On The Nature And Effectiveness Of The Sale And Purchase Guarantee

A new form of guarantee which currently exists in China's judicial practice is providing guarantee for a loan contract by a sale contract. There are different ways of sale guarantee, but it has a covenant clause, that is, the debtor repays the loan, the sale contract is no longer fulfilled, but if he fails to repay the loan on time, debtor should perform the sale contract. Article 24 of [2015] No. 18 judicial interpretation shows that the sale guarantee should be based on the establishment of the sale contract. The proper construction of the sale guarantee requires the court to take the intent of the parties, the objective situation of the case, and the corpus of Chinese civil laws and regulations into consider. The judges generally determine from violating the law of the market in the face of price, and lacking invoices of the of the sale and purchase of the house, violating the purpose of simple sale contract, the payment of interest payments and other aspects.Determining the nature of the sale guarantee is part of the scope of contract interpretation, in view of the existence of a number of interpretation ways, there are common (after-) alienation guarantee, the mortgage concerning the properties in the future, Datio in solutum. This thesis argues that parties conclude a sales contract which has the function of creating guarantee purpose. Alienation guarantee and after-alienation guarantee and so on which are atypical real rights of guarantee are all theoretic concepts should not be determined in the trial practice of the legal relationship of sale contract guaranteeing private loan contract. We are able to use obligation systems to create the effect of guarantee. The sale contract has the function of guarantee due to its price fluctuation.Sale guarantee is not a false declaration of intention. From the point of constitutive requirements, sale guarantee should not be regarded as void merely because of the ratio of the Lex commissoria, the balance of the interests of parties and the relevant commercial practices. From the point of the legislative purpose, sale guarantee cannot be invalid on account of evading action. Courts should avoid improper intervention in contract autonomy, at the same time prevent parties from using the sale guarantee.Therefore, under the precondition of Article 24, the dispute must be heard because private loan contract is only a technical settlement that is to make the trial procedure simple when the contract could exist as valid. otherwise it will violate the meaning of principle of autonomy of will. If the debtor fails to perform the private loan contract and the sale contract, the creditor will own the performance option for the debtor's double defaults.