The Guaranty Law of the People's Republic of China
(Approved by the 14th Meeting of the Standing committee of the 8th National People's Congress on June 30, 1995 and Effective as of October 1, 1995)
Chapter I General Provisions
Article 1 This Law is enacted with a view to promoting the accommodation of funds and the circulation of commodities, ensuring the enforcement of creditor's rights and developing the socialist market economy.
Article 3 In guaranty activities, the principles of equality, voluntariness, fairness, honesty and credibility shall be observed.
Article 4 Where a third party provides a guaranty to creditor for a debtor, the third party may require the debtor to provide him with a counter-guaranty.
The provisions on guaranty in this Law shall apply to the counter-guaranty.
Article 5 A guaranty contract is an ancillary contract of the principal contract. If the principal contract is null and void, the guaranty contract shall be null and void, accordingly. 担保合同另有约定的，按照约定。
Where it is otherwise agreed in the guaranty contract, such agreement shall prevail.
If a guaranty contract is determined to be null and void, the debtor, the guarantor or the creditor who is in default shall bear civil liability according to their respective fault.
Chapter 2 Suretyship
Section 1 Suretyship and Surety
Article 6 Suretyship as used in this Law means an agreement pursuant to which a surety and a creditor agree that the surety shall perform the obligation or bear the liability according to the agreement, when the debtor fails to perform his obligation.
Article 7 A legal person, other organization or a citizen capable of assuming debts may act as a surety.
Article 8 No State organ may act as a surety, except in the case of securing loans, for onlending, from a foreign government or an international economic organization as is approved by the State Council.
Article 9 Institutions such as schools, kindergartens and hospitals established for purposes of public welfare, and public organizations may not act as a surety.
Article 10 Branches and functioning departments of an enterprise as a legal person may not act as a surety.
If a branch of an enterprise as a legal person has a power of attorney from the legal person, it may provide a suretyship within the scope of authority.
Article 11 No organization or individual may compel a bank or another financial institution or an enterprise to provide a suretyship for another; a bank or another financial institution or an enterprise shall have the right to refuse to provide suretyship for another.
Article 12 Where there are two or more sureties for one obligation, the sureties shall undertake suretyship liability according to their proportion of suretyship agreed in the suretyship contract.没有约定保证份额的，保证人承担连带责任，债权人可以要求任何一个保证人承担全部保证责任，保证人都负有担保全部债权实现的义务。
In the absence of an agreement on the proportion of suretyship, the sureties shall be jointly and severally liable. The creditor may demand any one of the sureties to undertake all suretyship liability, and every surety shall have the obligation to ensure all of the creditor's rights. 已经承担保证责任的保证人，有权向债务人追偿，或者要求承担连带责任的其他保证人清偿其应当承担的份额。
The surety who has undertaken the suretyship liability shall have the right of recourse against the debtor, or have the right to demand other sureties who are jointly and severally liable to discharge the proportion of obligations which they should respectively assume
Section 2 Suretyship Contract and Modes of Suretyship
Article 13 A surety and a creditor shall conclude a suretyship contract in writing.
Article 14 A surety and a creditor may conclude separate suretyship contracts for a single principal contract, or may reach an agreement to conclude, to the extent of the maximum amount of claim, a single suretyship contract for loan contracts or for certain commodities transaction contracts which successively occur in a given period of time.
Article 15 A suretyship contract shall contain the following particulars:
(1) the kind and amount of the principal claim guaranteed;
(2) the time limit for the debtor to perform his obligation;
(3) the modes of suretyship;
(4) the scope of the suretyship guaranty;
(5) the term of the suretyship; and
(6) other matters the parties deem appropriate.
If a suretyship contract does not contain all the particulars specified in the preceding paragraph, the particulars omitted may be added by amendment.
Article 16 The modes of suretyship include:
(1) general suretyship;
(2) suretyship of joint and several liability.
Article 17 A general suretyship refers to a suretyship contract wherein the parties agree that the surety shall undertake suretyship liability in case the debtor defaults.
A general suretyship allows the surety to refuse to undertake suretyship liability towards the creditor before a dispute over the principal contract is tried or arbitrated and the obligations are not enforceable even after the debtor's assets have been seized according to law.
A surety may not exercise the right provided in the preceding paragraph in any of the following circumstances:
(1) The change of the debtor's domicile makes it extremely difficult for the creditor to have the debtor's obligation enforced;
(2) A People's Court suspends the enforcement proceedings due to its acceptance of the debtor's bankruptcy case; or
(3) The surety waives in writing the right provided in the preceding paragraph.
Article 18 A suretyship of joint and several liability refers to a suretyship contract wherein the parties agree that the surety and the debtor shall be jointly and severally liable.
Where the debtor of a suretyship of joint and several liability defaults when the time limit for his performance of the obligation provided in the principal contract expires, the creditor may demand that the debtor perform his obligation, or demand that the surety undertake the suretyship liability within the scope of the suretyship agreement.
Article 19 In the absence of an agreed or explicitly agreed mode of suretyship, the parties shall bear the suretyship liability following the mode of a suretyship of joint and several liability.
Article 20 The surety of a general suretyship or a suretyship of joint and several liability shall enjoy the debtor's right of defense. 债务人放弃对债务的抗辩权的，保证人仍有权抗辩。
Where a debtor waives his right of defense against the obligation, the surety shall still enjoy a right of defense.
