Study Of The Rule Of Buyer In Ordinary Course Of Business For The Exclusion Of Chattel Mortgages

The civil code era has established the rule of free transfer of mortgages,which has intensified the antagonism between the mortgage and the buyer’s ownership of the mortgage.Although the realisation of the buyer’s rights is directly related to the safety of transactions in the market,the exclusion of chattel mortgages to ensure the realisation of the buyer’s rights is a comprehensive consideration based on the principle of balance of interests.There are three points of demarcation for the exclusion of chattel mortgages that should be clarified: firstly,the buyer is not burdened with an unregistered chattel mortgage;secondly,the buyer is not burdened with a mortgage on a chattel that the mortgagee has authorised to be sold;and thirdly,the buyer is a buyer in the ordinary course of business under the buyer’s rule as set out in Article 404 of the Civil Code.The first two points of demarcation are proper to the subject of this article,which focuses on the rules applicable to the exclusion of chattel mortgages by buyers in the ordinary course of business as established by Article 404 of the Civil Code.In particular,it is necessary to discuss in depth the identification of the "normal business activities" of the seller,the definition of the scope of the buyer,the determination of the subjective good faith of the buyer and the time when the exclusion of the chattel mortgage becomes effective.First of all,the rule of arm’s length buyer and the floating mortgage were born together in the era of property law,but as the arm’s length buyer rule was unbundled from the floating mortgage system in the era of the Civil Code,its scope of application was extended to the general movable mortgage,and the buyer was thus able to fight against a wider range of mortgagees.It is therefore urgent to clarify the conditions under which a purchaser in the ordinary course of business becomes a purchaser in the ordinary course of business and to find a way to protect the rights of the mortgagee who is excluded.Secondly,the identification of arm’s length activities and the ontological conditions of the buyer under the arm’s length buyer rule are relevant to the exclusion of chattel mortgages.The transaction must take place in the ordinary course of the seller’s business activities,and the determination of "ordinary business activities" is not a purely legal issue,but should be combined with the buyer’s reasonable expectations to determine whether the subject matter of the transaction falls within the seller’s "business scope as clearly stated in the business licence" or The type of business should not be limited to sale and purchase activities,but should also include bartering and leasing of movable assets,while excluding bulk transactions and security activities;the scope of the buyer should not exclude traders and indirect buyers;the subjective aspect of the buyer should be presumed to be The subjective aspect of the buyer should be presumed to be "good faith",which should be understood to mean "not knowing that the sale is against the interests of the mortgagee".Once again,not all sales are immediate and there is a series of processes in which the buyer and the mortgagee win the battle against each other.Article 404 of the Civil Code stipulates that the time for the exclusion of a mortgage on movable property is when the buyer "has paid a reasonable price" and "has acquired the mortgaged property".By analysing the current state of legislation and judicial precedents on the issue of the buyer’s exclusion of chattel mortgages under the arm’s length buyer rule,it is argued that it is unreasonable to require that the buyer has "paid" a reasonable price,and the view is put forward that the exclusion of chattel mortgages takes effect when the buyer acquires ownership or possession of the mortgaged property.Finally,it provides a remedial route for mortgagees whose security interests are excluded by the buyer to form a circuit for the balance of rights under the legal rules.The mortgagee may assert the security interest by claiming prejudice and mortgage for early discharge of the debt or withdrawal,claiming reduction in the value of the mortgaged property and requesting additional security,and also by agreeing in the mortgage contract to restrict the transfer of the mortgaged property or agreeing on the method of payment for the sale of the mortgaged property for prior prevention.