Incomplete Contracts and Fair Dealing:Interpreting the Creditors'Right of Revocation in the Functional Comparative Perspective
After the implementation of the Civil Code of PRC,some basic issues of the creditor's right of revocation still remain controversial,which is rooted in the fact that we have not fully explored the function of the creditor's right of revocation outside the insolvency procedure.The Civil Code evaluates"affecting the realization of creditors'claims",which is in line with the idea of reasonable and equivalent value in the common law a voidable transaction system.The creditor's right of revocation,as a default rule for incomplete contracts,can be divided into two sub-types as fraudulent transaction and preferred transaction,which share similar factual components and legal effects.Articles 538 to 542 of the Civil Code shall be interpreted as follows:undervalued transactions base on the impact towards debtor's solvency capacity,and preferred transactions base on actual the intent to fraud;"revocation"shall be interpreted as relatively invalid in principle,i.e.invalid against the creditor,and the defense of payment with a reasonably equivalent value can protect the rights of the transferee and the subsequent transferee in order to maintain transaction security;and the characteristics of remedies outside bankruptcy procedure determines that creditors own direct rights against transferees.The creditor's right of revocation is worth exploring as a fundamental rule to regulate the improper impairment of property.
creditor's right of revocationavoidance outside bankruptcy procedurerelative invalidfraudulent transactionpreferred transaction
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