The Study Of The Assignment Of Creditor’s Rights

Creditor’s rights are one of the vital properties in terms of law, the nature of which reveals its expectative credit. The occurrence of creditor’s rights signifies that one party who bears the duty of his or her performance in an economic relationship obtains the trust of the other and thus gets the convenience of the delayed payment. If such kind of convenience can be freely transferred among parties, then "the barrier of time can be broken through so that the past can serve the future and the future can serve the past and so that the time and space can be unlimitedly surmounted". According to Roman law, the concept of obligation was once being regarded as a severe relationship with its personality and thus relativity and free assignment of creditor’s rights is not allowed. However,"the improvement of the possibility of assigning the creditor’s rights is the most significant part in the attachment of the property nature of creditor’s rights". There was an enduring confrontation between the social need of free assignment of creditor’s rights and the idea of defending the personal attributes of creditor’s rights. Up to modern times, the development of economy was screaming for emancipating the creditor’s rights from personal attributes and relativity for the benefit of extensive trade and payments. Under this circumstance, the Civil Law of the main countries in both two legal families ratified the free assignment of creditor’s rights and built up relatively sophisticated systems of assignment of creditor’s rights. At the same time, international normative documents specifying the assignment of creditor’s rights were being enacted by international organizations to accommodating the assignments of creditor’s rights in economic activities of different countries, followed by the globalization of economic trade, which constitute a vital part in the legal system of assignment of creditor’s rights.As an intangible property right, the legal system of assignment of creditor’s rights inevitably differentiates itself from the legal system of transference of tangible property. The thesis begins with the clarification of the concept of assignment of creditor’s rights and the orientation of its legal constitution, follows a relatively comprehensive demonstration and analysis of the historical evolution of the assignment of creditor’s rights, the scope of the assignable creditor’s rights, the legal validity of the assignment contract, the influence of the assignment to the interested parties, etc.Chapter one demonstrates the conception and the legal constitution of the assignment of creditor’s rights. Assignment of the creditor’s rights signifies the transference of creditor’s rights among different parties based on the premise of maintaining the identity of the creditor’s rights. It includes two types, one type being the assignment provided by the laws and regulations (hereinafter shortly referred to as "legal assignment", such as enterprise merger, warrantor recourse, and insurance subrogation), and the other type being assignment based on the agreement of the parties (hereinafter shortly referred to as "assignment by will"). As legal assignment is relatively simple and can apply to the rules of assignment by will, the thesis hereby confines the research scope to assignment by will. The assignment by will consists of the normal assignment of creditor’s rights and the assignment resulted from transferring guarantee. The legal constitution of assignment of creditor’s rights comprises three disparate doctrines, which is similar to that of the real rights alternation. The said three doctrines are the doctrine of "autonomy of will on creditor’s rights"(the doctrine doesn’t distinguish creditor’s rights and real rights), the doctrine of "autonomy of will on real rights"(the doctrine of quasi-real rights of the theory which distinguishes creditor’s rights and real rights), and the doctrine of "formalism of creditor’s rights"(the doctrine of factual act of the theory which distinguishes creditor’s rights and real rights). The thesis argues that the "autonomy of will on real rights" shouldn’t be adopted. The reasons are as follows. First, the double defects of the theory of juristic act of real rights, both in logic and value aspects. Second, as the area of real rights alternation in our country doesn’t recognize the theory of juristic act of real right; therefore, the area of creditor’s rights assignment shall hold the same standpoint. Meanwhile, due to creditor’s rights’ nature of intangible property, the assignment of the creditor’s rights doesn’t go with any extrinsic physical form, or it doesn’t relate to any performance problem. Even the legislation based on the doctrine of "autonomy of will on real rights" doesn’t require a physical form of this "will on real rights". As a result, the assignment of creditor’s rights shouldn’t be classified into two stages, which are the stage of assignment contract and the stage of right transference. In the area of assignment of creditor’s rights, the author proposes to build a doctrine of "autonomy of will on creditor’s rights". In other word, the creditor’s rights are assigned since a valid assignment contract is reached, which is different from the real rights alternation mode based on the doctrine of "formalism of creditor’s rights" under the principle of classifying creditor’s rights from real rights in our country.Chapter two is about the historical evolution of the system of assignment of creditor’s rights. In Continental law system, Roman law has stressed the personal attributes of creditor’s rights, and insisted on the principle that creditor’s rights shall not allowed to be assigned. In Gaius era, it began to use the way of updating the creditor’s right to achieve the purpose of transferring the creditor’s rights, but the update destroyed the identity of the creditor’s rights. Later it developed into using the litigation system to achieve the purpose of the creditor’s rights transference, and the agent was the assignee, but the assignee’s right would be affected due to assignor’s withdrawing of power of agency or the disposition of creditor’s rights. The general assignment of contractual rights was not formally recognized until the Justinian era. Even though the civil laws of Continental law countries which followed the Roman law differed in the legal structure and system design, they had developed the system of assignment of creditor’s rights in a systematic manner. However, in common law, due to the adherence to the relativity principle of contract, the common law considered creditor’s rights as "the rights deriving from litigation". The freedom of assignment of creditor’s rights had been oppressed for a long time, but it also viewed the way of litigation as an alternative of assignment of creditor’s rights. In contrast, the equity showed a relatively tolerant attitude towards the assignment of creditor’s rights. It held that the assignment of creditor’s rights shall be permitted as long as it was commercially needed, and the assignee was the real rights holder who could achieve the purpose of transfer without the agent. During the competition between the equity and the common law, the latter ultimately had to treat assignment of creditor’s rights in a manner that the former did. In the1870s, the