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On the practical sharing of guaranty money pledge
TIME：2021-12-23 PUBLISHER：ADMIN
2021, a trainee lawyer at Henan Changhao Law Firm, gave a keynote talk on the pledge of the security deposit on December 12.
This sharing mainly from the legal provisions of the deposit pledge, the composition of the deposit pledge, the deposit pledge case possible defense reasons to do the legal analysis.
一、Legal Provisions on guaranty bond pledge
Article 70 of the Supreme People’s Court on the application of the Civil Code of the People’s Republic of China on the interpretation of the security system, where the debtor or a third party guarantees the performance of a debt, the establishment of a special margin account under the actual control of the creditor, or the deposit of its funds into a margin account established by the creditor, and the creditor’s claim for priority repayment of the money in the account shall be supported by the People’s Court. The People’s Court shall not support a party’s claim that the creditors who actually control the deposit account do not have priority in the payment of the money in the deposit account on the ground that the money in the deposit account fluctuates.
The deposit accounts set up under a bank account shall be handled with reference to the provisions of the preceding paragraph.
Where the earnest money agreed upon by the parties is not created for the performance of the secured obligation or does not comply with the provisions of the preceding two paragraphs, the creditor’s claim that the earnest money shall be paid in priority shall not be supported by the People’s Court, however, it shall not affect the parties to claim their rights in accordance with the provisions of the law or in accordance with the agreement of the parties.
二、The constitutive requirements of the guaranty bond pledge
According to the above provisions, it can be seen that the pledge of security is a kind of security that the creditors require the debtors or the third party to provide in order to guarantee the realization of the creditor’s right when it is due, the conditions for its effective establishment should meet the general requirements of security interest: first, the object of the security property should be specified, and second, the creditor should have actual control over the subject property, in order to achieve the possession of the subject matter property publicity requirements.
(一) requirements for the specialization of property
1. Account Specialization
Account specialization requires that it be distinguished from other properties of the Pledgor by the opening of a margin account, which is a specific form,
There are three specific account-setting modes, including: (1) setting up a special margin account; (2) setting up a margin sub-account under a bank account; and (3) setting up a margin account by a creditor (deposit of funds by a debtor/guarantor)
No matter what form, it is necessary to adopt the special account form of margin account, so that it has the external identity and can be distinguished from the general settlement account and the basic account.
2. Specialization of funds in an account
The funds are specified, and the funds in the margin account can be used exclusively for the purpose of transferring funds. The deposits and deductions are used to repay the secured claim or to return the secured claim to the pledgor after it has been repaid.
It should be noted that the specialization of the margin account is not a fixation of the amount, and the specialization required by the margin pledge only requires that the account and the funds be distinguished from the other properties of the pledger, not that the funds in the account remain fixed.
In addition to the deposit in the margin account as agreed upon in the contract, the increase in interest, the addition of the margin and the deduction of the corresponding amount by the relevant bank entrusted by the creditor when the debt is due and not repaid will result in the floating of the account balance, this kind of floating corresponds with the margin business, does not belong to the settlement of non-margin business, can not consider the account as a general settlement account on the grounds that the account funds are not fixed.
(二) determination of transfer of possession
The creditor’s actual control over the margin account can be divided into two different situations: one is to open a margin account in the name of the creditor, and the other is to deposit the funds into the account by the debtor or a third party, at this point, the creditor, as the account owner, can actually control the funds, which meets the conditions for handing over the possession of the creditor, the pledger can not directly deliver the money to the creditor because he has the creditor’s right of deposit in the bank, and the creditor often needs to sign an account supervision agreement with the bank to realize the actual control of the deposit account, agreement shall not be in accordance with the creditor’s Instructions on the account funds operation, the account password set by the creditor and reserved seal, or through the establishment of joint account, agreed to the account joint supervision, in order to achieve the actual control of the margin account.
The parties through the establishment of a deposit account to complete the security property specialization, and transfer possession of the circumstances, resulting in the effectiveness of the security interest, the creditor can have priority in the payment of the deposit.
三. Reasons for possible defences
The common defense in this kind of case is: No Written Pledge Contract; the Litigant is ineligible; the deposit account is opened earlier than the contract is signed; the funds in the deposit account are used for other daily settlement.
