A Comparative Study Of Surety Rights Protection Between US And China - In The View Of Construction Surety Bond

The development of the construction surety bond in China is characterized by problems related to an insufficient legal basis and misunderstanding of the basic value of construction surety bonds. A prominent manifestation of this is a lack of rules for the protection of construction surety rights. Construction surety bond policy in our country was transplanted from America, where it played an indispensable role in construction area with a well-established surety rights protection system. Thus it is necessary to undertake a comprehensive analysis of the two countries‘ construction surety rights protection rules. By using diversified methods of normative analysis, risk analysis, comparative law analysis and case studies, this paper explores the shortcomings of our surety rights protection rules, in comparison to American rules, so as to identify those which can be drawn on as models.In order to systematically analyze the surety rights protection rules of this country and to find deficiencies, this paper initially constructs a comparison grid for laws and regulations, using a risk analysis method. We categorized the surety risks required to be controlled by legal rules into four groups. These are: risks from creditors(RC), risks from debtors(RD), risks from stakeholders(RS), and risks from special guarantee(RG). These are further subdivided into sixteen risk conditions by using legal control theory and qualitative methods. Then, based on the comparison grid the paper firstly studies the domestic surety protection rules by judging the controlling situations of corresponding risk situations, whose assessment criteria are divided into "controlled", "uncontrolled", "incompletelycontrolled". The uncontrolled and incompletely controlled risks in our county mainly consist of creditor‘s behavior risk, debtor‘s failure risk, debtor‘s anticipatory breach risk, unrealized collateral risk and so forth. On account of those "uncontrolled", "incomplete controlled" risk, we looked into relevant American legal and contractual control rules, making comparisons and obtaining a comparison graphic of the two countries‘ surety protection rules so that we were able to tentatively propose those rules which can be drawn on as models. These are creditor‘s duty of care, secondary obligation of surety, preliminary remedy of surety, subrogation right of surety, generalized collateral, general indemnity agreement, and so on.Based on in-depth examination of the subjective differences in the development conditions of the construction surety bond of the two countries in consideration of law transplant theory, we discussed the feasibility of the referential rules by virtual case studies and cost-benefit analysis. Finally, we arrived at six recommendations for improvements. These are: 1) To gradually build suitable law transplant conditions; 2) To integrate creditor-debtor surety relationships; 3) To regulate general and specified duty of care for creditor; 4) To realize the effect of exoneration and quia timet; 5) To entitle surety‘s subrogation right; and 6) To implement general indemnity agreement.The paper creatively examines surety risk from the angle of legal control as a law comparison grid, on the basis of which the differences of two counties‘ legal control rules were discussed. In order to find the referential rules, the paper also analyzed the effective contractual rules. In the view of feasible analysis, applicable recommendations were offered.