On The Judicial Determination Of The Establishment And Validity Of The Debt Contract With Property

Payment-in-kind which means use of other payment instead of the original payment is commonly seen in our daily life and judicial practice in China.Current legislation fails to specify payment-in-kind.Though having radically different characteriistics,the time and circumstances of the occurrence thereof have made such payment-in-kind similar to the fluidity contract,the transfer of guarantee,datio in solutum,the change of debts and the agreement on new debt repayment.Therefore,it is complicated to make a distinction between those terms and the application of law thereof in judicial practice.The guidance cases and bulletin cases issued by,and typical cases judged by the supreme people's court manifest that its examination and confirmation of the payment-in-kind become much looser and clearer.At first,most of the payments-in-kinds were caused by repayments of loans and settlements of construction funds.In the case that the two parties had the legal relationship of the previous creditor's rights and debts,the supreme people's court normally considered the payment-in-kind as the fluidity contract or the transfer of guarantee and directly denied legal effect thereof.In recent years,the supreme people's court has gradually recognized the difference between the payment-in-kind and related concepts,and has abandoned the idea of unilaterally considering the payment-in-kind contract invalid.Instead,the court tends to think that whether valid or not depends on the time of the contract,i.e.,such contract is considered valid after,and invalid before the expiration of the performance period.Moreover,some scholars have also proposed that the payment-in-kind contracts can be divided into different categories,such as fluidity contracts,the transfers of guarantee,agreements on new debt repayment,and other applicable contracts,thus to judge the case.Although the supreme people's court and some scholars tend to classify the type of payments-in-kind,it is quite difficult to unify and standardize the classification in practice due to complex and varied nature of such cases.In the final analysis,although there is no explicit legal provision on the payment-in-kind contract,as an unnamed contract,it shall also be subject to the general provisions of the Chinese Contract Law.The internal logic of the chapter on Effectiveness of the Contract pertaining to the establishment,validity,revocability and invalidity of the contract shall also apply to the payment-in-kind contract.Therefore,the judge may first examine the true meaning of the parties to determine whether the contract is established or not and then confirm the validity of the contract by distinguishing whether it's a consensual or practice contract.After the identification of the validity,the judge may examine whether there is any causes making the contract revocable or invalid.Adopting such an idea to examine payment-in-kind contract can not only avoid the concept distinction for classification,but also make the uniformity of law application operable.Indeed,due to the flaws in the existing legal framework and the limits of trial concept,the people's court still needs to improve and perfect the disposal mode of the payment-in-kind contract With respect to the flaws in the existing legal framework,as judicial authorities,we may first standardize our internal opinions,issue guidance cases according to the new situation.With respect to the question of trial concept,we may first change our traditional views,and then solve the problems via the rational allocation of the burden of proof,the correct guidance of the proceedings,etc.