The Guaranty Duration And The Prescription Of Action

As an important content of guaranty institution, GuarantyDuration is playing a key role in balancing the interests ofcreditor and guarantor; at the same time, it has essential influenceto assure guaranty institution to enhance the credit of market mainbody. But some disputation still exist, such as how to determine theGuaranty Duration; what the characters of Guaranty Duration are andwhat the relationship of Guaranty Duration and Litigation time limitis. Meanwhile, the legislation of Guaranty Duration triggered moreconflictions and misinterpretations in many circumstances due to theconstraint of legislative techniques. The Law of Guaranty and itsrelated judicial interpretation that constitute this guarantyinstitution confuse both theoretic and practical fields furtherrather than clarify all misunderstandings. Therefore, It isnecessary to probe deeper into all related issues of GuarantyDuration in order to benefit the legislation and judicial practicein future.This paper has three sections:The first section: Summarize of Guaranty Duration. For thedefinition of Guaranty Duration, there is no standardizedexplanation in legislation. So it was given various definitions by theoretic. The author gives a more precise and scientific definitionof Guaranty Duration by studying the purpose and features oflegislation for Guaranty Duration. The purposes of legislation forGuaranty Duration are: to balance the interests of the creditor andguarantor; to consummate the guaranty institution. The features ofGuaranty Duration are: the foundation for creditor realizing itsright and for Guarantor bearing its responsibility; the agreementbetween related parties in guaranty duration according to guarantycontract; the longest period for creditor to realize its right fromcreditor's perspective; the period for guarantor to exempt itsliability of guaranty from guarantor's perspective. Hence authorconcludes: Guaranty Duration is the period for creditor realizingits rights according to the guaranty contract agreed by relatedparties.The second section: to analysis the characteristics of GuarantyDuration. In this section, author presents her statements in twoparagraphs: first, introduction of the difference in characteristicsof Guaranty Duration in theory, There are five kinds ofunderstandings of characteristics of Guaranty Duration such asprescription of action, negative prescription, independentprescription etc. Some theorists thought the Guaranty Duration couldbe the period from forming the right to losing the right. Second,Author analyzed the concepts of prescription, period, prescriptionof action and negative prescription separately. By comparingGuaranty Duration, prescription of action and negative prescription,author refutes the incorrect points of prescription of action andnegative prescription, demonstrates the characteristics of GuarantyDuration is neither prescription of action nor negative prescription,but a duration agreed freely by all related parties. The third section is the core of this paper: to analysis therelationship between Guaranty Duration and prescription of action.At the beginning, author analyzed the relationship betweenGuaranty Duration and prescription of action in Guaranty contract.For the dispute whether prescription of action exist in Guarantycontract, author supports the standing point that prescription ofaction does exist in Guaranty contract. Following, author discussesthe starting point and calculation of duration of Guaranty. Aboutthe starting point, it should be determined from the date ofmaturity of the principal debts. In addition, author holds that thestarting date of duration of guaranty can still be counted from thedate of maturity of the principal debts if the principal debtor hasthe anticipated violation. For the starting point of prescription ofaction in guaranty contract, author believes that the duration ofguaranty of a general surety ship should be counted from the datewhen a judicial trial or arbitration for principal debt wasconducted, while execution proceedings was implemented on principaldebtor and still can not fulfill the debt. Meanwhile, authorcriticized the wrong opinion like the starting point of prescriptionof action in guaranty contract should be calculated from the datewhen a valid court judgment is made. For the duration of guaranty ofjoint and several guaranty surety ships, author states it should becounted from the following date after the date when a notice letterissued by creditor to ask guarantor to fulfill its responsibilitywas delivered. Besides above analysis, author also studied on somecircumstance as the duration of guaranty without agreement and theguaranty without specified time limit. After comparing to laws andclause from different countries and areas, author suggests thatguarantor should bear the responsibility in unlimited prescription;at the meantime, the creditor should be endowed the right of interpellation to debtor if there is no agreed duration of guaranty.For duration of guaranty without specified time limit, authorrefutes the popular opinions like that it should be granted as themaximum two years duration or no agreement on duration of guaranty,then confirms the validity of duration of guaranty without specifiedtime limit. In addition, author holds that Guaranty Duration shouldnot has neither upper limit nor low limit because it is a durationwith which all related parties agreed. At the same time, authoranalyzed the relationship between guaranty duration and theprescription of action of principal debt according to threedifferent situations: duration of guaranty is shorter, equal andlonger than prescription of action.At the end, author demonstrates the interlink between theprescription of action of guaranty contract and the prescription ofaction of principal debt. Conclusions are listed as below:1:whatevergeneral surety ship or joint and several surety ship, thevalidity ofdiscontinuance of the prescription of action of principal debtshould be lower than the validity of prescription of action ofguaranty contract. Based on author's studies on differentcountries'rules in the validity of discontinuance of theprescription of action of principal debt, legislation shouldprescribe any other related forces in validity of discontinuance ofthe prescription of action of principal debt. 2: The prescription ofaction of principal debt should not involve the other related forces;suggest legislation could make proper emendation on this issue. 3:After the expiration of the prescription of action of principal debt,guarantor should demur as the principal debt exceeds theprescription of action when the guaranty relationship is going to bereestablished, and the people's court should not support.