1. failure to conclude a written pledge contract
In such cases, the defendant often pleads that the bank and a third party have not entered into a written pledge contract. According to Article Four hundred and twenty-seven of the Civil Code, no written pledge contract has been concluded and no pledge relationship has been created, and the right of pledge did not arise.
In judicial practice, we should adopt a more tolerant attitude to the cognizance of the pledge contract. The existence or non-existence of the consent of the pledge has been examined. However, the review of this element is more lenient, the parties only need to conclude a general written contract (or in the loan agreement to agree on the corresponding security matters, is deemed to meet this element) . Even if the parties are unable to provide a written pledge contract, court will also be based on the evidence on file such as the mortgage amount of the application, the bank’s approval materials, between the debtor and creditors loan agreement, such as the existence of a comprehensive determination of the pledge.
2. Ineligibility of the litigant
The defendant will take the difference between the Opening Bank of the deposit account and the subject of the prosecution as the reason that the plaintiff does not have the qualification of the subject of the prosecution.
In such cases, the party who signs the guarantee or loan agreement is a bank branch, while the bank that opens the deposit account is generally a branch of the bank, but this does not affect the bank branch as the direct superior of the branch, you can actually control the normal use of the margin account.
3.The deposit account was opened earlier than the contract was signed
The defendant will plead that the opening of the margin account is earlier than the signing of the guarantee or loan agreement, and that the margin account does not meet the specification requirement.
In such cases, there may sometimes be evidence that the opening of the margin account is earlier than the signing of the guarantee or loan agreement, but it may be combined with such evidence as the running account details since the opening of the margin account, to demonstrate that the margin account has been used in accordance with the terms of the agreement and that it meets the specification requirements.
4.The funds in the margin account are used for other day-to-day settlements
The cash in and out of the margin account in the case shall correspond to the relevant margin business. Even if the name of the account is shown as a margin account, the existing bank flow of the account should correspond to each of the relevant margin business, and provide relevant evidence to prove that the use of the margin account involved in the case are related to margin business. It also does not meet the specification requirement if there is a business that does not match the margin business or is used to guarantee other business.
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 legal provisions of the deposit pledge, the composition of the deposit pledge, the deposit pledge case possible defense reasons to do the legal analysis.
一、Legal Provisions on guaranty bond pledge
Article 70 of the Supreme People’s Court on the application of the Civil Code of the People’s Republic of China on the interpretation of the security system, where the debtor or a third party guarantees the performance of a debt, the establishment of a special margin account under the actual control of the creditor, or the deposit of its funds into a margin account established by the creditor, and the creditor’s claim for priority repayment of the money in the account shall be supported by the People’s Court. The People’s Court shall not support a party’s claim that the creditors who actually control the deposit account do not have priority in the payment of the money in the deposit account on the ground that the money in the deposit account fluctuates.
The deposit accounts set up under a bank account shall be handled with reference to the provisions of the preceding paragraph.
Where the earnest money agreed upon by the parties is not created for the performance of the secured obligation or does not comply with the provisions of the preceding two paragraphs, the creditor’s claim that the earnest money shall be paid in priority shall not be supported by the People’s Court, however, it shall not affect the parties to claim their rights in accordance with the provisions of the law or in accordance with the agreement of the parties.
二、The constitutive requirements of the guaranty bond pledge
According to the above provisions, it can be seen that the pledge of security is a kind of security that the creditors require the debtors or the third party to provide in order to guarantee the realization of the creditor’s right when it is due, the conditions for its effective establishment should meet the general requirements of security interest: first, the object of the security property should be specified, and second, the creditor should have actual control over the subject property, in order to achieve the possession of the subject matter property publicity requirements.
(一) requirements for the specialization of property
1. Account Specialization
Account specialization requires that it be distinguished from other properties of the Pledgor by the opening of a margin account, which is a specific form,
There are three specific account-setting modes, including: (1) setting up a special margin account; (2) setting up a margin sub-account under a bank account; and (3) setting up a margin account by a creditor (deposit of funds by a debtor/guarantor)
No matter what form, it is necessary to adopt the special account form of margin account, so that it has the external identity and can be distinguished from the general settlement account and the basic account.
