Towards a Non-unified System on the Mode of Patrimonial Rights Alteration
Existing debates among Chinese scholars over the system of patrimonial rights alteration often fall into the binary thinking of being either purely causative or purely abstract.Considering that patrimonial right is the umbrella term of property right,this article argues that Chinese law does not necessarily have to choose sides between pure causation and pure abstraction.Rather,it is perfectly justifiable that Chinese law can adopt a non-unified system as the starting point for the mode of not only property right alteration in particular,but also patrimonial right alteration in general.The contest between causation and abstraction is essentially an issue of restitution,more specifically,it is concerned with whether the transferor of a right transferred under a flawed underlying basis deserves proprietary restitution.The most practical distinction between causation and abstraction lies in the insolvency of the transferee,as to whether the transferor enjoys insolvency priority so as to get its claim fully satisfied at the expense of the transferee's general body of creditors,but not whether the transferor is entitled to the specific recovery of the subject-matter.The English non-unified system ostensibly appears to be depending on the particular type of vitiating factors in question,though the essence of the system is that causation applies only where the transferor has swollen the assets of the transferee,and where the transferor has involuntarily assumed the risk of the transferee's insolvency,so that the transferor deserves insolvency priority over the transferee's general body of creditors by meeting the two tests.Otherwise,abstraction shall apply.Such a way of justification can be taken as a test universally applicable to the transfer of all types of patrimonial rights,not confined to property rights.It further improves the current arguments and counter-arguments between Chinese abstractionists and anti-abstractionists.As to the test of swollen assets,if the value of the assets obtained by the transferee in the transaction in question exceeds the value of the assets lost by the transferee in the same transaction,it can be said that the transferee's assets have swollen due to the very transaction.The timing of computation ought to be the moment when an action is brought,not the moment when the transaction in question takes place.As to the test of involuntary assumption of risk,if the transferor,at the moment of transferring the right in question,has no actual or constructive knowledge of the transferee's risk of insolvency,it can be said that the transferor has involuntarily assumed the risk of the transferee's insolvency.The lack of knowledge in question refers to not only mistake of fact,but also mistake of law,so that as long as there is no clear rule providing that a particular illegality leads to the voidness of a contract in the first place,a transfer pursuant to the very contract which is subsequently nullified by the court ought to be taken to indicate the transferor's involuntary assumption of risk.The most viable method of embracing the two tests in Chinese law is to add a paragraph in Article 30 of the Enterprise Bankruptcy Law,which is currently under revision.
restitutionvitiating factorrisk of insolvencycausationabstraction
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