Study On The Extension Of Defense In Installment Financed By The Third Party

The current legislation of installment transaction in China only stipulates the traditional installment transaction,but does not have the explicit stipulation of the installment financed by the third party.Some extraterritorial countries with developed consumer credit have established the linking responsibility of the lender through enacting the consumer credit law.On the other word,consumers can refuse to repay the loan based on the defenses of the sales contract.In recent years,some scholars in China have argued that the linking relationship among the sales contract and the loan contract should be clearly defined in the installment financed by the third party and consumers is empowered to extend their defenses.In view of this,for the purpose of discussing the extending institution of defense in the installment financed by the third party,this paper is divided into six parts.First part,the concept of the installment financed by the third party is defined by reading these key words,such as "the third party" and "installment ".In the installment transaction financed by the third party,financial institutions have replaced consumers to pay for the sales contract when the credit grantee is in charged by a third financial institution,and consumers repay the loan to financial institutions by stages finally.Second part is about analyzing the case of credit card transactions and mortgage purchase transactions combined with the current situation of China's legislation and judicature.It has concluded that the current legislation is so ambiguous about the legal relation of credit consumption that consumers are not adequately protected.Third part has determined the nature of the legal relationship between the sales contract and the loan contract.There are many opinions about the relationship between these two contracts,such as independent contracts,accessory contracts,simultaneous contracts,linked contracts,etc.The sales contract and the loan contract are linked contracts.The fourth part is about elaborating the constitutive elements of the linked contracts and the legitimacy of the breakthrough of the principle of relativity of contract.There are three constitutive elements: first,both the sales contract and the loan contract are consumer contracts;second,the purpose of the loan contract is to finance the sales contracts;third,the sales contract and the loan contract objectively have economic unity.And there are three reasons about the breakthrough of relativity of contract:first,protecting vulnerable consumers;second,balancing the interests and risks among the three parties,such asconsumers,operators,lenders;third,saving social costs.The fifth part is about the important documents and legal effect of the extension of defense under linked contract.There are four elements:the first is that the sales contract and the loan contract are linked contract;the second is that the consumer have defensed to the operators because of the sales contract;the third is that the consumer failed to fulfill the defense to the operator;the last one is that the defense should be limited to the predictable range of lender when he signs the contract.The legal effect includes three aspects:first,the consumer could refuse the repayment claim given by lender within the limits of the part of what the consumer can refuse to the operator;second,in principle,the consumer may not request repayment of the loan and interest.that the consumer have paid to lender;third,it is invalid if you set the defense clause which is can be cut in advance.The sixth part is about giving some advice on the protection of credit consumers,specifically including these two parts: first,to clear the linking relation between the sales contract and the loan contract in the installment financed by the third party;second,to lead in the mechanism of the extension institution of defense in the installment financed by the third party.