Study on the Application of Rules for Normal Business Buyers

Effectively allocating rights and obligations between parties in guarantee relationships is essential to balancing the guarantor’s discretionary freedom and the security interests of the guarantee right holder. This issue has long been a focal point in the reform of the chattel guarantee system. The “normal business buyer rule” stipulated in Article 320(a) of Part 9 of the Uniform Commercial Code (UCC) in the United States is a legislative approach aimed at harmonizing the inherent conflict between efficiency and security in commercial transactions. Similar provisions exist in Article 102 of the Model European Civil Code and Article 34 of the Model Law on Secured Transactions. However, despite its global prominence in chattel guarantee reforms, this system faces challenges of “acclimatization” when transplanted into the Civil Code. Critics argue that while comparative law establishes “normal business buyer rules” to sever the pursuit of security interests in chattel guarantees, it simultaneously allows for the extension of guarantee rights to income derived from the secured property, preventing excessive disposal freedoms granted to debtors from undermining security interests. In contrast, China’s chattel guarantee system reform adopts the “normal business buyer rules” from foreign legal frameworks but neglects corresponding “income disposal” provisions to mitigate risks. This omission raises concerns about protecting mortgagees’ interests.