Wang¡¯s parents divorced 12 years ago, the two sides reached a mediation agreement. Wang lived with his mother and his mother paid all the maintenance expenses until his eighteenth birthday. Wang¡¯s father voluntarily gifted the property under his name to Wang.

The property was originally owned by Wang¡¯s father and grandfather. In 2011, the property was registered as shared by Wang and his grandpa. However, Wang¡¯s father has been the actual occupant. When Wang proposed to divide the property, he was rejected by his father and grandpa. Wang¡¯s father filed a complaint with the Jinshan District People¡¯s Court of Shanghai (hereinafter referred to as the ¡°Shanghai Jinshan Court¡±), requesting to revoke the property gifted to his son Wang. At the same time, he also requested Wang to return the share of the property to him and assist him with the house transfer formalities.

Father: My son asked to divide the property and let my father pay 50% amount of the consideration on the property. My father is retired and has no other source of income. We need to sell the house to give Wang half amount of the consideration. I am a person enjoying the minimum living allowance and have no other residence. Where do I live after selling the house? Wang¡¯s action is a serious violation to the rights of me and his grandfather!

Son: When my parents divorced, the agreement stated that my father was exempt from the obligation of paying child maintenance, so there is a corresponding consideration for the property gift, which cannot be revoked. Moreover, he enjoyed relocation allowance before. My request does not infringe on the rights of him and my grandfather.

Wang held that his request to divide the property is the exercise of his legitimate rights, and does not constitute the basis for his father to exercise his legal revocation right. After divorce, his father did not fulfill his maintenance obligations, and now he is asking to revoke the gift, which violates the principle of good faith.

[Case Study]

The focus of this case: Does Wang¡¯s father enjoy the legal right to revoke the gift contract?

    1. Wang is the legal owner of the property involved in the lawsuit and has the right to possess, use, benefit from and dispose of the property according to law.

    2. Wang¡¯s father has not reached retirement age. Although he enjoys the minimum living allowance, he has full labor capacity and does not need to be supported by his son.

    3. When Wang¡¯s father signed the divorce agreement, he did not reserve the right to reside in the donated property. Now he has no legal rights and interests protected by law in the property involved in the suit.

After trial, the Shanghai Jinshan Court held that a lawfully established contract shall be legally binding on the parties thereto, each of whom shall perform its own obligations in accordance with the terms of the contract, and no party shall unilaterally modify or terminate the contract.

When Wang¡¯s parents divorced, his father gifted Wang his own share of the property concerned. Wang also relieved his father of the obligation to pay child maintenance. Wang assumed corresponding consideration for the gift.

At the same time, the gift that parents give to their children during the divorce process also bears certain moral attributes. Wang¡¯s disposal of the donated property does not violate the provisions of the law or seriously infringe on the rights and interests of the donor. Therefore, the court does not support Wang¡¯s father¡¯s appeal to revoke the gift.

The court dismissed Wang¡¯s father¡¯s request to revoke the gift.

The court reminds that the property gift clauses in the divorce agreement and the entire divorce agreement are a whole and the right of arbitrary revocation cannot be exercised solely for gift. Some parties only agree to register for divorce on the premise of comprehensive consideration of various factors, and perhaps the additional condition is the free gift of the property to their children.

The act of disposing of the joint property of the husband and wife to the children based on the divorce grounds can be regarded as a gift attached to the divorce conditions of the agreement. Under the premise that the marriage relationship between the two parties is ended, and based on the principle of good faith, the gift cannot be arbitrarily revoked.

In order to avoid the risk of disputes and loss of property as much as possible, after the signing of the divorce agreement, the property agreed to be given to the children should be delivered and the relevant transfer registration procedures should be completed in time.

[Relevant Laws]

¢ñ. Contract Law of the People¡¯s Republic of China

Article 8 A lawfully established contract shall be legally binding on the parties thereto, each of whom shall perform its own obligations in accordance with the terms of the contract, and no party shall unilaterally modify or terminate the contract.

Article 185 A gift contract is a contract whereby the donor conveys his property to the donee gratuitously and the donee expresses his acceptance of the gift.

Article 186 Prior to the transfer of rights to the gift property, the donor may revoke the gift.

The provisions of the preceding paragraph does not apply to any gift contract the nature of which serves the public interests or fulfills a moral obligation, such as disaster relief, poverty relief, etc., or any gift contract which has been notarized.

Article 192 Where the donee is in any of the following circumstances, the donor may revoke the gift:

(1) seriously harming the donor or any immediate family member thereof;

(2) failing to perform support obligations owed to the donor;

(3) failing to perform the obligations under the gift contract.

The donor shall exercise its revocation right within one year after he knows, or ought to know, the cause for revocation.

(Authors: Lu Yebo and Zhang Tao of Shanghai Jinshan Court)