On The Pledge Of Accounts Receivable System

The Property Law of the People's Republic of China (hereinafter refereed to as The Property Law) promulgated at 2007 sets the rules of pledge of accounts receivable and legalizes the pledge of accounts receivable. On the basis of the rules of pledge of accounts receivable, this Article introduces the whole system of pledge of accounts receivable of China through concept, necessity of establishment and legal relationships, and sets forth the author's opinions on the legal risks and preventive measures while commercial banks dealing with the accounts receivable pledge business.Chapter One is the introduction of the pledge of accounts receivable. In Section One of this Chapter, the author firstly explains the concept of accounts receivable according to accounting definition and domestic and foreign laws, and defines the accounts receivable to be a kind of due or undue unsecuritized monetary creditor's right mainly derived from civil activities such as sales, rental and service, or other civil behaviors or de facto behaviors like infringement, negotiorum gestio, unjust enrichment, which creditors are entitled to claim from debtors, and then analyzes the characteristics of accounts receivable based on the concept. In Section Two of this Chapter, the author firstly interprets the concept of pledge of accounts receivable. The pledge of accounts receivable means the creditor financing by means of pledging its accounts receivable from the debtor to a bank or other financial institution. Afterward, the author analyzes the characteristics of pledge of accounts receivable based on the concept. In Chapter Two, the author compares the system of pledge of accounts receivable with other relevant systems such as the system of transfer of accounts receivable and the system of pledge of toll right. In Section One of this Chapter, by comparasion of the pledge of accounts receivable and the transfer of accounts receivable, the author clarifies that the system of pledge of accounts receivable is independent and shall not be confused with the transfer of accounts receivable. In Section Two of this Chapter, the author compares the pledge of accounts receivable with the pledge of toll right, and then concludes that the above two are totally different. The object of the pledge of toll right shall be the business right, while the object of the pledge of accounts receivable is the creditor's right, therefore, the pledge of toll right shall not be brought into the pledge of accounts receivable and shall be stipulated by law separately.The author emphasizes the necessity and importance of establishing the system of pledge of accounts receivable in China in Chapter Three. Notwithstanding the Property Law's stipulation of the pledge of accounts receivable, the rules in the Property Law are too general and rough, and as a new system, the practice is also immature and imperfect. Therefore, it is still necessary to explain the necessity and importance of establishing the system of pledge of accounts receivable in order to further promote the enterprises, banks and the public's understanding of the system, and make the financial function of the system into full play.In Chapter Four of this Article, the author discusses the legal relationships of the pledge of accounts receivable. Based on the civil law perspective, first of all, the author introduces the background knowledge of concept and characteristics of juristic act, then makes a comprehensive analysis of the establishment, taking effect, effectiveness and implementation of the legal relationship of the pledge of accounts receivable, including the establishment essentials, effective essentials, the respective rights and obligations of pledgee, pledgor, and the third debtor, especially clarifies the implementation of the right of pledge of accounts receivable which lacks of specific prescriptions in law and is hard to carry on. Among which, the author also introduces the Measures for the Registration of the Pledge of Accounts Receivable promulgated by the People's Bank of China. Readers by this Chapter may get their comprehensive ideas and understandings on the legal relationships of pledge of accounts receivable.The author discuses the legal risks that commercial banks may encounter while implementing the business of accounts receivable pledge and the preventive measures they may adopt in Chapter Five. The pledge of accounts receivable is a financing means and the commercial banks are the main player in such business, as a result of which the legal risks are mainly existed in the commercial banks. As an employee of the commercial bank, the author put forward his opinion on the legal risks and preventative measures of the accounts receivable pledge so that provide a guideline to commercial banks.