common law also recognized free assignment of creditor’s rights. In the international conventions, the United Nations Convention on the Assignment of Receivables in International Trade directly provides for the provisions of the assignment of creditor’s rights. The Convention on International Factoring and General Rule of International Factoring Business are devoted to the assignment of creditor’s rights in factoring business. The European Contract Law and the Principles of International Commercial Contracts set up provisions related to assignment of creditor’s rights.Chapter three discusses the subject matter of creditor’s rights assignment. The assignor shall own disposition right to the assigned creditor’s rights, or the effect of the creditor’s rights assignment act is to be determined further. However, under the legislative background of "autonomy of will on creditor’s rights", when a creditor’s rights have been assigned twice sequentially, the second assignment is by no means equal to unauthorized disposition in legislations. Instead, the effects of both the assignments are universally recognized, and detailed rules of deciding the final owner of the assigned creditor’s rights are made. The assignability of creditor’s rights is generally recognized worldwide, but meanwhile the creditor’s rights which are non-assignable subject to the nature of contract, laws or involved parties’ agreements shall not be assigned is usually provided. As to the effect, express contractual provisions against assignment are made between parties. Different countries have different legislations, which can be roughly divided into three modes in general:valid(the assignment is invalid), invalid(the assignment is valid) and the defensible mode(the assignment is invalid, it shall not be against the third party). Since the defensible mode both respects party autonomy and takes account of creditor’s rights’ assignability and business safety, it is regarded as the most reasonable and justifiable in economicality and value. As regards to the future creditor’s rights, whether with fundamental relations or not, it can be assigned as long as it is of appropriate certainty and identifiability. Nevertheless the assigned future creditor’s rights can never follow the pattern of "autonomy of will on creditor’s rights", i.e., it is assigned to the assignee when the contract is legally established; instead it is not assigned until the creditor’s rights actually take place.Chapter four states the effect of creditor’s rights assignment contract upon the assignor and assignee. The effect of creditor’s rights assignment contract is not conditioned by debtor’s assent or notification to the debtor. Furthermore, creditor’s rights are immediately assigned to the assignee as soon as assignment contract is legally established and needs no any other requirements or procedures. Assignment notification makes no sense to deciding the owner of the aforementioned rights between the assignor and the assignee, but a requirement for the assignment to take effect to the debtor. And the delivery of documents as certificate of creditor’s rights is not a sign of rights assignment, but only an accessory performance duty from assignor to assignee. When creditor’s rights arc assigned to the assignee, any other rights (such as subordinate rights, derivative rights and right of defense) and obligations (such as guarantees for the debtor’s rights, defenses) collateral to these creditor’s rights arc also assigned synchronously except those rights of formation that exclusively belong to the assignor (as right of rescission). Although the assignor is no longer a party of creditor’s rights relationship, yet he shall provide warranty against defects for the assignee, which is only limited to warranty against defects of title; the assignor need not provide warranty against the debtor’s performance ability unless otherwise arranged. Chapter five examines the effect of creditor’s rights assignment upon the debtor. How does the assignment take effect to the debtor? Notification and acknowledgement are found in legislations. Notification sets objective events provided in law as the requirement of the assignment to take effect to debtor, while acknowledgement sets debtor’s objective recognition as the prerequisite. And most legislations adopt notification due to its high objectivity and certainty. In the case of notification, the aforementioned object events basically are assignment notice and debtor’s promise, both of which in nature are ideological notice or real acts in civil law. Both assignor and assignee can serve notice to the debtor, which shall not have the effect of prescription interruption. The debtor can have the same defenses against the assignee as against the assignor when creditor’s rights are assigned. The Japanese law provides that it will cut off the debtor’s right of defense against the assignee if the debtor made the promise of reserving no exceptions. This provision has changed the sameness of obligations and shall be excluded in our law. Where the debtor avails himself of set-off against the assignee on the ground of his creditor’s rights against the assignor, it is required that these creditor’s rights already exist on notice or debtor’s promise, and that the maturity of these rights is ahead of or at the same time with the maturity of the assigned creditor’s rights; but it is not required that these rights are already at its maturity on notice or debtor’s promise.Chapter six elaborates the effect of creditor’s rights assignment upon third party out of the debtor-creditor relationship. The assignment of creditor’s rights involves not only the debtor, but the interests of the third party out of the obligation. In order to protect the third party appropriately and maintain the security of creditor’s rights transaction, the publication system of creditor’s rights assignment shall be built; and the assignment shall not be against the third party without publication. The referred "third party" means person who’s essentially related to the creditor’s rights in dispute and is irreconcilable with the parties of the dispute (such as the other assignee in double assignments and pledgee of the creditor’s rights) regardless of bona fide or mala fide, except the "perfidious malicious" third party. In real legislations, there are three modes of assignment notification; natural confrontation, notification confrontation and registration confrontation. Natural confrontation fundamentally negates the necessity of publication of creditor’s rights assignment and seems to be the most improper. Notification confrontation sets debtor as the "information center" of creditor’s rights assignment and strengthened forms of notification against debtor’s moral hazard; it is relatively feasible in ordinary creditor’s rights assignment and not fit for collective creditor’s rights assignment or implied assignment. By comparison, registration confrontation owns distinct institutional advantage in collective creditor’s rights assignment or implied assignment, yet the institutional cost is relatively higher. Our future legislation should distinguish various kinds of creditor’s rights assignment; ordinary assignment adopts notification confrontation, while collective creditor’s rights assignment or implied assignment adopts registration confrontation.