On The Legal System Of Maximum Hypothecation

Maximum amount hypothec is a legal system that the persons related signing a contract to guarantee the unspecific credit rights based on a continuous relationship in a time, with the worth of the guaranty. As a special kind of mortgage, the Maximum amount hypothec meets the need of economic activities and makes up the insufficiency of ordinary mortgages. Therefore, it facilitates convenient and on-time interactions for long-term and continuous business activities.The civil laws of Germany, France, Switzerland, Japan, Korea and Taiwan have regulations on maximum amount hypothec, which implement effectively and deserve popularizing. There are also regulations about Maximum amount hypothec in Mortgage Law of PRC,however, they are too immature to meet the requirements of practice and seldom applied. The fourth chapter of , which was passed on March 16th, 2007, has regulated the system of Maximum amount hypothec, proposed detail definitions on the meaning, transfer, alteration and confirmation of maximum amount hypothec. This has provided detail legal reference for the practical application of maximum amount hypothec, and should be regarded as an improvement of legislation. However, compared with the legislations of Japan and Germany, is not perfect, and does not involve some basic principles of Maximum amount hypothec.Furthermore, there are many differences between maximum amount hypothec and ordinary mortgage, and the industry and business groups in China lacks practice on this. Therefore, it is of great necessity to study this subject in depth and introduce it to the whole country. Consequently, the birth of this paper has great importance in both of theory and practice.This paper starts from the introduction of the history of maximum amount hypothec, then analyses maximum amount hypothec in a step by step manner in the following three areas: the definition and characters, values and defects, the boundary, alteration and limitation of guaranty credit rights. And based on these analysis, this paper finally proposes some suggestions on improving the maximum amount hypothec system of China.The whole thesis consists of four parts, apart from foreword and conclusion.The first part is a brief statement of the maximum amount hypothec with the definition of the maximum amount hypothec discussed first, and then it introduces the history of maximum amount hypothec and lastly summarizes the characteristics of the maximum amount hypothec. Through analyzing other theories, the author thinks the maximum amount hypothec has dependency, but the dependency is different from general dependency of mortgage because it has special characters in existing, punishment and eliminating aspects, etc.; The special character of maximum amount of hypothec is different from the general mortgage; the maximum amount hypothec must schedule the maximum of creditor's rights limitation; It is essential to carry out final accounts for implementing maximum amount hypothec. The last part explains the social function and the defects of the maximum amount hypothec. The legal system of the maximum amount hypothec has reflected the value orientations of security and efficiency. The maximum amount hypothec can promote the fund to circulate, strengthen the great economic function of the business relation. The maximum amount hypothec is a double-edged sword, which has negative consequence as well, and must be overcome through system design.The second and third sections of this paper are the main part of special focus on the effect of the maximum amount hypothec. These two sections explain three issues: Creditor's rights scope of maximum amount hypothec guarantee; Change of maximum amount hypothec contract terms; Transfer of the maximum amount hypothec. The scope of application of the maximum amount hypothec cannot be limited strictly; it is unable to satisfy the social need, if it is too loose, certainly it will fall into the mire of the maximum amount mortgage. The balance between the loose and the strict should be made. There are too much disputes about transfer of maximum amount hypothec. After explaining the difference between foreign relevant legislations and theories, The author thinks the maximum amount hypothec can be transferred, but it should follow certain rule.Part Four is on the perfection of the maximum amount hypothec system of PRC. There must be correct guidelines on establishing and perfecting the maximum amount hypothec system; this is a prerequisite of setting up the rational system. While establishing and perfecting the maximum amount hypothec system, the efficiency must be regarded as the primary value orientation of the maximum amount hypothec; the balance of right must be noticed, not only the pledge's interests, but also the interests of mortgagors and other interested parties should be protected. This paper proposed following detail suggestions on perfecting maximum amount hypothec: first, confirming mortgage contract terms of maximum amount must include assuring the scope of creditor's rights, such as maximum amount, etc., and it must register; the scope of application of the maximum amount mortgage should be adopted to generally limitation doctrine; the provision on mortgage change of maximum amount should be increased; the maximum amount hypothec can be punished and the punishment regulation should be made clear; the confirmative system of the maximum amount hypothec, reducing volume, asking right system and asking eliminating right system should be increased.