Tooling Possession Safeguards and Asset Tagging in China Factories
Secure China factory tooling title with bilingual bailment contracts, tamper-proof steel plaques, and notarized audits to prevent commercial lien detention.
Article 447
Meaning
Legal provisions governing the right of retention allow a creditor to withhold property until a debt is satisfied. Under the framework of article 447, a creditor who legally possesses a debtor’s movable property may retain it if the debtor fails to perform an obligation. This right is fundamental to securing payments in manufacturing and repair contracts.
Statutory Requirement
Possession of the physical asset must be legal and directly related to the claim. For article 447 to apply, the debt must typically arise from the same legal relationship as the possession of the property. Exceptions exist for transactions between enterprises where the relationship requirement is relaxed.
If the debtor provides a separate security that is deemed adequate, the creditor must release the retained goods.
Creditor Priority
Secured interests established through possession take precedence over certain other claims. While article 447 grants a right to retain, it does not permit immediate disposal of the asset. The creditor must allow a grace period for the debtor to settle the account.
Following the expiration of this period, the creditor may negotiate a settlement or seek a court ordered auction.
Execution Limit
Valuation of the retained property must be commensurate with the outstanding debt. If the asset value greatly exceeds the claim, article 447 does not justify the retention of the entire lot. Courts may order the release of excess goods.
Failure to return the property after the debt is paid makes the creditor liable for any resulting losses.