The Legal Effect Of The Twice Assignment Of Creditor’s Rights

Assignment of the creditor’s rights signifies the transference of creditor’s rights among different parties based on the premise of maintaining the identity of the creditor’s right. As the name supplies, the twice assignment of creditor’s rights is defined as that after the first transference of creditor’s right, the creditor transfers his rights twice in the same way of contract. The Articles 79 to 83 of the Contract Law of People’s Republic of China(Contact Law for short) show the system of the assignment of the creditor’s rights. However, the five rules are so simple that the judges are always facing the pressure of explaining them, especially in the situation of twice assignment of the creditor’s rights. So this passage starts out from the judicial case, and tries to discuss the questions as below: the priority rules between the two assignees; and how to protect the rights of debtor, who is just involved in the case unwillingly.This passage can be divided into three parts.The first part states the conception and legal constitution of the assignment of creditor’s rights. Firstly, it begins with the judicial case and presents the main questions: when the assignment of creditor’s rights goes into effect; how to decide the priority rules between two assignees, which means what is the requirement of validity of the assignment to the third parties except the debtor; if the assignee obtains the payment without the priority right, whether he can maintain it or not. Secondly, this 2 passage restricted the research object into the assignment of creditor’s rights on the agreement of the parties. Meanwhile, the object is limited to the general creditor’s rights, because the assignment of securities creditor’s rights follows some particular rules. Thirdly, the last of the first part is about the historical evolution of the system of priority rules in case of the twice assignment of creditor’s rights in China.The second part discusses the establishment of the priority rules in the situation of the twice assignment of creditor’s rights, which is the hard core. Firstly, the necessity is based on that the clear priority rules benefit the optimization of the credit market structure, and the widening of financing channels to vulnerable groups like small and medium-sized enterprises. Secondly, by means of comparative law method, this passage investigates the three main legislation models and their logic about the priority rules, which are Notice Priority Model, Time Priority Model and Register Priority Model. Thirdly, Section Three of this part discusses the appropriate priority rules of assignment of creditor’s rights in China, and the discussion starts from four angles of the legal nature of the assignment of creditor’s rights, historical interpretation, the interpretation of current law and judicial practice, and the analysis of advantages and disadvantages. And eventually, it comes to the conclusion that we should adopt the Time Priority Model in China.The third part demonstrates the protection of the debtors. Since the creditor’s rights are relative, and the assignment comes into effect just as the consequence of the agreement between the assignor and assignee. Especially in the situation of twice assignment of creditor’s rights according to the Time Priority Model, the debtor does not know the condition generally, so that it is necessary to set rules to protect them. Firstly, it is generally said that the way of protection is the notice of assignment of the creditor’s rights, and the Article 80 of Contract Law agreed. The first section of Part Three states the notice in details, including the legal nature, the subject, the counterpart, the consequence and the alternative forms. Meanwhile, there are different viewpoints in whether to take the debtor’s subjective state into account, and Notification and acknowledgement are found in legislations. After the study of comparative law and interpretation of current law, I found that the appropriate way is Notification due to its high objectivity and certainty. The second section of Part Three discusses the four different conditions of assignment of creditor’s rights on the basis of notice, which are conditions that notice the first assignment only, notice the second assignment only, notice neither of the two assignments, and notice the both assignments. In the meantime, unjust enrichment is generated in the last three situations. This part analyses the afterwards handling process, according to the system of unjust enrichment, in order to recover to the normal state.In conclusion, aiming at the lack of rules about the twice assignments of creditor’s right and the requirement of juridical practice, I concluded that the Time Priority Model is appropriate rules in China, and the notice of assignment is the requirement of validity only for the debtor. And as to the payment to the second assignee, it will be adjusted by the unjust enrichment system.