Study On Effect Of The Fluidity Clause

Fluidity clause originates from Roman Law, develops with the development of Real Rights for Security. There is a big difference between the Continental Law and the Common Law .Our country's Property Law prohibit the fluidity clause totally. Traditionally, the reasons for the prohibition of the fluidity clause are mainly lie in preventing creditor from making use of the fluidity clause to seek inordinate benefit; protecting the benefit of the guarantor and his other creditor. Indeed, the prohibition of fluidity clause, at the socio-economic conditions, has played a positive role to protect the interest of the debtor. However,now the reasons for the prohibition of fluidity clause show simply and lack of persuasion. Through studying the history of fluidity clause and analyzing fluidity clause and its tendency in the Continental Law and The Common Law, and criticizing the traditional reasons for the prohibition of the liquidity clause, the author provides that our country should admit effect of liquidity clause.Based on the foreign legislation mode, the author also provides some suggestions of legislation on adopting the non-interference legislation, while in order to exert security and financing functions of fluidity clause, the author proposes four details to perfect the relevant systems.Totally this paper consists of five parts.The first part overviews fluidity clause.the concept, features and functions of fluidity clause were introduced. Though comparing the different titles and different concepts of fluidity clause, the author believes that fluidity clause can be adopted, because of tradition and concision. The most important characteristics of fluidity clause lie in that the parties have agreed the ownership of the guarantee, before the expiration. The prohibition of fluidity clause, at that time, can prevent inordinate benefit. However, the fluidity clause will protect the benefit of the creditor and debtor better.The second part introduces the provision of fluidity clause in the Roman Law and other countries after that, includes the Roman Law, the Germanic Law and the Continental Law and the common Law. The author believes before Constance fluidity clause was not prohibited and in all the three terms of real rights for security in the Germanic Law contained fluidity clause. The Continental law countries adopt prohibitive legislation and non-interference legislation. According to the different scope of prohibitive legislation, its includes totally prohibitive legislation and partially prohibitive legislation, and which have civil and the other commercial. The Common Law countries adopt permissive legislation. But no matter the totally or partially prohibition legislation, scholars write paper to claim the acknowledgement of fluidity clauseThe third part introduces the current station of fluidity clause in our country, its includes the evolution of fluidity clause,the reasons of prohibition of liquidity clause and criticism of such reason. Before the guarantee law, our country admit fluidity clause, but after that prohibition. Fluidity clause is not necessarily harm the interests of the guarantor, and the purpose which to protect the interests of other creditors of the guarantor is not sure, at the same time fluidity clause is not contrary to the terms of the exchange value of Real Rights for Security and can not prevent loss of state assets as the main way.In the fourth part,the necessity to admit the fluidity clause are discussed. The permission of fluidity clause can embody the value of autonomy which is the spirit of the Civil law; safeguard the interests of creditors and guarantors better; expand the means of security, provide the debtor a new channel of financing to strengthen the protection of the interests of the debtor, and fluidity clause is also in line with the provisions of our country's legal tradition and tendency of Real Rights for Security. Therefore, our country should admit the fluidity clause.The fifth part firstly indicates the current inadequacies in our country and proposes that the fluidity clause should be admitted". Then though comparing the foreign legislation mode,the author believes that our country can adopt non-interference legislation and design specific systems, make fluidity clause public ,adopt registration of confrontation, not provide liquidation as mandatory obligation of the creditors; entitle grace period for the debtor.