On The Direction Of Fluidity Clause System In China

In different countries or regions, it is different for the specific title of fluidity clause as well as their meanings. No matter what the title of liquid terms is, its essence is an agreement prohibited for the transferred security interests. Although the dispute of titles conduces to the comprehension of the issue, it is helpless to solve the problem. And the key to solve the problem consist in the valuation and the ideas of equity.The signification of fluidity clause has two meanings in broad sense and narrow sense. The signification of fluidity clause in broad sense refers to the clause that creditors own the guaranty or obtain the ownership when the debtors failed to perform their obligations in accordance with the contract which agreed contractually between both parties. Fluidity clause in broad sense is a special clause agreed by two parties in contract, and it is applicable to mortgage relations and impawn relations, as well as indicates the direction of guaranty.At present, the legislative options of fluidity clause include prohibitive options, permissive options and indulgent options. The various legislative options reflect the differences of options on legislative value in different countries. And they all have their own set of theory and reasons for it. In China, on the theory of Civil Law, the majority of scholars show counterviews on fluidity clause. Our attitude toward fluidity clause on legislation is strictly prohibited, and this embodied in the "People's Republic of China Guarantee Law," "People's Republic of China Law on Real Right," as well as judicial interpretation of the Supreme People's Court. The purpose of the clause which prohibits fluidity clause is to guarantee the right of debtor, prevent creditor from making fluidity clause at the advantage of economic factors, and guarantee small claims by high value guaranty. From their point of view, the debtor is in a weak position. Creditors can receive profits easily by fluidity clause while the debtor is in weak position, which is in violation of fairness, honesty and credibility of the Civil Law, as well as bring disadvantages to the socio-economic stability .The prohibition of fluidity clause is intent to maintain a balance of interests for both parties while transaction.Time passes and the situation has changed, does the reason of opposing fluidity clause can reflect the economic living of society nowadays? On this matter, we can put forward two questions: the first is if fluidity clause will result in unjust outcomes absolutely? The second is if the legislation could bestow necessary relief? Equity in Civil Law is a sort of equity in procedure and opportunity, but not in outcomes. If we pursue equity in outcomes blindly, it is hard to avoid the suspicion of patriarchal protectionism. Any exertion of function all need special historic background and stated circumstance. Along with the advancement of society and the high speed development of market economy, the modes and approaches of financing and leasehold are presenting diversity gradually. It is not sure that debtors are always the weak ones. In most situations, they have more choices when they affront so many unpredictable creditors, so the law has no need to take sides with debtors blindly and regard them as the feeble parties, thereby neglects the creditors'interests. Furthermore, Civil Law belongs to Private Law which meant autonomy is one of the fundamentals principles in Civil Law, especially in Contract Law. Therefore, in order to realize the value of Civil Law, more free choices should be endowed to the civil principals. If we allow the parties to make fluidity clause, we could achieve the purpose. In the modern society which commodity economy is highly developed, the prohibition of fluidity clause has been challenged by economic life. With the acceleration of globalization, it is an irrefragable fact that law has increasingly been international. For our country, we should absorb lessons from the historic vicissitude of fluidity clause, establish a fluidity clause system that suit the situation of our country in the new era, and allow the parties to make fluidity clause.The agreement of fluidity clause between debtors and creditors will lead to the imbalance of interests between two parties. For the general imbalance of interests, the law does not need to intervene. The law intervene only under such circumstances that significant imbalance has arise. We can make appropriate changes and restrictions to the specific provisions of fluidity clause on the premise of allowing two parties to make fluidity y clause. So that both parties can receive relief legally, thereby the economic interests of both parties can be balanced.