The Legal Effect Of Inter-Enterprise Credit

Inter-enterprise credit refers to the mutual credit behavior among non-financial enterprises or other non-legal person organizations. At present, China’s laws and regulations have not explicit provisions on the validity of inter-enterprise credit. Forbidding inter-enterprise credit has been no longer able to meet the need of economic and social development. It is urgent to accelerate the relevant legislation and modify the non-conforming laws, regulations and judicial interpretations, and to conditionally affirm the validity of inter-enterprise credit.The paper is comprised of four parts:part1defines inter-enterprise credit and makes the overview of it. Nowadays, China’s inter-enterprise credit market scale has been going through unprecedented rapid growth. Different with private credit, small loan company credit and enterprise credit, inter-enterprise credit is featured with temporality, convenience, reliability, unbalancedness, and elusiveness, etc.Part2states the awkward attitude of China’s legislation and judiciary towards the validity of inter-enterprise credit. At present, China’s laws and regulations have not explicit provisions on the validity of inter-enterprise credit, but the current policies and relevant legislations have not entirely negated its efficacy. It can no longer meet the economic and social needs to prohibit inter-enterprise credit, and the original judicial interpretations lack legal foundations. In respect of the validity recognition and responsibility undertaking issues of inter-enterprise credit, local courts have different practices. This forms the awkward situation in respect of legislation and judiciary on inter-enterprise credit. It is the product of the planned economy age to prohibit inter-enterprise credit, and in the context of varied economic environment, the relevant legislations have not entirely kept pace with the times.Part3gives the theoretical basis and realistic foundation for the effectiveness of inter-enterprise credit. The Principle of autonomy of will, real right theory, enterprise autonomous right theory, and market competition theory are the theoretical basis of inter-enterprise credit. Moreover, there is also realistic foundation for the identification of the effectiveness of inter-enterprise credit. Under the ban, inter-enterprise credit conducts have not decreased but increased, causing increasingly emerged phenomena evading the forbidding regulations. The sweeping approach has caused high absence rate and frequent occurrence of contradictions. By explicitly stipulating the effective conditions of relevant contracts, it is helpful for unifying the judging standards, since forbidding inter-enterprise credit is not the fundamental method for guaranteeing the financial order.Part4gives the thinking and suggestions on the legal force legislation in respect of inter-enterprise credit. Based on its national conditions, China shall take foreign experience for reference, and conditionally admit the validity of inter-enterprise credit. When completing relevant legislation on inter-enterprise credit,China shall adhere to the constitutional discipline, principle of rule of law, doctrine of democracy, and scientific principle, and clear up and modify the original relevant laws, regulations and judicial interpretations. It is recommended to formulate and issue the Regulations on Lenders, so as to define the effective conditions for inter-enterprise credit, or the specific conditions for the effectiveness of inter-enterprise credit involved contracts through formulating new judicial interpretations. When identifying the validity of inter-enterprise credit involved contracts, the validity of the contracts shall be taken as the principle, and the invalidity shall be taken as the exception.