On The Reform Of The Real Transaction Background Principle In The Law Of Negotiable Instruments

The Law Of Negotiable instruments of People's Republic Of China which has come into force in January 1st 1996 is the first law of negotiable instruments since the establishment of PRC, and also a very controversial law. The 10th article of this law about the real transaction background of negotiable instruments is one of the most controversial points. According to this article, the issuing, acceptance and transference of negotiable instruments should comply with the principle of authenticity & creditability and be based on real transaction & debt payment. Through the link between negotiable instruments and real transaction, the negotiable instruments relations and real economic relations are closely connected. These kinds of connection are obviously a violation of principle of abstractness which is considered as the basis of the traditional theory of negotiable instruments and the principle of real transaction background should be abolished because of this. However, the principle of real transaction background and the system of transaction background investigation established according to it have their own theoretical and practical foundation. The principle of real transaction background has its special advantages in controlling credit expansion through negotiable instruments channels and preventing excessive money supply. A group of scholars who start their research from the view points of financial law and finance insist on the preserving of the principle of real transaction background because of these advantages. It is the disputes and differences between those two perspectives that become the theoretical background of this essay.The first Chapter of this essay start its analysis from defining the principle of real transaction background in the law of negotiable instruments, and make an intensive study on the history and norm system of the principle. Chapter II of the essay focused on the defects of the principle of real transaction background and the disputes triggered by it. On the basis of the previous chapter, chapter III and IV discuss the principle from both theoretical and practical levels. On theoretical level, chapter III of this essay analyzes several topics about the principle of real transaction background, including its status, theoretical basis, legislative targets and its relation with the principle of abstractness in the law of negotiable instruments. On the practical level, chapter IV analyzes the necessity and feasibility of the principle of real transaction background and the transaction background investigation system base on it.Based on the research conclusions from the previous chapters, the last chapter make basic conclusion of this essay as follow: As a legal principle with Chinese characteristics, the real transaction background principle of negotiable instruments arose and developed in special time period and financial environment of China's reform and opening up. The principle had its own legislative target about keeping the stability and safety of the financial system which were reasonable and necessary. But the principle of real transaction background and the transaction background investigation system base on it are not the best method to achieve their legislative purpose because of their serious defects in both theoretical and practical levels. According to this, the principle of real transaction background should be abolished and deleted from the law of negotiable instruments. However, the abolishment of the principle of real transaction background is only a system reform which does not mean that the legislative target and value judgment of the principle should be give up. On the contrary, any change of the principle of real transaction background should be based on the reform of the legal system of financial regulation and macro-control which could effectively controls credit expansion through negotiable instruments channels and prevents excessive money supply.The legislation suggestion consists of the ending part of this essay. The legislation suggestion part attaches great importance on the reform of law of financial regulation and macro-control. The core contents of this part are several reforming actions aimed at both the stability of financial system and the abolishment of the principle of the real transaction background. These actions include: the reforming of the negotiable instruments related legal system of financial regulation and macro-control, the establishment of the new system of negotiable instrument related financial regulatory standards, the introduction of modern financial negotiable instrument related financial regulatory and macro-control technologies. Only under the conditions that the financial stability is assured and the credit expanse through the channel of negotiable instruments is reasonably controlled, the abolishment of the principle of the real transaction background and the actualization of the principle of abstractness could become reality in the legislation of the law of negotiable instruments.