The right of defense means a debtor's right to exercise his right of claim on legal basis against the creditor when the creditor seeds to enforce his rights.
Section 3 Suretyship Liability
Article 21 The scope of the suretyship guaranty includes the principal claim and the interest thereof, default fine, compensation for damage and expenses for enforcing the claim,保证合同另有约定的，按照约定。
unless the suretyship contract provides otherwise.
In the absence of an agreed or explicitly agreed scope of the suretyship guaranty, the surety shall be liable for payment of all the above costs.
Article 22 If a creditor transfers, in accordance with law, his principal claim to a third party during the period of the suretyship, the surety shall continue to be bound by the suretyship contract within the scope of the original suretyship guaranty, 保证合同另有约定的，按照约定。
unless the suretyship contract provides otherwise.
Article 23 Where a creditor permits a debtor to transfer his debts to a third party during the period of the suretyship, a consent in writing shall need to be obtained from the surety; the surety shall no longer be liable if the debts are transferred without his prior consent in writing.
Article 24 When a creditor and a debtor agree to alter the principal contract, they shall have to obtain the surety's consent in writing; the surety shall no longer be liable if the contract is altered without his prior consent in writing, 保证合同另有约定的，按照约定。
unless the suretyship contract provides otherwise.
Article 25 If the surety of a general suretyship and the creditor have no agreement on the term of suretyship, the term of suretyship shall be six months from the date of maturity of the principal debts.
Where the creditor neither files a lawsuit against the debtor nor applies for arbitration during the term of suretyship agreed in the contract of provided in the preceding paragraph, the surety shall be relieved of the suretyship liability; where the creditor has filed a lawsuit or applied for arbitration, the provisions on the interruption of prescription shall apply to the term of suretyship.
Article 26 Where the surety of a suretyship of joint and several liability and the creditor have no agreement on the term of suretyship, the creditor shall, within six months from the date of maturity of the principal debts, have the right to demand that the surety undertake suretyship liability.
If the creditor does not demand that the surety undertake suretyship liability during the term of suretyship agreed in the contract or provided by the preceding paragraph, the surety shall be relieved of the suretyship liability.
Article 27 Where in accordance with the provisions of Article 14 of this Law, a surety provides a suretyship to a creditor's claims which successively occur but there is no agreement on the term of the suretyship, the surety may at any time notify in writing the creditor of termination of the suretyship contract, nevertheless, the surety shall be liable for the creditor's claims which vested before the creditor receives the notice.
Article 28 Where there are both suretyship and property security for the same claim, the surety shall be liable for the creditor's claim unsecured by the property security.
If the creditor waives the property security, the surety shall be relieved of his suretyship liability to the extent of the creditor's waiver.
Article 29 If a branch of an enterprise as a legal person concludes a suretyship contract with a creditor without the written authorization of the enterprise or beyond the scope of the authorization, the suretyship contract shall be null and void or the part of the contract that is beyond the scope of the authorization shall be null and void. If the creditor and the enterprise as a legal person are both at fault, they shall bear their respective civil liabilities commensurate with their own fault; if the creditor is not at fault, the enterprise as a legal person shall be civilly liable.
Article 30 The surety shall not be civilly liable under any of the following circumstances:
(1) the parties to the principal contract conspire to defraud the surety of a suretyship; and
(2) the creditor to the principal contract resorts to deception or coercion to induce or cause the surety to provide a suretyship against its will.
Article 31 The surety, after his assumption of the suretyship liability, shall be entitled to recourse against the debtor.
Article 32 If the creditor does not seek to enforce his claim after a People's Court's acceptance of the debtor's bankruptcy case, the surety may participate in the distribution of the bankruptcy property and exercise his right of recourse in advance.
Chapter 3 Mortgage
Section 1 Mortgage and Mortgaged Property
Article 33 Mortgage as used in this Law means that the debtor or a third party secures the creditor's rights with property listed in Article 34 of this Law without transference of its possession.债务人不履行债务时，债权人有权依照本法规定以该财产折价或者以拍卖、变卖该财产的价款优先受偿。
If the debtor defaults, the creditor shall be entitled to convert the property into money to offset the debts or have priority in satisfying his claim from the proceeds of auction or sale of the property in accordance with the provisions of this Law.
The debtor or the third party specified in the preceding paragraph is the mortgagor, the creditor is the mortgagee, and the property provided as security is the mortgaged property.
Article 34 The following property may be mortgaged:
(1) houses and other things firmly fixed on the land which are owned by the mortgagor;
(2) machines, means of transport and other property owned by the mortgagor;
(3) the land-use right to the State-owed land, State-owned houses and other things firmly fixed on the land which the mortgagor is entitled to dispose of according to law;
(4) State-owned machines, means of transport and other property which the mortgagor is entitled to dispose of according to law;
(5) The land-use right to barren hills, barren gullies, barren hillocks, waste flood land and other unreclaimed land contracted by the mortgagor according to law and consent for the mortgage of such right is obtained from the party granting the contract; and
(6) Other property that may be mortgaged according to law.
A mortgagor may at the same time mortgage all the property listed in the preceding paragraph.