Chapter 1 General Provisions
Article 1: This Law is formulated to promote the circulation of funds and commodities, safeguard the realization of creditor's rights, and develop the socialist market economy.
Article 2: In economic activities such as lending, buying and selling, transportation of goods, and processing contracting, if creditors need to guarantee the realization of their rights through guarantees, they may set up guarantees in accordance with the provisions of this Law.
The guarantee methods stipulated in this law include guarantee, mortgage, pledge, retention, and deposit.
Article 3: Guarantee activities shall follow the principles of equality, voluntariness, fairness, honesty and credibility.
Article 4: When a third party provides a guarantee to a creditor on behalf of the debtor, they may require the debtor to provide counter guarantee.
The provisions of this law on guarantees shall apply to counter guarantees.
Article 5: The guarantee contract is a subordinate contract of the main contract, and if the main contract is invalid, the guarantee contract is also invalid. If there are other provisions in the guarantee contract, they shall be followed.
After the guarantee contract is confirmed to be invalid, if the debtor, guarantor, and creditor are at fault, they shall each bear corresponding civil liability according to their fault.
Chapter 2 Guarantee
Section 1 Guarantee and Guarantor
Article 6: The term "guarantee" as used in this Law refers to the agreement between the guarantor and the creditor that, in the event that the debtor fails to perform the obligation, the guarantor shall perform the obligation or assume responsibility in accordance with the agreement.
Article 7: Legal persons, other organizations or citizens who have the ability to repay debts on behalf of others may act as guarantors.
Article 8: State organs shall not act as guarantors, except for those approved by the State Council to transfer loans from foreign governments or international economic organizations.
Article 9: Schools, kindergartens, hospitals, and other public welfare institutions and social organizations shall not act as guarantors.
Article 10: Branches and functional departments of enterprise legal persons shall not act as guarantors.
If a branch of an enterprise legal person has written authorization from the legal person, it can provide guarantees within the scope of authorization.
Article 11: No unit or individual shall force banks, financial institutions, or enterprises to provide guarantees for others; Banks and other financial institutions or enterprises have the right to refuse actions that force them to provide guarantees for others.
Article 12: If there are two or more guarantors for the same debt, the guarantors shall bear the guarantee liability in accordance with the guarantee share stipulated in the guarantee contract. If there is no agreement on the guaranteed share, the guarantor shall bear joint and several liability, and the creditor may demand that any guarantor bear all the guarantee liability. The guarantor shall have the obligation to guarantee the realization of all the creditor's rights. The guarantor who has already assumed the guarantee responsibility has the right to recover from the debtor or demand other guarantors who bear joint and several liability to pay off their share that they should bear.
Section 2 Guarantee Contract and Guarantee Method
Article 13: The guarantor and the creditor shall enter into a guarantee contract in writing.
Article 14: The guarantor and the creditor may enter into separate guarantee contracts for a single main contract, or may agree to enter into a guarantee contract for a loan contract or a commodity transaction contract that occurs continuously within a certain period of time within the maximum amount of the creditor's rights.
Article 15: The guarantee contract shall include the following contents:
（1） The type and amount of the guaranteed principal debt;
（2） The deadline for the debtor to fulfill the debt;
（3） The method of guarantee;
（4） Ensure the scope of the guarantee;
（5） Guarantee period;
（6） Other matters that both parties consider necessary to be agreed upon.
If the guarantee contract does not fully comply with the provisions of the preceding paragraph, it may be supplemented.
Article 16: The methods of guarantee include:
（1） General guarantee;
（2） Joint and several liability guarantee.
Article 17: If the parties agree in a guarantee contract that the guarantor shall bear the guarantee liability when the debtor is unable to perform the debt, it is a general guarantee.
The guarantor of a general guarantee may refuse to assume the guarantee responsibility towards the creditor until the main contract dispute has been tried or arbitrated and the debtor's property has been lawfully enforced but the debt cannot be fulfilled.
