Analysis Of Legal Issues In Secured Sales Contracts

In recent years, a new form of guarantee which exists in China’s judicial practice is providing guarantee for a loan contract by a sale contract. Specifically, if the debtor repay on schedule, the two sides will not perform the sale contract, however, if the debtor fails to repay on schedule, the two sides need to fulfill the sale contract. The seller, also the borrower need transfers title to the subject matter to the buyer. To correctly identify the nature of this type of contract, and determining the rights and obligations between the parties, is the key to solve related disputes. Analyzing the legal issues related to this new form contract and the legal relationship between the parties under the contract, we could broaden the financing channel of enterprises and provide better service for China’s economic development. The nature of the sale contract is a forming atypical security interest. The causes of this new security interest is the specific economic conditions and the legal background in our country. This atypical security interest is different from the alienation guarantee, is not in violation of the Numerus Clausus Principle and is not Conspire Hypocritical Act. Therefore, we should admit the untypical security interests between the contract parties.