2. Specialization of funds in an account
The funds are specified, and the funds in the margin account can be used exclusively for the purpose of transferring funds. The deposits and deductions are used to repay the secured claim or to return the secured claim to the pledgor after it has been repaid.
It should be noted that the specialization of the margin account is not a fixation of the amount, and the specialization required by the margin pledge only requires that the account and the funds be distinguished from the other properties of the pledger, not that the funds in the account remain fixed.
In addition to the deposit in the margin account as agreed upon in the contract, the increase in interest, the addition of the margin and the deduction of the corresponding amount by the relevant bank entrusted by the creditor when the debt is due and not repaid will result in the floating of the account balance, this kind of floating corresponds with the margin business, does not belong to the settlement of non-margin business, can not consider the account as a general settlement account on the grounds that the account funds are not fixed.
(二) determination of transfer of possession
The creditor’s actual control over the margin account can be divided into two different situations: one is to open a margin account in the name of the creditor, and the other is to deposit the funds into the account by the debtor or a third party, at this point, the creditor, as the account owner, can actually control the funds, which meets the conditions for handing over the possession of the creditor, the pledger can not directly deliver the money to the creditor because he has the creditor’s right of deposit in the bank, and the creditor often needs to sign an account supervision agreement with the bank to realize the actual control of the deposit account, agreement shall not be in accordance with the creditor’s Instructions on the account funds operation, the account password set by the creditor and reserved seal, or through the establishment of joint account, agreed to the account joint supervision, in order to achieve the actual control of the margin account.
The parties through the establishment of a deposit account to complete the security property specialization, and transfer possession of the circumstances, resulting in the effectiveness of the security interest, the creditor can have priority in the payment of the deposit.
三. Reasons for possible defences
The common defense in this kind of case is: No Written Pledge Contract; the Litigant is ineligible; the deposit account is opened earlier than the contract is signed; the funds in the deposit account are used for other daily settlement.
1. failure to conclude a written pledge contract
In such cases, the defendant often pleads that the bank and a third party have not entered into a written pledge contract. According to Article Four hundred and twenty-seven of the Civil Code, no written pledge contract has been concluded and no pledge relationship has been created, and the right of pledge did not arise.
In judicial practice, we should adopt a more tolerant attitude to the cognizance of the pledge contract. The existence or non-existence of the consent of the pledge has been examined. However, the review of this element is more lenient, the parties only need to conclude a general written contract (or in the loan agreement to agree on the corresponding security matters, is deemed to meet this element) . Even if the parties are unable to provide a written pledge contract, court will also be based on the evidence on file such as the mortgage amount of the application, the bank’s approval materials, between the debtor and creditors loan agreement, such as the existence of a comprehensive determination of the pledge.
2. Ineligibility of the litigant
The defendant will take the difference between the Opening Bank of the deposit account and the subject of the prosecution as the reason that the plaintiff does not have the qualification of the subject of the prosecution.
In such cases, the party who signs the guarantee or loan agreement is a bank branch, while the bank that opens the deposit account is generally a branch of the bank, but this does not affect the bank branch as the direct superior of the branch, you can actually control the normal use of the margin account.
3.The deposit account was opened earlier than the contract was signed
The defendant will plead that the opening of the margin account is earlier than the signing of the guarantee or loan agreement, and that the margin account does not meet the specification requirement.
In such cases, there may sometimes be evidence that the opening of the margin account is earlier than the signing of the guarantee or loan agreement, but it may be combined with such evidence as the running account details since the opening of the margin account, to demonstrate that the margin account has been used in accordance with the terms of the agreement and that it meets the specification requirements.
4.The funds in the margin account are used for other day-to-day settlements
The cash in and out of the margin account in the case shall correspond to the relevant margin business. Even if the name of the account is shown as a margin account, the existing bank flow of the account should correspond to each of the relevant margin business, and provide relevant evidence to prove that the use of the margin account involved in the case are related to margin business. It also does not meet the specification requirement if there is a business that does not match the margin business or is used to guarantee other business.
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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