In any of the following circumstances, the guarantor shall not exercise the rights stipulated in the preceding paragraph:
（1） If the debtor's domicile changes, causing significant difficulties for the creditor to demand performance of the debt;
（2） If the people's court accepts a debtor's bankruptcy case and suspends the execution procedure;
（3） The guarantor waives the rights stipulated in the preceding paragraph in writing.
Article 18: If the parties agree in a guarantee contract that the guarantor and the debtor shall assume joint and several liability for the debt, it is a joint and several liability guarantee.
If the debtor of the joint and several liability guarantee fails to perform the debt upon the expiration of the debt performance period stipulated in the main contract, the creditor may require the debtor to perform the debt, or may require the guarantor to assume the guarantee liability within its guarantee scope.
Article 19: If there is no agreement or unclear agreement on the guarantee method between the parties, the guarantee liability shall be borne in accordance with joint and several liability guarantee.
Article 20: The guarantor of a general guarantee and a joint and several liability guarantee shall have the debtor's right of defense. If the debtor waives the right to defend the debt, the guarantor still has the right to defend.
The right of defense refers to the right of the debtor to resist the creditor's exercise of the right of claim based on legal reasons when the creditor exercises the creditor's right.
Section 3 Guarantee Responsibility
Article 21: The scope of guarantee includes the principal debt and interest, liquidated damages, compensation for damages, and the cost of realizing the debt. If there are other provisions in the guarantee contract, they shall be followed.
If the parties have not agreed or the agreement on the scope of the guarantee is unclear, the guarantor shall be responsible for all debts.
Article 22 During the guarantee period, if the creditor lawfully transfers the main creditor's rights to a third party, the guarantor shall continue to bear the guarantee liability within the scope of the original guarantee. If there are other provisions in the guarantee contract, they shall be followed.
Article 23: During the guarantee period, if the creditor permits the debtor to transfer the debt, they shall obtain the written consent of the guarantor. The guarantor shall no longer be liable for the debt transferred without their consent.
Article 24: If the creditor and debtor agree to change the main contract, they shall obtain the written consent of the guarantor. Without the written consent of the guarantor, the guarantor shall no longer be liable for the guarantee. If there are other provisions in the guarantee contract, they shall be followed.
Article 25: If the guarantor of a general guarantee and the creditor have not agreed on a guarantee period, the guarantee period shall be six months from the date of expiration of the main debt performance period.
If the creditor fails to bring a lawsuit or apply for arbitration against the debtor during the guarantee period stipulated in the contract or the guarantee period specified in the preceding paragraph, the guarantor shall be exempted from the guarantee liability; If the creditor has filed a lawsuit or applied for arbitration, the provisions on the interruption of the statute of limitations shall apply during the guarantee period.
Article 26: If the guarantor of a joint and several liability guarantee and the creditor have not agreed on a guarantee period, the creditor has the right to demand that the guarantor assume the guarantee liability within six months from the date of the expiration of the autonomous debt performance period.
If the creditor does not require the guarantor to assume the guarantee liability during the guarantee period stipulated in the contract or the guarantee period specified in the preceding paragraph, the guarantor shall be exempted from the guarantee liability.
Article 27: If the guarantor guarantees consecutive claims in accordance with Article 14 of this Law and no guarantee period is agreed upon, the guarantor may terminate the guarantee contract at any time by giving written notice to the creditor. However, the guarantor shall bear the guarantee liability for claims that occurred before the notice was given to the creditor.
Article 28: If the same creditor's right has both guarantees and property guarantees, the guarantor shall bear the guarantee responsibility for the creditor's right other than the property guarantee.
If the creditor waives the guarantee of the property, the guarantor shall be exempted from the guarantee liability within the scope of the creditor's waiver of rights.
Article 29: If a branch of an enterprise legal person enters into a guarantee contract with a creditor without written authorization from the legal person or beyond the scope of authorization, the contract shall be invalid or the part beyond the scope of authorization shall be invalid. If the creditor and the enterprise legal person are at fault, they shall each bear corresponding civil liability according to their fault; If the creditor is not at fault, the enterprise legal person shall bear civil liability.
