Study On Title Retention

The title retention is a very important institutional arrangement in buyer-seller relationships. However, the provisions concerning title retention system in Chinese Contract law is too brief. In order to overcome this defect, the Supreme People’s Court in 2012 enacted "Interpretation on Issues Concerning the Application of Law for the Trial of Cases of Disputes over Sales Contracts", from the perspective of the scope of application and the protection of parties" rights, the Explanation has formulated a series of practical regulations concerning ownership retention, and then established this special method of transaction security under Chinese modern civil law system. Title retention system balances the interests of buyers and sellers by the greatest possibility through the separation of ownership and possession of the subject matter in transactions, thus becomes an unique right-security ownership, which is different from ownership and security property. However, it is because of the particularity of the ownership retention contract-the sellers own but do not possess, while the buyers possess but do not own the introduction of title retention system at the very beginning has caused numerous debates upon a variety of issues, including how to regulate the rights and obligations of buyers and sellers, how to define the type and object of title retention, and so on. This paper adopts a variety of methods including comparative analysis, empirical study, and historical inquiry to deeply illustrate the nature of title retention, the type, object, and establishment and publicity of title retention, the legal relationship between the parties and between the party and the third person. Learning from to the relevant legal systems of other jurisdictions,, this paper analyzes the main problems related to the title retention system existing in the judicial trial in china, through the analysis upon typical cases involving title retention in judicial practice and makes concrete suggestions to fix problems.Title retention clause is originally used to allow buyers and sellers to freely decide the time and manner to transfer the ownership of subject matter, namely simple title retention, followed by a variety of title retention clauses, including extended title retention, expanded title retention and complex title retention.. Along with the development of the title retention system and the expansion of the range of species, some jurisdictions have gradually changed their understanding concerning the nature of title retention clause, and the allocation of power between buyers and sellers, and among sellers, buyers and the third person is also quietly changing. This is reflected by distinguished legislations and theoretical debate in various countries. The difference in opinion mainly focuses on following issues related to title retention:the legal nature, the scope of object, and the establishment and publicity.It is obvious that title retention has the function of security. However, there is a wide debate about what kind of security it is.. There are three main views:ownership structure theory, security right structure theory and the theory in between. The author believes that the title retention by nature is inherently an ownership, rather than a new type of security right. Based on the ownership of the subject matter, the sellers provide a security for their debts. The scope of the object of title retention is another topic under hot debate. The issue whether Real estate can retain ownership is particularly controversial. It is also uncertain whether creditor’s rights, appurtenance, fruits, and processed goods, addendum, mixture, aggregation can retain ownership. The author believes that the object of title retention should be limited to movable property, and its scope should be limited. How the title retention agreement between buyer and seller can bind the third person, is the problem that should be addressed by the publicity system. There is a wide distinction among the legislation and practice regarding the publicity in various jurisdictions. There are many theories regarding this issue, including concensualism, establishment of writing, registration effectiveness and eclecticism, each of which has its strong and weak points. The author agrees with registration antagonism that suggests the establishment of title retention shall make an explicit publicity.The key of the title retention system is to reasonably define the rights of buyers and sellers, which mainly includes sellers’right of recall and buyers’expectant right. When there is a risk that sellers can not realize their creditors’right based on sales, the most important guarantee for sellers is the right of recall. When buyers do not pay according to agreement improperly dispose the subject matter, sellers besides the right of recall also shall enjoy the right of rescission, the claim of continuous perform, damages claim, etc. During the period of implementation of retained transaction, the buyer holds a strange position. As to the issue concerning the nature of expectant right, the author tends to agree with. Wang Zejian’s point of view:buyer’s rights is a new right,. Expectant right may be transferred. The transfer of expectant right will not affect the relations between buyers and sellers in a title retention transaction. There are various cases that title retention may involve the interests of the third person. When the subject matter is transferred, pledged and infringed, there might be right conflict between one party of the transaction and the creditor of another party (the third person).In China, common practices in the judicial adjudication on title retention include dealing with retained ownership disputes from the perspective of creditor’s rights, deny retention of title, confirm sellers’option, combining the trials requested by two sides of the, as well as providing the protection on the third person in good faith. "Interpretation on Issues Concerning the Application of Law for the Trial of Cases of Disputes over Sales Contracts", enacted in 2012 has stipulated the scope of the object of title retention, and has also provided specific protection on the rights of sellers and buyers in a title retention transaction, In this fashion, the explanation has preliminarily established basic infrastructure of title retention system. With the enforcement of this explanation, some disputes have been settled., but there are still many problems need to be addressed further, such as how sellers how exercise their recall right? How to judge whether the ownership retention has been effectively set up? Whether title retention can be a defense against a third person in good faith? Whether a publicity is required to establish a ownership retention? To address these questions, this paper put forward some concrete suggestions to improve the title retention system in China, through accurately defining the position of title retention institution in civil law system and the relationships with other legal institutions.