Article 56 Where a buyer obtains movable property in which a security interest has been created by paying reasonable consideration in the normal course of business activities of the seller, and the security interest holder requests that the movable property be compensated in priority, the people's court shall not support it, except in any of the following circumstances:
(1) The quantity of goods purchased clearly exceeds that of ordinary buyers;
(2) the purchase of the seller's production equipment;
(3) the purpose of entering into a sales contract is to guarantee the performance of obligations by the seller or a third party;
(4) the buyer and the seller have a direct or indirect control relationship;
(5) Other circumstances in which the buyer should inquire about the mortgage registration but fails to do so.
The term "normal business activities" as used in the preceding paragraph refers to the fact that the seller's business activities fall within the scope of business clearly stated in its business license, and the seller continues to sell the same kind of goods. The term "security interest holder" as used in the preceding paragraph refers to a mortgagee that has already been registered, a seller of a retention-of-title sale, or a lessor of a financial lease contract.
【Purpose of the Article】
This article is about how to identify the buyer in the ordinary course of business in the mortgage of movable property.
【Overview of Provisions】
The mortgage system adopts registration as a publicity method, and the movable property has a large number and some are of low value, if it is used for mortgage, it will not only bring a lot of registration costs to the parties, but also bring a lot of inquiry costs to the third party in the transaction. It is for this reason that, while the Civil Code provides for a chattel mortgage system, it also reduces the transaction costs caused by the system to a socially tolerable level by providing special protection to buyers in the ordinary course of business. The term "normal business activities" in article 404 of the Civil Code not only indicates that the seller's business activities are within the scope of business specified in the seller's business license and continues to sell the same kind of goods, but also requires that from the buyer's point of view, the transaction itself is not abnormal. In addition, since the Civil Code has stipulated that ownership rights in retention-of-title sales and financial leases are atypical security interests, and the subject matter of retention-of-title and financial leases is also movable property, and registration is used as a means of publicity, there are also limitations similar to the chattel mortgage system. In the case of retention of title and financial leases, in order to protect the transaction security of the buyer in normal business activities, this article extends the rules for determining the buyer in ordinary business activities to those that have already been registered.
【Controversial Views】
Article 404 of the Civil Code stipulates that: "A mortgage of movable property shall not be used against a buyer who has paid a reasonable price and obtained the mortgaged property in the ordinary course of business." "There are different opinions in theory and practice on how to determine the buyer in the ordinary business activities mentioned in this article: one opinion is that the normal business activities referred to in this article should be judged from the perspective of the seller, and as long as the seller's business activities fall within the business scope specified in its business license, and the seller continues to sell similar goods, the buyer should be deemed to be a buyer in the ordinary course of business; Another view was that the buyer in the ordinary course of business referred to in this article should be defined not only from the perspective of the seller, but also from the perspective of the buyer, even if the seller's business activities fall within the scope of business clearly stated in its business license, and the seller continues to sell similar goods, the buyers are not all buyers in the ordinary course of business, and it depends on whether the buyer has the obligation to inquire about the mortgage registration.
[Understanding and Application]
Paragraph 2 of Article 189 of the Property Law stipulates that the mortgage right "shall not be used against a buyer who has paid a reasonable price and acquired the mortgaged property in the ordinary course of business" only in the case of a floating charge on movable property, the reason is that in the case of a floating charge on movable property, the mortgagor's property is in a dynamic state of change, and there are both cases of purchasing new property and selling existing property, and the newly acquired property automatically becomes the mortgaged property, while the property being sold automatically leaves the scope of the mortgaged property. The mortgagee shall not pursue the mortgage right of the buyer who has paid a reasonable price and obtained the mortgaged property in the ordinary course of business. It can be seen that in the case of a floating charge on movable property, it is justified to protect the buyer in normal business activities by cutting off the retroactive effect of the mortgage.
A major change in the Civil Code with respect to security interests is that the protection of buyers in the ordinary course of business extends to general chattel mortgages, rather than to floating chattel charges. In a general chattel mortgage, is it justified to protect the buyer in the ordinary course of business by cutting off the retroactive effect of the mortgage? In our view, there are two important reasons for special protection for buyers in the ordinary course of business in chattel mortgages.
The first is the limitations of the chattel mortgage system itself. The chattel mortgage system adopts registration as a confrontation element, but the number of movable assets is large, and some of them are of low value, if all of them require publicity, it will not only bring a lot of registration costs to the parties, but also bring a lot of inquiry costs to the third party in the transaction. It is precisely for this reason that some countries or regions have not yet provided for a chattel mortgage system, and countries or regions that have a chattel mortgage system must also consider how to reduce the transaction costs caused by the system to a third party to a socially tolerable range.
Second, for the buyer in ordinary business activities, it is naturally impossible to know whether the subject matter is subject to a general chattel mortgage or a movable floating charge without consulting the register, and once the buyer is required to inspect the register, the purpose of exempting the buyer from inspecting the register in the movable floating charge cannot be achieved. For example, if Zhang San goes to a shopping mall to buy a computer, whether there is a general chattel mortgage or a floating chattel mortgage on the computer, it is actually meaningless to Zhang San, because he can only know after checking the register. In this context, if only the protection is provided to the buyer in the normal business activities under the movable property floating charge, Zhang San has to check the register because he is worried about the existence of a general chattel mortgage on the computer, and the purpose of exempting the buyer from the obligation to inquire under the movable floating charge will naturally not be realized.