Article 30: In any of the following circumstances, the guarantor shall not bear civil liability:
（1） The parties to the main contract collude to deceive the guarantor into providing guarantees;
（2） The creditor of the main contract uses fraud, coercion, and other means to make the guarantor provide guarantees against their true intentions.
Article 31: After assuming the guarantee responsibility, the guarantor has the right to recover from the debtor.
Article 32: After the people's court accepts a debtor's bankruptcy case, if the creditor fails to declare their claim, the guarantor may participate in the distribution of bankruptcy property and exercise the right of recourse in advance.
Chapter 3 Mortgage
Section 1 Mortgage and Collateral
Article 33: Mortgage referred to in this Law means that the debtor or a third party does not transfer possession of the property listed in Article 34 of this Law and uses the property as collateral for the creditor's rights. When the debtor fails to perform the debt, the creditor has the right to convert the property into money or receive priority compensation from the proceeds of auction or sale of the property in accordance with the provisions of this Law.
The debtor or third party referred to in the preceding paragraph is the mortgagor, the creditor is the mortgagee, and the property provided as collateral is the mortgaged property.
Article 34: The following assets may be mortgaged:
（1） All houses and other fixtures on the ground owned by the mortgagor;
（2） All machines, transportation vehicles, and other property owned by the mortgagor;
（3） The mortgagor has the legal right to dispose of state-owned land use rights, houses, and other fixtures on the land;
（4） State owned machinery, transportation vehicles, and other property that the mortgagor has the right to dispose of in accordance with the law;
（5） The land use right of barren hills, ravines, hills, beaches and other wasteland contracted by the mortgagor in accordance with the law and mortgaged with the consent of the contracting party;
（6） Other property that can be mortgaged according to law.
The mortgagor may mortgage the property listed in the preceding paragraph together.
Article 35: The creditor's rights guaranteed by the mortgagor shall not exceed the value of the mortgaged property.
After the property is mortgaged, if the value of the property is greater than the remaining balance of the secured debt, it can be mortgaged again, but not exceeding its remaining balance.
Article 36: If a house on state-owned land obtained in accordance with the law is mortgaged, the right to use the state-owned land within the scope of the house shall be mortgaged simultaneously.
If the state-owned land use right obtained through transfer is mortgaged, the houses on the state-owned land at the time of mortgage shall be mortgaged simultaneously.
The land use rights of township (town) and village enterprises shall not be separately mortgaged. If buildings such as factories of township (town) and village enterprises are mortgaged, the land use rights within their occupied area shall be mortgaged simultaneously.
Article 37: The following assets shall not be mortgaged:
（1） Land ownership;
（2） The collective ownership of land use rights such as cultivated land, homestead land, self retained land, and self retained mountains, except as provided in Article 34 (5) and Article 36 (3) of this Law;
（3） Educational facilities, medical and health facilities, and other social welfare facilities of public institutions and social organizations such as schools, kindergartens, hospitals, etc. for the purpose of public welfare;
（4） Property with unclear or disputed ownership and usage rights;
（5） Property that has been lawfully sealed, seized, or supervised;
（6） Other property that cannot be mortgaged according to law.
Section 2 Mortgage Contract and Mortgage Registration
Article 38: The mortgagor and the mortgagee shall enter into a mortgage contract in writing.
Article 39: A mortgage contract shall include the following contents:
（1） The type and amount of the guaranteed principal debt;
（2） The deadline for the debtor to fulfill the debt;
（3） The name, quantity, quality, condition, location, ownership or usage rights of the collateral;
（4） The scope of mortgage guarantee;
（5） Other matters that the parties consider necessary to be agreed upon.
If the mortgage contract does not fully comply with the provisions of the preceding paragraph, it may be supplemented.
Article 40: When entering into a mortgage contract, the mortgagee and the mortgagor shall not agree in the contract that the ownership of the mortgaged property shall be transferred to the creditor when the mortgagee is not paid off upon the expiration of the debt performance period.
