The Effectiveness Of The Borrower's Prepayment

Loan of money consumption means a contract where a party transfers his ownership of money to the other party and the latter returns things of equivalent variety,quality or quantity in exchange.The repayment before repayment dates(hereinafter referred to as “the act”),which means the borrower repays partial or total repayment before the repayment dates as the contract of loan stipulates,arouses extensive controversy in financial and law circles.Financial experts take the act as a noncompliance and they focus their researches on the management of risks and the design of liquidated damages,while law experts share the opposite opinion.The author holds the distinction in the subjects of contracts of loan as a key to the argument.The chapter one of this essay involves the analysis to the act from a perspective of law.The author divides the repayment time into the expiration(the creditor demands)and the fulfillment(the debtor requires).Thus,the act can also be divided into the repayment before the expiration and the one before the fulfillment.The legal reviews of these two kinds are different.The chapter two discusses the permissibility and the characteristics of the act in contracts of loan featured by fixed date and interests.The author summarizes comprehensions about relevant domestic regulations of the act by method of comparative study and goes into the rights of the act in Germany,Taiwan and Japan.The author also expounds the relationship among the Article 208,the Article 71 of our Contract Law and the Article 32 of Judicial Interpretation of Private Lending.The Article 208 of Contract Law should be understood as ”the rights of borrowers' acts given by legislators should be limited or reduced in effectiveness on the basis of different subject of contracts of loan for judgement”.In the situation that the party reaches an agreement on the act,the extent of effectiveness should be expounded by distinguishing standard terms and non-standard terms.When defined as the termination at will exercisLoan of money consumption means a contract where a party transfers his ownership of money to the other party and the latter returns things of equivalent variety,quality or quantity in exchange.The repayment before repayment dates(hereinafter referred to as “the act”),which means the borrower repays partial or total repayment before the repayment dates as the contract of loan stipulates,arouses extensive controversy in financial and law circles.Financial experts take the act as a noncompliance and they focus their researches on the management of risks and the design of liquidated damages,while law experts share the opposite opinion.The author holds the distinction in the subjects of contracts of loan as a key to the argument.The chapter two discusses the permissibility and the characteristics of the act in contracts of loan featured by fixed date and interests.The author summarizes comprehensions about relevant domestic regulations of the act by method of comparative study and goes into the rights of the act in Germany,Taiwan and Japan.The author also expounds the relationship among the Article 208,the Article 71 of our Contract Law and the Article 32 of Judicial Interpretation of Private Lending.The Article 208 of Contract Law should be understood as ”the rights of borrowers' acts given by legislators should be limited or reduced in effectiveness on the basis of different subject of contracts of loan for judgement ”.In the situation that the party reaches an agreement on the act,the extent of effectiveness should be expounded bydistinguishing standard terms and non-standard terms.When defined as the termination at will exercised in no needs of established condition in continuous contract,the act is contractual,otherwise in default.In chapter three,the author analyzes the extent of legal effect based on whether the act has some stipulation.The application of punitive liquidated damages should be excluded in the condition that the party has stipulated the liquidated damages with standard terms,for we take it as compensatory damages.The clause is invalid when the liquidated damages stipulated are not equal to the real damage or have been stipulated as punitive liquidated damages.If the party has stipulated the liquidated damages by means of negotiation,the author holds the view that the liquidated damages are inapplicable to nature person.The reduction of liquidated damages should be taken into account when they are too high.In the condition that the act happens and no stipulation of the act has been made,the right of termination at will counts.If the borrower owns the right,compensatory damages should be paid;if not,the borrower should take charge of the compensatory damages,and the calculation method should obey the benefits rule.