A Research On The Issues In Ensuirng Application Of Law

As a legal guarantee system, guarantee plays a major role in safeguarding theorder and security of credit market and solving dispute over obligation since theenforcement of Security Law, however, there are still some problems in the process ofpractice, some of which are caused by legal loophole, some are depute over legalinterpretation between guarantee system and regulation, while some areinappropriateness between legislation and guarantee practice. Through judicialinterpretation of Security Law(Judicial Interpretation of the Supreme People’s Courton Some Issues Regarding the Application of Security Law of the People’s Republic ofChina, hereinafter referred to as Interpretation of the Security Law), SupremePeople’s Court has clarified and solved some contradictions, but some importantissues in the process of practice, such as the guarantee form, beneficium excussionisof guarantee, guarantee and limitation of action, legality and binding force ofguarantee, still need to be further understood and discussed, aiming to clearly defineand guarantee the applicability of laws and regulations, solve the depute over lawsand its judicial interpretation, draw some practical experiences of judgment andimprove guarantee regulations.Four questions are discussed in this paper and thus the thesis can be divided intofour parts.The first question is about the item character of Guaranty Contract.The issue discussed in this part is the qualifications required for theestablishment of Guaranty Contract, and the most basic and substantial constitutiverequirements required for the establishment of Guaranty Contract is responded bysome representative cases in the process of practice, that is how to confirm thevalidity of signature signed on the payment reminders by the guarantor after theexpiration during guaranty period. It is thought that as a guarantee system, GuarantyContract is a special type of civil contract and thus the basic principle of autonomy ofwill as the contractual obligation and the abundant proof required for the guarantor’s clear guarantee expression to ensure the existence of guarantee relationship and theinapplicability of implied presumption are both needed to be adhered to with thepurpose of strengthening the seriousness of guarantee and balance the relationshipbetween oblige and obligor along with guarantor. Therefore the written form offormality of the contract should be reviewed carefully on whether the guaranteeexpression of signatory can be fully proved.The second question focuses on the beneficium excussionis in guarantee.This part discusses the identification of beneficium excussionis of normalguaranty assurance responsibility method and grasps and understands the substantialcomposition of beneficium excussionis by analyzing legal characters of normalguaranty; in addition, practical identification problems relating to beneficiumexcussionis in the process of practice can be mastered and handled better by theanalysis of the three cases of the extinction of beneficium excussionis regulated in theSecurity Law.It is thought that there are some contract promises with the difficulties ofasserting whether it is a normal guaranty responsibility in the process of practice, andit should be judged from the following aspects:(1)An agreement should be reacheddirectly that the guarantor needs to undertake the normal guaranty responsibility;(2)An agreement should be reached that the guarantor needs to undertake theresponsibility of indemnification;(3) An agreement should be reached that theguarantor is the obligor second in order or the guarantor should undertake the liabilityfor satisfaction second in order;(4) An agreement should be reached that theguarantor is entitled to the right regulated in the Paragraph2of Article17of theSecurity Law. Particular attention should be paid to the fact that for the limitation ofthe obligor not to be able to fulfill obligation,“after the enforcement on the propertyof the obligor, the obligation still can not be fulfilled completely” should beinterpreted as “after the legal enforcement on the property of the obligor, no actualresult is obtained”,“no convenient and executable property”, and after theenforcement, no realistic disposable interest exists.In the three cases of extinction of beneficium excussionis, particular attentionshould be paid to the case in the process of practice that the beneficium excussionis is renounced by the guarantor in written form, if the renouncement is established, thenthere should be the aforehand specific agreement of beneficium excussionis.Moreover, the beneficium excussionis is considered as being renounced if therenouncement is not in written form even if the guarantor has undertook the guaranteeresponsibility in the guarantee practice.The third question is about the limitation of action of Guaranty Contract.The issues discussed in this part are the limitation of action of normal GuarantyContract, the relationship between guaranty period and limitation of action period andthe incompatible problems between limitation of action and guaranty period.As for the commence of guarantee’s limitation of action, there are interpretationand explanation for the cases that the interruption of guarantee debt’s limitation ofaction is meaningless due to the interruption of principal debt’s limitation of actionwhile in the process of practice, it is regulated that the interruption of guarantee debt’slimitation of action and that of principal debt happen at the same time based on thedate of validity of judgment or arbitral awards as the commence of GuarantyContract’s limitation of action.As for the relationship between guaranty period and limitation of action, theproperty of guaranty period is primarily illustrated, that is the guaranty period ofnormal guaranty is neither limitation of action nor absolute scheduled period, but aliability exemption period that is only applicable for a special right of Security Law,which can be regarded as an independent period type different from scheduled periodand limitation of action. The property of guaranty period is clarified after the analysisand comparison of the similarities and differences between limitation of action andguaranty period.Aiming at the incompatibility of limitation of action and guaranty period and theconflict between them, it is pointed out that there is conflict between Article25ofSecurity Law and Paragraph1of Article34of Judicial Interpretation of Security Law.The regulation of Paragraph1of Article34in Judicial Interpretation of Security Lawis not to the benefit of the guarantor, and can prolong the duration of the guarantor forguaranty liability and also can change the nature of eliminating right of oblige. Hence,the legislation intent of Article25in Security Law should be obeyed to adjudicate in practice.The fourth question is about the relation between guaranty and untypicalguarantee.Aiming at the guaranty styles that have with guaranty including transferringguarantee, proprietary rights retention and repurchase, it is thought that legal doctrineof guaranty style means that the guaranty style is legal, the party can only select theguaranty style among the legal guaranty styles instead of creating a new guarantystyle and obey the regulations of Security Law on the contents of guaranty style. Inother word, the party can only select the guaranty style among the legal guarantystyles and obey mandatory provisions of Security Law on specific guaranty style andalso the created real rights for guarantee through convention is not allowed.The untypical guarantee including transferring guarantee, proprietary rightsretention and repurchase corresponds to statutory guarantee. Although they haveguarantee significance from different aspects, the article that has guaranteesignificance is the main content of the contract instead of independent contract oraccessory contract. Besides, its constitutive requirements does not confirm to theconstitutive requirements of the related guaranty style regulated by Security Law.Hence, untypical guarantee should not be considered as guaranty. The party can agreeon the guaranty style besides the legal guaranty style according to the agreement andsuch guaranty style can be adjusted according to Security Law. It means that it shouldbe effective as long as it does not against the mandatory and prohibitive requirementsin law and administrative regulation and it is only not applicable for Security Law. Inother word, the agreed guaranty style of the party besides legal guaranty style isadjusted by the Contract Law and applicable to the principles of Contract Law. In thisway, the problem for selecting the applicable law when the guaranty agreed on by theparty is not clear can be solved.