Article 41: If a party mortgages property as stipulated in Article 42 of this Law, they shall register the mortgaged property, and the mortgage contract shall take effect from the date of registration.
Article 42: The departments responsible for registering the mortgaged property are as follows:
（1） The land management department that issues the land use right certificate shall be responsible for mortgaging the land use right without any fixed property on the land;
（2） If urban real estate or buildings such as factories of township (town) or village enterprises are mortgaged, the department designated by the local people's government at or above the county level shall be responsible;
（3） If forest trees are mortgaged, the forest management department at or above the county level shall be responsible;
（4） For aircraft, ships, and vehicles mortgaged, the registration department for transportation vehicles shall be responsible;
（5） If the equipment and other movable property of the enterprise are mortgaged, the administrative department for industry and commerce where the property is located shall be responsible.
Article 43: If the parties mortgage other property, they may voluntarily handle the registration of the mortgaged property, and the mortgage contract shall come into effect from the date of signing.
If the parties have not registered the mortgaged property, they shall not be able to confront any third party. If the parties concerned handle the registration of the mortgaged property, the registration department shall be the notary department in the place where the mortgagor is located.
Article 44: When registering a mortgaged property, the following documents or their copies shall be provided to the registration department:
（1） Main contract and mortgage contract;
（2） Certificate of ownership or use right of the collateral.
Article 45: The materials registered by the registration department shall be allowed to be accessed, copied or duplicated.
Section 3 Validity of Mortgage
Article 46: The scope of mortgage guarantee includes the principal debt and interest, liquidated damages, compensation for damages, and the cost of realizing the mortgage right. If there are other provisions in the mortgage contract, they shall be followed.
Article 47: If the debtor fails to perform the debt at the expiration of the debt performance period and the mortgaged property is lawfully seized by the people's court, the mortgagee has the right to collect the natural interest separated from the mortgaged property and the statutory interest that the mortgagor can collect from the mortgaged property from the date of seizure. If the mortgagee fails to notify the obligor who should pay the statutory interest of the fact that the mortgaged property has been seized, the effectiveness of the mortgage right shall not extend to the interest.
The interest mentioned in the preceding paragraph shall first be used to offset the cost of collecting the interest.
Article 48: If the mortgagor mortgages the leased property, they shall notify the lessee in writing, and the original lease agreement shall remain valid.
Article 49: During the mortgage period, if the mortgagor transfers the mortgaged property that has already been registered, they shall notify the mortgagee and inform the transferee of the fact that the transferred property has been mortgaged; If the mortgagor fails to notify the mortgagee or the assignee, the transfer shall be invalid.
If the transfer price of the collateral is significantly lower than its value, the mortgagee may request the mortgagor to provide corresponding guarantees; If the mortgagor does not provide it, the collateral shall not be transferred.
The proceeds from the transfer of the mortgaged property by the mortgagor shall be used to repay the secured debt to the mortgagee in advance or deposited with a third party agreed upon with the mortgagee. The portion exceeding the amount of the debt shall belong to the mortgagor, and the shortfall shall be paid off by the debtor.
Article 50: Mortgage rights shall not be separated from creditor's rights and transferred separately or used as collateral for other creditor's rights.
Article 51: If the actions of the mortgagor are sufficient to reduce the value of the mortgaged property, the mortgagee has the right to demand that the mortgagor cease their actions. When the value of the collateral decreases, the mortgagee has the right to demand that the mortgagor restore the value of the collateral or provide collateral equivalent to the reduced value.
If the mortgagor is not at fault for the decrease in the value of the collateral, the mortgagee can only request guarantee within the scope of compensation received by the mortgagor for the damage. The portion of the collateral whose value has not decreased shall still serve as collateral for the creditor's rights.
Article 52: The mortgage right and the secured creditor's right coexist. If the creditor's right is extinguished, the mortgage right shall also be extinguished.
