Research On The Legislation Of The Inventory Mortgage

To meet the needs of social development, the Inventory Mortgage System came into being. It takes all sorts of properties of the business entity as a whole inventory, merely setting a right to mortgage above it after its necessary registration and publication to satisfy the keen demand for financing. Along with the development of the socialist market economy in China, the requirements for financing of business entities, which are the main part of financing, have been expanded, resulting in the establishment of the Inventory Mortgage System. Adopting such approaches as comparison, legal philosophy, economic analysis and profit-balance, this article makes an effort to analyze and study important issues including the legislation status quo on inventory mortgage, the value of legislation on the right of the inventory to mortgage, the technical difficulties of the legislation, as well as the content of the legislation from a three-dimension viewing angle which include a certain extent of width, height and profundity pertaining to the actual situation in China with a reference of the system in some countries of the continental legal system. This article firstly introduces the status quo of the legislation on inventory mortgage in countries of the continental legal system; secondly after an analysis of the status quo of the legislation in China in accordance with the regulation, legal interpretation, scholars'viewpoints as well as the judicial practices, conclusions have been arrived: Item the 2nd, Article 34 of Law of Hypothecate "mortgage along with others"should be interpreted as mortgage together and the real inventory mortgage system does not exist in the actual legal system in China. This article discusses the inevitability of the establishment of the inventory mortgage system through the study of the evolution rule and development trend of the Hypothecate system, the tendency of the pluralization of the system value, diversification of the hypothecate variety, the value of legal order and of legal efficiency. Inventory as mortgage target, the inventory mortgage meets the needs of modern economic development. Properties of the business entity seen as a whole, the inventory mortgage is more capable of exerting the hypothecate value and enhancing the hypothecate ability, and favors the financing of the entity. In the aspect of improving the utilization efficiency and economic use assurance, inventory mortgage will be more efficient than mortgage together. Inventory mortgage only registers once for its hypothecation of the whole properties without having to register respectively according to different target at different institutions. Inconveniences caused by tedious procedure of registration will be avoided and the mortgage cost will be reduced as a result of the reduction of the registration fee. Taking into consideration that urgent demand for financing of Chinese business entities and for development of finance together with the generally not high credit of Chinese business entities, it naturally leads to the necessity of the review of China's Inventory mortgage system. This article argues that the key factor to deal with the contradiction between the principle of inventory mortgage and that of 'one-entity-one-property'is to update the criterion of 'one entity'and get over the thinking formulary that property-centered idea in the traditional property law. 'One entity'dose not only include the actual existing entity (entity in the physical sense), but also include entities that are set up and exist in different forms by law to facilitate the property relations. Any asset with values as target of exchange could be taken as entity appropriately which give relativity to the one-entity-one-property principle as well as a wider and more opening adaptability to the actual property relations. Inventory mortgage possesses following potencies: priority to compensation of the hypothecation of creditor's rights; subrogation over entityof hypothec; reservation of the exchanging value of hypothecated matter and the hypothec owner's possession of guaranty. While the inventory hypothec right is in conflict with the ordinary hypothec right, the order of hypothec right shall be judged according to the order of registration, earlier registration enjoying priority. In the case that hypothec rights with registration are at same time with the same order, compensation of appraisement of the guaranty shall be paid in accordance with the proportion of creditor's rights by each hypothec possessors. While the inventory hypothec right is in conflict with the quality right, potency of inventory mortgage shall have the priority if the enactment of inventory mortgage is earlier and vice versa. While inventory hypotheca right is in conflict with the lien right, the latter shall have the absolute priority without having to distinguish the goodwill and hostility. If the leasehold takes place in advance of the enactment of the hypothec right, the exertion of the hypothec right will make no difference to the leasehold contract; in the case of the continuant potency of the leasehold contract, it can rival the person who gets the guaranty property after auction. If the hypothec right precedes the leasehold, the former shall have the priority to the leasehold right and after the realization of the hypothec right, receiver of the guaranty shall still be entitled to withdraw the guaranty with the property without being restricted by the leasehold contract even if the leasehold contract is still during the period of validity. Conditions for exertion of the inventory hypothec right include the following three points: firstly, the hypothec right shall have to be of valid existence; secondly, creditor's rights have not been discharged upon the arrival of discharging period; thirdly, creditor's rights being not discharged is not caused by the creditor. Modes of exertion of the inventory hypothec right include the following three: conversion into money according to the guaranty. Referring to the idea of individual hypothec right to compare with mortgage together, inventory mortgage falls into one category of mortgagetogether while the mortgage along with others in China's legislation actually could be mortgage together. If referring to the idea of plural hypotheca right, the inventory mortgage would be a particular category of hypothec right rather than being a form of mortgage together. Aggregate mortgage in China's civil law theory is equal to the inventory mortgage system in traditional civil law system merely with different name. To differentiate the inventory mortgage from the floating mortgage and clarify the characteristics of inventory mortgage, concept of aggregate mortgage is adopted in the article without the adoption of the concept of inventory mortgage. As two different mortgage systems that came into being to meet the needs of economic development, inventory mortgage and floating mortgage both have advantages and disadvantages. While inventory mortgage is able to provide more potent guarantee for creditor's rights, it also restricts the outflow of property and influence the debtor's management. The advantages of floating mortgage include the better flexibility and that it exerts no influence on the management of the company while the disadvantages include the weaker potency and incapability to stop the debtor from abusing rights and illegal management of property before discharge. It is obvious that the former's advantages are the disadvantages of the latter while vice versa. From the viewpoint of protecting the development of entities, floating mortgage excels the inventory mortgage; from the viewpoint of protecting the hypothec owner, inventory mortgage excels the floating mortgage. This article argues that legislation of the inventory mortgage should be judged by value. Inventory mortgage has evident irrationalities; on the other hand, inventory mortgage is sure to be able to meet certain particular economic needs of large enterprises as well as the requirement of the state's financial policy. Legislation of inventory mortgage cannot accomplish in an action but advance step by step. Taking into account the special situation of certain trades, consider regulations of legislation when there is existing value...