On Express Contractual Provision Against Assignment

Contract Law has a long history, which could be traced back to the Ancient Times. Meanwhile, Contract Law is quite modern as well, which thoroughly embraces itself with daily life of every common people. There are tremendously huge amount of merits for the growth of Contract Law, but among all of them one is highly determinative, i.e. THE FREEDOM OF CONTRACTS. Just as Article 1134 of Code Napoleon provides"any contracts that legitimately entered by the parties has the law-like effects between them."But, does the freedom of contracts per se really satisfy the best interests of the financial market?With the development of the market economy, the financial functions of the contracts become increasedly self-perfect. Apart from the traditional functions, for example accounting and security, the contracts nowadays play more and more active role in financing at the financial market, especially via the newly-invented vehicles of International Factoring and Securitization. Indeed, the setting of the economic market requires marketability of assets. Under such economic backdrop, the norm of encouraging transactions has been eroding the freedom of contracts gradually and drastically. So, in both legal systems, the Civil and the Common, some scholars have already voiced their concerns on the wane of the freedom of contracts. American Law Professor Gilmore even made his famous proposition by projecting the death of contracts. Now, lots of people may ask what should be the supremacy in contracts regime at modern society. EFFICIENCY or else?Ironically, the recent 2008 American financial meltdown does find its root in the over-efficiency of contracts. All began with the downgrading of the threshold for housing mortgages by Fannie Mae and Freddie Mac, which leads to banks and other financial institutions securitized these sub-prime mortgage loans in order to avoid the huge inherited risks therein. They created a financing vehicle named Collateralized Debt Obligations, or CDOs. Then they sliced the pool of CDOs and sold them publicly. For those who bought the junior CDO group, who are mostly institutional invertors, they continued to conduct lots of hedging transactions, say CDS, to hedge CDO risks of default. Unfortunately, under Bush administration, the CDS marker also lacks necessary regulations, thus making the CDS bought by these institutional invertors transacted endless in the markets. Such countless rounds of CDS transactions incredibly amplify the original risks in the housing market. Once the markets goes sucks just like the year of 2008 did, the value of these CDS would evaporate overnight from the Balance Sheets of these institutional invertors, such as Lehman Brothers and AIG. After the declarations of Chapter 11 protection by these firms which is too large to fall, the whole market suddenly shrouded in huge panic. Then, in the wake of the chaos occurred in Wall Street, the global economic market was plagued by another huge round of economic crisis.So, what is the problem? Can purely norm of efficiency really achieve the best interest of the modern financial market? Apparently not! So, we now get a spectrum, with two extremes: one is freedom of contracts and another is norm of efficiency. But the issue is what point might be the right one to balance these two conflicting interests? We think the key might be buried in Express Contractual Provision Against Assignment. Bearing this hope in mind, I began this journey to seek the solutions to all these issues and concerns by researching the legal effects of these Express Contractual Terms among the leading nations in two biggest legal systems currently worldwide. Apart from Introduction Chapter, the whole thesis consists of the following six other chapters.Chapter One is the roadmap of this thesis, which gives a bird view of existing regulations on Express Contractual Terms in two leading legal system, i.e. the Civil and the Common, and the conclusion made by this essay, i.e. the mode of regulation differentiating in types of contractual rights between the traditional ones and the modern ones mainly for financing.Chapter Two focuses on the existing regulations concerned in Civil Law System, which consisting of two parts. One is under German Sub-branch and another is French Sub-branch.Chapter Three is devised to provide a deep legal analysis on the footing of the previous chapter. Thus, this Chapter also contains two sub-parts in light of two sub-branches in Civil Law System.Chapter Four emphasizes on the Common Law System. This Chapter has two parts: the first one discusses an English leading case; the second one elaborates the US laws and precedents on point.Basing on the fruit of the forth chapter, Chapter Five analyzes two core issues purely from the Common Law perspective: one concerns the public policy defense for the rules and another provides my understanding of the pro and con regarding the mode of rules on the Uniform Commercial Code-Secured Transactions.Chapter Six consists three parts. First part summarizes the experiences of two legal systems and gives my conclusion therefrom. Secondly,â… thoroughly make a research on the regulations concerned in China. Lastly, by combining these two results,â… render my suggestions to Chinese law-makers with a view to further perfecting our nation's rules and regulations on Express Contractual Provision Against Assignment and on modern financial market.