| Claim has become an important subject matter in modern financing and other transactions. In practice, assignment of claims and pledge of claims are frequently used. Assignment and pledge are similar in economic function and legal rules. In China, the Contract Law provides for assignment of claims and the Property Law provides for pledge of receivables. The relevant provisions in the two laws are inconsistent in subject matter and there are legislative loopholes in both laws. The Contract Law contains assignment rules that are applicable to all ordinary claims, but no rule on the effect of assignment on third parties, such as publication (or perfection) of assignment. The Property Law contains pledge rules that are applicable to receivables only and establish modern notice-filing rules on pledge, but no rule on the effect of pledges between the parties and on the debtor, such as pledge notice requirement to the debtor and the defenses and right of the debtor to set-off. The dual scheme generates much inconvenience and confusion in judicial practice and is not adapted to the economic reality. The solution is to unify assignment and pledge rules by adopting the functionalist approach, including unifying the scope of claims as well as the internal and external effect of assignment and pledge, and setting aside only special rules on the enforcement of pledge. To solve the above-mentioned problems, it is far from enough to add a new chapter on factoring contract in the Title of Contract of the Civil Code. The provisions in the Chapter on Factoring Contract are not exclusive for factoring contract, but are about general rules on assignment of claims. This legislative approach is against the maximization of the value of civil codification. Therefore, it is better to improve current rules on assignment of claims in general than to make factoring contract rules only. |
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