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Creditor's right of cancellation
TIME：2021-12-14 PUBLISHER：ADMIN
2021 Li Yingying, a lawyer with Henan Changhao law firm, gave a keynote talk on issues related to creditors’right of revocation on November 28.
This sharing mainly from the civil code before the implementation of the act related to the application of the law, jurisdiction, the exercise of the right of revocation, the composition of the creditor’s right of revocation and other aspects of a legal analysis.
一、 On the application of Law in the conduct of the debtor before the implementation of the Civil Code
Through the search for relevant jurisprudence and legal analysis, the need for specific case analysis and judgment. It can not be generalized that the Civil Code is directly applicable or that the civil code is not directly applicable.
二、 On jurisdiction
According to Articles twenty-one and twenty-three of the civil procedure, it is the general principle that the plaintiff is the defendant. If there are more than one defendant, the courts at each defendant’s place of residence shall have jurisdiction, and in the event of a conflict shall be under the jurisdiction of the court which first filed the case, in accordance with Article thirty-five of the civil procedure.
三、The period during which the right of revocation is exercised
The rescission right is the right of formation, and the period of rescission is applicable. It should be noted that article five hundred and forty-one of the Civil Code reads, “The right of revocation shall be exercised within one year from the date on which the creditor becomes aware or ought to become aware of the subject matter of the revocation. If the right of cancellation has not been exercised within five years from the date of the debtor’s act, the right of cancellation shall be extinguished”.
四、The constitutive elements of the creditor’s right of cancellation
(一) the constitutive requirements for exercising the right of revocation against an act of gratuitous disposition
1、The creditor has a legitimate and valid claim against the debtor
As for the right of cancellation, the legal and effective creditor’s right is the basic premise of exercising the right. When examining the claim, we should pay attention to the legality, extant, the term need not expire, the amount need not be determined and the type of the claim is not limited.
2、The debtor has the behavior of free disposal
When the debtor disposes of the property rights and interests without compensation by means of renouncing his claim, renouncing the security of his claim, transferring the property without compensation, etc. , the establishment of the creditor’s right of cancellation does not require subjective elements, only the objective element of fraud is required to exercise the right of rescission. But if the debtor can prove that he still has enough property to pay off his debts after disposing of his property rights and interests, and his behavior is harmless to the creditor’s rights, then the debtor can be presumed not to have subjective malice.
3、Subject matter of the right of rescission
At present, the subject matter of the right of rescission is presented by way of enumeration. However, it should be noted that article five hundred and thirty-eight of the Civil Code has added the word “Etc.”, that is, the subject matter of the right of rescission can be expanded with social practice, but the scope of judicial interpretation is to be further clarified.
4. The debtor has the fraudulent behavior, and affects the realization of the creditor’s right
The behavior theory that the debtor damages the realization of the creditor’s right is called the fraudulent behavior. The judgment standard of the fraudulence of the debtor’s behavior in different situations is also different. Such as waiver of claims and waiver of claims security shows different harm, malicious extension of the term of performance of claims needs the debtor to have a subjective malicious intent. In judicial practice, we should adopt penetrating thinking to judge whether the debtor has committed fraudulent acts.
Even if the creditor has a legitimate and valid claim against the debtor and the debtor has committed fraudulent acts, the right of cancellation can not be exercised if there is no causal relationship between the two, therefore, the influence of the debtor’s fraudulent behavior on the realization of the creditor’s rights is the essential element of the right of cancellation. With regard to the specific standard of judgment, it is generally said that the “Incompetent theory”is adopted to judge whether the debtor’s behavior affects the realization of the creditor’s right, that is to say, the debtor no longer has enough assets to pay off the creditor’s right after disposing of the property, and this state continues until the creditor exercises the right of revocation. In judging whether the debtor is “Unable to pay”, there are two kinds of examination criteria: one is the examination of form, that is to say, whether there are situations such as “The debt exceeds”, “The payment can not be made”, and the other is the examination of substance, that is, the combination of subjective and objective relevant situations, consider whether the debtor has the legitimacy of the motive for the purpose of the act, whether it has the appropriateness of means and methods of conduct and so on.
(二) the constitutive requirements of exercising the right of revocation against a compensated act
Among the types of disposition of property or security provided by the debtor, it is more common for the debtor to transfer the property at a manifestly unreasonable low price and to provide security for the debts of others. It should be noted that in this category, in addition to the above-mentioned constitutive requirements for the debtor to exercise the right of cancellation, it is also necessary to meet the “Debtor’s relative knowledge”of the conditions. “The debtor’s relative person knows”, mainly refers to the relative person’s bad faith, that is to know or should know that the debtor’s behavior is to avoid paying the debt and will affect the realization of the creditor’s claim.
References: Understanding and application of contracts in the Civil Code of the People’s Republic of China, People’s Court.