Section 4: Implementation of Mortgage Rights
Article 53: If the mortgagee is not paid off upon the expiration of the debt performance period, they may negotiate with the mortgagor to convert the mortgaged property into money or receive compensation from the proceeds of auction or sale of the mortgaged property; If the agreement cannot be reached, the mortgagee may file a lawsuit with the people's court.
After the collateral is discounted, auctioned, or sold, the portion of the proceeds exceeding the amount of the debt shall belong to the mortgagor, and the shortfall shall be paid off by the debtor.
Article 54: If the same property is mortgaged to two or more creditors, the proceeds from the auction or sale of the mortgaged property shall be paid off in accordance with the following provisions:
（1） If the mortgage contract becomes effective upon registration, the payment shall be made in the order of registration of the mortgaged property; If the order is the same, repay according to the proportion of debt;
（2） If the mortgage contract takes effect from the date of signing, and the mortgaged property has been registered, it shall be settled in accordance with the provisions of item (1) of this article; Unregistered debts shall be settled in the order of the effective date of the contract. If the order is the same, debts shall be settled in proportion to the creditor's rights. The registered collateral shall be paid before the unregistered collateral.
Article 55: After the signing of the urban real estate mortgage contract, newly added houses on the land are not considered as collateral. When it is necessary to auction the mortgaged real estate, the newly added houses on the land can be auctioned together with the mortgaged property in accordance with the law, but the mortgagee has no right to priority compensation for the proceeds from the auction of the newly added houses.
According to the provisions of this law, if the land use right of contracted wasteland is mortgaged, or if the land use right of buildings occupied by township (town) or village enterprises such as factories is mortgaged, after realizing the mortgage right, the collective ownership and land use of the land shall not be changed without legal procedures.
Article 56: The proceeds from the auction of allocated state-owned land use rights shall be paid in accordance with the law in an amount equivalent to the land use right transfer fee, and the mortgagee shall have priority in receiving compensation.
Article 57: The third party who mortgages and guarantees for the debtor has the right to recover from the debtor after the mortgagee realizes the mortgage right.
Article 58: The mortgage right shall be extinguished upon the loss of the mortgaged property. The compensation obtained from the loss shall be used as collateral property.
Section 5: Maximum Mortgage Amount
Article 59: The maximum amount mortgage referred to in this Law refers to an agreement between the mortgagor and the mortgagee to use the mortgaged property as collateral for a certain period of continuous debt within the maximum limit of the debt amount.
Article 60: A loan contract may be accompanied by a maximum amount mortgage contract.
A contract signed between a creditor and a debtor for continuous transactions of a certain commodity within a certain period of time may be accompanied by a maximum amount mortgage contract.
Article 61: The main contract creditor's rights under the maximum amount mortgage shall not be transferred.
Article 62: In addition to the provisions of this section, other provisions of this chapter shall apply to the maximum amount mortgage.
Chapter 4 Pledge
Section 1: Pledge of Movable Property
Article 63: The pledge of movable property referred to in this Law refers to the transfer of movable property by the debtor or a third party to the creditor for possession, and the use of the movable property as collateral for the creditor's rights. When the debtor fails to perform the debt, the creditor has the right to be compensated first by discounting the movable property or by auctioning or selling the movable property in accordance with the provisions of this Law.
The debtor or third party referred to in the preceding paragraph is the pledgor, the creditor is the pledgee, and the transferred movable property is the pledged property.
Article 64: The pledgor and the pledgee shall enter into a pledge contract in writing.
The pledge contract becomes effective when the pledged property is transferred to the pledgee for possession.
Article 65: A pledge contract shall include the following contents:
（1） The type and amount of the guaranteed principal debt;
（2） The deadline for the debtor to fulfill the debt;
（3） The name, quantity, quality, and condition of the substance;
（4） The scope of pledge guarantee;
（5） The time for the transfer of the pledged property;
（6） Other matters that the parties consider necessary to be agreed upon.
If the pledge contract does not fully comply with the provisions of the preceding paragraph, it may be supplemented.
