On The Legal Effect Of The Security Clause In The Contract

Along with substantially increasing income and the concept of financial management deeply rooted in the hearts of the people, the residents’ demand for financial management is rising day by day. As a form of financial innovation, entrusted financial transaction becomes a hot economic phenomenon gradually.Entrusted financial contracts are frequently occurring in judicial practices. At its most fundamental,the minimum guarantee clause is a kind of incentive and restriction mechanism that the commissioned party makes the promise of "minimum guarantee" and "guarantee benefits" with the purpose of attracting investment. The minimum guarantee clause is a significant clause in entrusted financial contracts, which is so far as to be called the "core clause" or "object clause" of the entrusted financial contracts. As a result of that our country has not formulated a unified legislation to regulate the minimum guarantee clause in the entrusted financial contracts yet, there is no agreement on the minimum guarantee clause in academic and practical departments, especially the legal validity of the minimum guarantee clause.There are three kinds of views in the theoretical circle, which are effective theory, invalid theory and limited recognition theory. In judicial practice, the majority of the judges tend to adjudge the minimum guarantee clause to be invalid. However, as an agreement of interest and risk allocation between both parties of the contract, is there no space of the legitimate or reasonable for the minimum guarantee clause to leech on to?Is it in the best interest of the market economy protection to uniformly adjudge the minimum guarantee clause to be invalid?What kind of standard shall we be based on to cognize the validity of the minimum guarantee clause? This paper takes the minimum guarantee clause as the subject investigated. which is based on the analysis of typical cases and the legal nature and validity of the entrusted financial contract with drawing lessons from finance, economics and related theories. These are all for purpose of investigating the rationality and limitation of the minimum guarantee clause and providing theoretical support for cognizing the legal effect of the minimum guarantee clause in the judicial practices, finally providing solutions for the validity of minimum guarantee clause disputes in judicial practices.This paper consists of the introduction, the text and the conclusion.The introduction part puts forward the research significance. The author proposed the research idea and research methods of this text on the basis of summarizing the existing academic achievements.The text is divided into four parts. The first part is the question to be put forward. This part introduces the concept of entrusted financial contract and minimum guarantee clause and leads in two typical cases. Then the problems to be solved is pointed out.The second part thoroughlydiscusses the legal nature and validity of the entrusted financial contract, which clear the obstacles for discussing the below terms of legal nature and validity of the contract. The third part is the analysis ofseveral theories about cognizing the legal effect of the minimum guarantee clause and the exposition of limited recognize the validity of the minimum guarantee clause on the basis of the existing law.Then the author makes a conclusion that the validity of the minimum guarantee clause should be admitted conditionally.The fourth part is the distribution of liability for the loss of trust property after the validity of the minimum guarantee clause is conformed.At last, the thesis carries on a brief summary and reiterates the main points of the research. In addition, the prospect of the development of the entrusted financial transaction including the minimum guarantee clause is also discussed in the conclusion part.