In short, the Civil Code extends the protection of buyers in the ordinary course of business to chattel mortgages in general, with the aim of overcoming the inherent defects of the chattel mortgage system by exempting buyers from the obligation to make inquiries. Therefore, when we understand the buyer in the ordinary course of business as stipulated in Article 404 of the Civil Code, we should also take the legitimacy of exempting the buyer from the obligation to inquire about registration as the starting point on the basis of a deep understanding of the limitations of the chattel mortgage system.
The question is, under what circumstances can a buyer be exempted from a search registration? In our view, the legitimacy of the buyer's exemption from the registration of an inquiry should be ensured in two ways.
First, the buyer must acquire the movable property in which the security interest has been created by paying a reasonable consideration in the ordinary course of the seller's business. The so-called normal business activities of the seller refer to the fact that the seller's business activities fall within the scope of business specified in its business license, and the seller continues to sell similar goods. The reason why the business scope of the business license is "clearly recorded" is emphasized is that the business scope recorded in the business license of many enterprises has a comprehensive general description, and after consulting the tax department, the enterprise cannot issue invoices as a tax payment item if it is included in the business scope of the general description, so it does not belong to the normal business activities of the seller; The reason why it is emphasized that the seller must continue to sell the same kind of goods is that the business scope recorded in the business license of many enterprises may be very broad, but the business scope of the enterprise to carry out continuous business operation is relatively narrow, and if the buyer conducts transactions with the seller in the event that the enterprise does not continue to operate, it should be regarded as an abnormal transaction, and the buyer cannot be exempted from the search and registration.
Second, from the buyer's point of view, even if the seller's business conduct is a normal business activity, if the transaction itself is abnormal, the buyer cannot be exempted from the search and registration. In order to facilitate the judge's judgment that the buyer should have the obligation to inquire and register even in the normal business activities of the seller, the Interpretation of the Guarantee System of the Civil Code, with reference to extraterritorial experience, identifies the following situations as abnormal transactions and excludes them from normal business activities: (1) the quantity of goods purchased clearly exceeds that of ordinary buyers; (2) purchase of the seller's production equipment; (3) the purpose of entering into a sales contract is to guarantee the performance of obligations by the seller or a third party; (4) the buyer and the seller have a direct or indirect control relationship; (5) Other circumstances in which the buyer should have inquired about the mortgage registration but failed to do so.
In short, the normal business activities referred to in Article 404 of the Civil Code not only indicate that the seller's business activities are within the scope of business specified in the seller's business license and continue to sell the same kind of goods, but also require that from the buyer's point of view, the transaction itself is not abnormal. In addition, it is worth noting that since the Civil Code has stipulated that ownership rights in retention-of-title sales and financial leases are atypical security interests, and the subject matter of retention of title and financial leases is also movable property, and registration is used as a means of publicity, there are also limitations similar to the chattel mortgage system. In the case of retention of title and financial leasing, in order to protect the transaction security of the buyer in normal business activities, the Interpretation of the Guarantee System of the Civil Code extends the rules for determining the buyer in normal business activities to the retention of title and financial lease that has already been registered.
[Practical issues]
Article 404 of the Civil Code does not limit the mortgage on movable property that cannot be used against the buyer in the ordinary course of business to the mortgage on movable property that has already been registered, but since Article 403 of the Civil Code has limited the countervailing effect of the mortgage that has not been registered, the issue of protection for bona fide buyers in the case of a chattel mortgage that has not been registered as a mortgage should be resolved by applying Article 403 of the Civil Code, rather than by applying Article 404 of the Civil Code. In addition, logically speaking, the legislative intent of Article 404 of the Civil Code is to exempt the buyer of movable property from the obligation to inquire and register when the chattel mortgage has already been registered.
In addition, article 404 of the Civil Code restricts buyers in ordinary business activities to chattel mortgages, so in principle, this article cannot be applied to mortgages of immovable property. In other words, the buyer of immovable property is obliged in principle to consult the immovable property register. However, judging from the situation in practice, in the pre-sale or sale of commercial housing, on the one hand, real estate development enterprises carry out the pre-sale or sale of commercial housing in their normal business activities; On the other hand, when a real estate development enterprise obtains a pre-sale license, buyers who purchase commercial housing from a real estate development enterprise are still required to go to the real estate registration agency for inquiries, which is often too harsh for buyers as consumers. In this regard, we believe that when a real estate development enterprise mortgages the right to use construction land or mortgages a building, and then carries out the pre-sale or sale of commercial housing, it should also refer to the provisions of Article 404 of the Civil Code to protect consumers who have paid a reasonable consideration and obtained possession of the subject matter in normal business activities. In this regard, although the Interpretation of the Guarantee System of the Civil Code does not explicitly stipulate this, the judicial interpretation on enforcement objections in the process of enactment will make corresponding provisions on this.