Article 66: The pledgor and the pledgee shall not agree in the contract that the ownership of the pledged property shall be transferred to the pledgee when the debt performance period expires and the pledgee is not repaid.
Article 67: The scope of pledge guarantee includes the main creditor's rights and interest, liquidated damages, compensation for damages, storage fees for the pledged property, and expenses for realizing the pledge right. If there are other provisions in the pledge contract, they shall be followed.
Article 68: The pledgee has the right to collect the fruits generated from the pledged property. If there are other provisions in the pledge contract, they shall be followed.
The interest mentioned in the preceding paragraph shall first be used to offset the cost of collecting the interest.
Article 69: The pledgee shall have the obligation to properly safeguard the pledged property. If the pledged property is lost or damaged due to improper storage, the pledgee shall bear civil liability.
If the pledgee fails to properly safeguard the pledged property, which may result in its loss or damage, the pledgor may require the pledgee to deposit the pledged property or demand early repayment of the debt and return of the pledged property.
Article 70: If there is a possibility of damage or significant reduction in value of the pledged property, which is sufficient to endanger the rights of the pledgee, the pledgee may request the pledgor to provide corresponding guarantees. If the pledgor does not provide it, the pledgee may auction or sell the pledged property, and agree with the pledgor to use the proceeds from the auction or sale to repay the secured debt in advance or deposit with a third party agreed upon with the pledgor.
Article 71: If the debtor fulfills the debt upon the expiration of the debt performance period, or if the pledgor repays the secured debt in advance, the pledgee shall return the pledged property.
If the pledgee is not paid off upon the expiration of the debt performance period, they may negotiate with the pledgor to discount the pledged property, or auction or sell the pledged property in accordance with the law.
After the pledged property is discounted, auctioned, or sold, the portion of the proceeds exceeding the amount of the debt shall belong to the pledgor, and the shortfall shall be paid off by the debtor.
Article 72: The third party who pledges and guarantees for the debtor has the right to recover from the debtor after the pledgee realizes the pledge right.
Article 73: The pledge right shall be extinguished upon the loss of the pledged property. The compensation obtained from the loss shall be used as pledged property.
Article 74: The pledge right and the secured creditor's rights coexist, and if the creditor's rights are extinguished, the pledge right shall also be extinguished.
Section 2 Pledge of Rights
Article 75: The following rights may be pledged:
（1） Bills of exchange, cheques, promissory notes, bonds, deposit receipts, warehouse receipts, bills of lading;
（2） Shares and stocks that can be transferred according to law;
（3） Trademark exclusive rights, property rights in patents and copyrights that can be transferred according to law;
（4） Other rights that can be pledged according to law.
Article 76: If a bill of exchange, cheque, promissory note, bond, deposit receipt, warehouse receipt, or bill of lading is pledged, the right certificate shall be delivered to the pledgee within the time limit stipulated in the contract. The pledge contract shall come into effect from the date of delivery of the certificate of rights.
Article 77: If a bill of exchange, check, promissory note, bond, deposit receipt, warehouse receipt, or bill of lading is pledged with a date indicating the date of redemption or delivery, and the date of redemption or delivery of the bill of exchange, check, promissory note, bond, deposit receipt, warehouse receipt, or bill of lading is earlier than the debt performance period, the pledgee may redeem or deliver the goods before the debt performance period expires, and agree with the pledgor to use the redeemed price or goods for early repayment of the secured debt or deposit them with a third party agreed upon with the pledgor.
Article 78: If stocks that can be transferred according to law are pledged, the pledgor and the pledgee shall enter into a written contract and register the pledge with the securities registration authority. The pledge contract shall come into effect from the date of registration.
After the stock is pledged, it cannot be transferred, but it can be transferred with the agreement of the pledgor and the pledgee through negotiation. The proceeds from the transfer of stocks by the pledgor shall be used to repay the secured debt to the pledgee in advance or deposited with a third party agreed upon with the pledgee.
If the shares of a limited liability company are pledged, the relevant provisions of the Company Law on share transfer shall apply. The pledge contract shall come into effect from the date when the pledged shares are recorded in the shareholder register.
