A Study On The Legal Issues Of Pledge Of Accounts Receivable

Article 228 of the Property Law of the People's Republic of China stipulates the system of pledge of accounts receivable,but there are many inadequacies in it.Many of the problems in the system of accounts receivable in our country are controversial.Based on the legal theory of our country,this paper puts forward its own suggestions on the basis of foreign advanced experience,hoping to perfect the system of pledge of accounts receivable in our country.This paper consists of five parts.In the first part,the author introduces the basic theory of accounts receivable system.The connotation of accounts receivable and the interpretation of the functions of it,and the analysis of related systems are discussed in detail.Accounts receivable has served as an accounting concept in practice before the promulgation of the Property Law."Property Law" defines the system of pledge of accounts receivable from the legal level;however,its meaning is not explained.Accounts receivable has a broader meaning in the United States and other developed countries,it refers to the secured debtor enjoys the rights to claim to the third person or due money obligatory right to a third person(the right might be based on the contract or beyond the contract).Legists have a great controversy on whether the right of charge belongs to accounts receivable.The author believes that the right of charge and accounts receivable is essentially different and they should be regulated independently,although China's lawmaker considers the charging right belongs to accounts receivable.The author also discusses the characteristics and classification of accounts receivable,make comparisons between accounts receivable pledge and its relevant system.In the second part,the author analyses the case of a bank in Laiwu v.Company Jinchengxinglong,which demonstrates typical problems in China's accounts receivable pledge system.For example,whether the third debtor should be informed,or whether it is valid that the debtor pays to the pledgor in advance without the consent of the pledgee,and the registration effect of the accounts receivable.The author also discusses a few problems not involved in the case but is common to see in judicial practice so as to have a better understanding about the system of pledge of accounts receivable.In the third part,the author discusses the effect of pledge of accounts receivable on the pledgor,pledgee and the third debtor,and puts forward his own views on the scope of the secured claims.In the fourth part,the author makes a more detailed discussion about the system of pledge of accounts receivable.The author analyses the inadequacies of the registration system,for instance,the registration authority only does the formal examination,the pledgee bears too many obligations,and the registration period is unreasonable and so on.The author also puts forward his own feasible solution.For example,the registration authority should strengthen its review,determine a reasonable period of pledge registration and make it equal of rights and obligations to the parties.In addition,this article proposes its own recommendations on the establishment of a sound social credit system.In the fifth part,the author discusses ways to ensure the pledgees' right.First of all,the debtor shall be informed.Second,the pledgee shall have a direct right to charge,for it can save costs and improve efficiency.Third,this paper discusses the exercise of charging right by establishing regulatory accounts and other measures.In addition,the author explains how to deal with the problem of different redemption period between principal claims and accounts receivable and conflict rules between accounts receivable pledge and other rights.Finally,the paper stresses the importance of strengthening banks' pre-loan review and post-mortem supervision in ensure pledge.