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| Legislative Approaches to Personal Property Security: Expressions, Elements and Judgements |
| Zhang Shidi |
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Abstract The Civil Code of the People’s Republic of China has brought profound changes to the personal property security system through the legislative approach of combining formalism and functionalism. Both legislators and academic circles take this legislative method as the foundation and starting point of the argument, but the interpretation theory does not point out the specific content of the legislative method now. At present, the interpretation theory of personal property security is difficult to obtain unity and self-consistency in the interpretation of a specific security method, and it is trapped in the cycle of interpretation theory. The normative system of personal property security in China can be divided into three types of normative expressions: “formalism”, “functionalism” and “both functionalism and formalism”. Formalism is mainly reflected in the fact that the Civil Code still sets specific provisions according to different types of rights. The norms of functionalism include unified security contracts, unified perfection rules and unified priority rules. The expression of the combination of functionalism and formalism includes the rules of the effectiveness of the security right of movable property against third parties, the separation of the special movable property perfection system from the personal property and other security interests perfection system, and the coexistence of the right of recall and the right of priority. The legislative method of personal property security can be extracted into three elements, “security function”, “limited entry” and “legal fiction”. The “security function” is born in the provision of Article 388 of the Civil Code “other contracts with guarantee functions”. The security interests, especially the atypical guarantee, the premise of applying the security interest system is that the contract has the security function of improving the debtor’s credit enhancement. “Legal fiction” means that because of the same function, atypical guarantee is deemed as a security interest, but it should still be restricted by its basic relationship in the absence of security function. “Limited entry” aims to limit the expansion of the scope of application of guarantee norms. “security function” is the requirement of functionalism, “legal fiction” is the way to realize “security function”, “limited access” is the limitation of “security function”, and it is also the manifestation of formalism. There is some space for further adjustment on the issues of functionalism and real right change mode, registration antagonism, formalism and fictional security rights. The parties have other interests with security functions through “other contracts with security functions”, and these rights are security interests. The doctrine of numerus clauses requires that the types of property rights be stipulated by law, and the “other” in Article 388 cannot clarify the types of such contracts. Even if these unnamed personal security rights cannot be registered, they are still real rights. Although they are not against other confrontational real rights, these unnamed chattel security rights can still take precedence over other creditor’s rights. The registration antagonism of the current personal property security is limited to the subsequent security right holder, and the antagonism effect is only to warn the subsequent transaction party that there may be a secured transaction on the secured property. When the atypical guarantee, which is proposed as a security interest, coexists with the general liability guarantee or the property guarantee provided by the third party, when the security right holder is reluctant to exercise the right, resulting in the reduction or damage or loss of the value of the property, its behavior can be regarded as giving up part or all of the property guarantee, and the guarantor and other security interest holders can reduce or waive the liability within the scope of their waiver rights.
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Published: 08 May 2026
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