Article 79: If the property rights of a trademark exclusive right, patent right, or copyright that can be transferred according to law are pledged, the pledgor and the pledgee shall enter into a written contract and register the pledge with their management department. The pledge contract shall come into effect from the date of registration.
Article 80: After the rights stipulated in Article 79 of this Law are pledged, the pledgor shall not transfer or license others to use them, but may transfer or license others to use them with the consent of the pledgor and the pledgee through consultation. The transfer fee and license fee obtained by the pledgor shall be paid in advance to the pledgee for the secured debt or deposited with a third party agreed upon with the pledgee.
Article 81: In addition to the provisions of this section, the provisions of the first section of this chapter shall apply to the pledge of rights.
Chapter 5: Detention
Article 82: The term 'retention' referred to in this Law means that, in accordance with Article 84 of this Law, if the creditor occupies the movable property of the debtor as agreed in the contract, and the debtor fails to perform the debt within the time limit agreed in the contract, the creditor has the right to retain the property in accordance with the provisions of this Law, and to receive priority compensation from the proceeds of the sale or auction of the property.
Article 83: The scope of the retention guarantee includes the principal debt and interest, liquidated damages, compensation for damages, storage fees for the retained property, and expenses for realizing the retention right.
Article 84: If the debtor fails to fulfill the debt arising from a custody contract, transportation contract, or processing contract, the creditor has a right of retention.
Other contracts that can be retained by law shall be subject to the provisions of the preceding paragraph.
The parties may agree in the contract on items that cannot be retained.
Article 85: If the detained property is divisible, the value of the detained property shall be equivalent to the amount of the debt.
Article 86: The holder of the right of retention shall have the obligation to properly safeguard the detained property. If the retained property is lost or damaged due to improper storage, the holder of the right of retention shall bear civil liability.
Article 87: Creditors and debtors shall stipulate in the contract that after the creditor retains the property, the debtor shall perform the debt within a period of not less than two months. If there is no agreement between the creditor and the debtor in the contract, after the creditor retains the debtor's property, it shall determine a period of more than two months and notify the debtor to perform the debt within that period.
If the debtor fails to perform within the prescribed time, the creditor may negotiate with the debtor to discount the retained property, or may auction or sell the retained property in accordance with the law.
After discounting, auctioning, or selling the retained property, the portion of the proceeds exceeding the amount of the debt shall belong to the debtor, and the shortfall shall be paid off by the debtor.
Article 88: The right of retention shall be extinguished for the following reasons:
（1） Debt extinguishment;
（2） The debtor provides additional guarantees that are accepted by the creditor.
Chapter 6 Deposit
Article 89: The parties may agree that one party shall pay a deposit to the other party as collateral for the creditor's rights. After the debtor fulfills the debt, the deposit should be offset against the price or recovered. If the party who pays the deposit fails to fulfill the agreed debt, they have no right to demand the return of the deposit; If the party receiving the deposit fails to fulfill the agreed debt, they shall return double the deposit.
Article 90: The deposit shall be agreed upon in writing. The parties shall agree on the deadline for delivering the deposit in the deposit contract. The deposit contract shall come into effect from the date of actual payment of the deposit.
Article 91: The amount of the deposit shall be agreed upon by the parties, but shall not exceed 20% of the subject matter of the main contract.
Chapter 7 Supplementary Provisions
Article 92: Real estate referred to in this Law refers to land, as well as fixed objects such as houses and trees.
The movable property referred to in this law refers to things other than immovable property.
Article 93: The guarantee contract, mortgage contract, pledge contract, and deposit contract referred to in this Law may be separately concluded written contracts, including letters, faxes, etc. with guarantee nature between the parties, or may be guarantee clauses in the main contract.
Article 94: When converting or selling collateral, pledged property, or retained property, the market price shall be referred to.
Article 95: If the Maritime Law and other laws have special provisions on guarantees, they shall be followed.
Article 96: This Law shall come into effect on October 1, 1995.