The above article only represents the author’s own views, does not represent any form of legal advice or recommendations issued by Henan Changhao Law Firm. If you are interested in further exchanges or discussions on related topics, please contact us.
This sharing mainly from the civil code before the implementation of the act related to the application of the law, jurisdiction, the exercise of the right of revocation, the composition of the creditor’s right of revocation and other aspects of a legal analysis.
一、 On the application of Law in the conduct of the debtor before the implementation of the Civil Code
Through the search for relevant jurisprudence and legal analysis, the need for specific case analysis and judgment. It can not be generalized that the Civil Code is directly applicable or that the civil code is not directly applicable.
二、 On jurisdiction
According to Articles twenty-one and twenty-three of the civil procedure, it is the general principle that the plaintiff is the defendant. If there are more than one defendant, the courts at each defendant’s place of residence shall have jurisdiction, and in the event of a conflict shall be under the jurisdiction of the court which first filed the case, in accordance with Article thirty-five of the civil procedure.
三、The period during which the right of revocation is exercised
The rescission right is the right of formation, and the period of rescission is applicable. It should be noted that article five hundred and forty-one of the Civil Code reads, “The right of revocation shall be exercised within one year from the date on which the creditor becomes aware or ought to become aware of the subject matter of the revocation. If the right of cancellation has not been exercised within five years from the date of the debtor’s act, the right of cancellation shall be extinguished”.
四、The constitutive elements of the creditor’s right of cancellation
(一) the constitutive requirements for exercising the right of revocation against an act of gratuitous disposition
1、The creditor has a legitimate and valid claim against the debtor
As for the right of cancellation, the legal and effective creditor’s right is the basic premise of exercising the right. When examining the claim, we should pay attention to the legality, extant, the term need not expire, the amount need not be determined and the type of the claim is not limited.
2、The debtor has the behavior of free disposal
When the debtor disposes of the property rights and interests without compensation by means of renouncing his claim, renouncing the security of his claim, transferring the property without compensation, etc. , the establishment of the creditor’s right of cancellation does not require subjective elements, only the objective element of fraud is required to exercise the right of rescission. But if the debtor can prove that he still has enough property to pay off his debts after disposing of his property rights and interests, and his behavior is harmless to the creditor’s rights, then the debtor can be presumed not to have subjective malice.
3、Subject matter of the right of rescission
At present, the subject matter of the right of rescission is presented by way of enumeration. However, it should be noted that article five hundred and thirty-eight of the Civil Code has added the word “Etc.”, that is, the subject matter of the right of rescission can be expanded with social practice, but the scope of judicial interpretation is to be further clarified.
4. The debtor has the fraudulent behavior, and affects the realization of the creditor’s right
The behavior theory that the debtor damages the realization of the creditor’s right is called the fraudulent behavior. The judgment standard of the fraudulence of the debtor’s behavior in different situations is also different. Such as waiver of claims and waiver of claims security shows different harm, malicious extension of the term of performance of claims needs the debtor to have a subjective malicious intent. In judicial practice, we should adopt penetrating thinking to judge whether the debtor has committed fraudulent acts.
Even if the creditor has a legitimate and valid claim against the debtor and the debtor has committed fraudulent acts, the right of cancellation can not be exercised if there is no causal relationship between the two, therefore, the influence of the debtor’s fraudulent behavior on the realization of the creditor’s rights is the essential element of the right of cancellation. With regard to the specific standard of judgment, it is generally said that the “Incompetent theory”is adopted to judge whether the debtor’s behavior affects the realization of the creditor’s right, that is to say, the debtor no longer has enough assets to pay off the creditor’s right after disposing of the property, and this state continues until the creditor exercises the right of revocation. In judging whether the debtor is “Unable to pay”, there are two kinds of examination criteria: one is the examination of form, that is to say, whether there are situations such as “The debt exceeds”, “The payment can not be made”, and the other is the examination of substance, that is, the combination of subjective and objective relevant situations, consider whether the debtor has the legitimacy of the motive for the purpose of the act, whether it has the appropriateness of means and methods of conduct and so on.
(二) the constitutive requirements of exercising the right of revocation against a compensated act
Among the types of disposition of property or security provided by the debtor, it is more common for the debtor to transfer the property at a manifestly unreasonable low price and to provide security for the debts of others. It should be noted that in this category, in addition to the above-mentioned constitutive requirements for the debtor to exercise the right of cancellation, it is also necessary to meet the “Debtor’s relative knowledge”of the conditions. “The debtor’s relative person knows”, mainly refers to the relative person’s bad faith, that is to know or should know that the debtor’s behavior is to avoid paying the debt and will affect the realization of the creditor’s claim.
References: Understanding and application of contracts in the Civil Code of the People’s Republic of China, People’s Court.
The above article only represents the author’s own views, does not represent any form of legal advice or recommendations issued by Henan Changhao Law Firm. If you are interested in further exchanges or discussions on related topics, please contact us.
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