[Direct answer]In the Beijing area, the maximum guarantee is used to set a limit guarantee on claims that occur continuously within a certain period, thereby locking in a series of future claims at once. According to Article 420 of the Civil Code of the People's Republic of China, a maximum mortgage is used to guarantee that the debtor will have continuous claims to occur within a certain period, and the mortgagee will be given priority in repayment within the maximum limit of the claims; Article 423 lists the statutory circumstances under which the claims are determined. The key to locking in the claims is to clearly stipulate the period during which the claims are determined, the maximum amount of the claims, and to go through the registration procedures; the maximum guarantee is determined in accordance with Article 690 regarding the guarantee period and the liability limit. It is recommended to clearly specify the settlement period and the limit in the contract, to handle the registration in a timely manner, and to claim the rights promptly after the claims are determined. For more details, please refer to the following link:Financial capital and cross-border legal services involving foreign affairs.

1. Problem background and typical scenarios

Maximum guarantee is widely used in scenarios such as bank credit approval, revolving loans, supply chain credit sales, and continuous transaction exchanges. Typical cases include: the bank approves a credit limit for the enterprise, and the enterprise signs a maximum mortgage contract with the bank to guarantee "continuous borrowing within one year" with its own factory; the parent company of the group provides a maximum guarantee for the series of purchasing debts of its subsidiaries; and the two parties set a maximum pledge for the rolling loans under the framework contract. In practice, many creditors mistakenly believe that "signing a guarantee will definitely cover the full amount", but due to the lack of a specified credit determination period, failure to register, or excess lending, the part exceeding the limit is uninsured. Establishing this guarantee in a standardized manner is a core means for creditors to lock in a series of creditor's rights. For more information, please refer to the following sources:Financial capital and cross-border legal services involving foreign affairs.

II. Key points of contention

There are three main points of contention regarding the maximum amount of the guarantee. Firstly, the scope and limit of the guarantee: the maximum amount of the creditor's claim is the upper limit of the guarantor's liability, and the guarantor may refuse to guarantee the excess part. It is necessary to clarify whether it includes interest and penalty. Secondly, the determination period of the creditor's claim: the creditor's claim is determined when the period expires or when statutory circumstances arise (such as the debtor being declared bankrupt or the occurrence of the agreed circumstances for determining the creditor's claim). After that, new creditor's claims will no longer be included in the guarantee. Thirdly, the legal effect of registration: if the maximum amount of the mortgage or pledge is set on real estate, equity, etc., it shall not be enforceable against bona fide third parties unless it is registered in accordance with the law. The determination of the validity of the relevant contract can be combined with the above points.Business and contract dispute resolution services for enterprisesReview clauses.

III. Professional analysis by Hengluo Lawyers

Based on practical observations in handling financial guarantee cases, the most common oversights in maximum guarantee agreements are "emphasizing contract signing, neglecting registration, and forgetting to calculate the final amount". According to Article 423 of the Civil Code, circumstances in which the creditor's rights are determined include the expiration of the agreed creditor's rights determination period, the impossibility of new creditor's rights arising, and the debtor's bankruptcy. Once the creditor's rights are determined, the guarantor's liability is "capped". Hengluo Lawyers usually recommend the following: specify the maximum creditor's rights amount, the creditor's rights determination period, and the scope of the guarantee in the contract at the time of establishment, and handle the statutory registration simultaneously; the creditor should monitor whether the limit or period is exceeded when disbursing the loan; and the guarantor should pay attention to the time of creditor's rights determination to avoid being pursued for liability beyond expectations. For cases involving recovery of execution proceeds, follow-up actions can be taken accordingly.Creditor-debtor relations and enforcement case servicesAdvance.

IV. Practical suggestions and legal basis

The legal basis is Article 420 (definition of maximum amount mortgage), Article 423 (circumstances under which the creditor's rights are determined), and Article 424 (reference application of the provisions) of the Civil Code of the People's Republic of China (effective on January 1, 2021), as well as Article 690 (guarantee amount and term of maximum guarantee); the registration-related matters shall follow the relevant rules on registration of real rights. Practical suggestions: The contract must specify the maximum amount of the creditor's rights, the determined term, and the scope of the guarantee (whether it includes interest and default penalties); real estate and equity guarantees must be registered to have opposable effect; the creditor should establish a loan ledger to monitor the limit; the guarantor should pay attention to the circumstances of bankruptcy and other definite matters, and the liability shall be capped after the creditor's rights are determined. For foreign-related credit matters, relevant provisions can be referred to for reference.Business and contract dispute services for enterprisesEvaluate the cross-border provisions.

5. Hengluo Law Firm's Advice

The maximum guarantee is a tool of "fixing the amount and locking the period". If used properly, it can effectively protect a series of creditor's rights; if not used properly, it is easy to lose the guarantee. Creditors should not think that the guarantee once signed will cover unlimited debts. They should closely monitor the maximum amount of creditor's rights and the specified period, register in time, and settle accounts in time; guarantors should keep the evidence of creditor's rights to prevent being sued for debts beyond the limit or period. Before signing the contract, either party should ask professionals to review the terms and clarify the settlement mechanism and registration obligations. If it is necessary to coordinate the establishment of the guarantee, they can take advantage of the following tools:Special services and other case servicesClarify the boundaries of guarantees and the paths of recourse for compensation.

VI. Frequently Asked Questions

Q1: Can the maximum guarantee amount definitely cover all debts in full?

No. The core of the maximum guarantee is "limit plus period": the guarantor is only responsible for debts within the maximum creditor's claim limit and occurring within the creditor's determination period. Creditor's claims exceeding the limit or occurring after the period will not be included in the guarantee. According to Article 423 of the Civil Code, once the circumstances for creditor's determination occur (such as the expiration of the period or the debtor's bankruptcy), the new creditor's claims will be excluded from the scope of the guarantee. Therefore, even if a maximum amount contract has been signed, if the creditor over-lends or lends when the determination period has already passed, the excess part will face the risk of being excluded from the guarantee. Whether the creditor can be compensated depends on the contract limit, the determination period, and whether the registration is standard, rather than a blanket promise.

Q2: What materials and procedures are required to set up a maximum guarantee?

The core materials include: the main creditor's contract or framework agreement (to prove the basic transaction relationship), the maximum amount guarantee contract (stating the maximum creditor's amount, determining the period, and the scope of the guarantee), proof that the guarantor has the right to dispose of the guaranteed property (such as property certificates, equity certificates), and the application form and identity documents required for registration. For real estate and equity pledges with a maximum amount, it is necessary to apply for registration with the corresponding registration authority. Failure to register may not be enforceable against bona fide third parties. It is recommended to prepare the registration materials at the same time as signing the contract to avoid the situation of "the contract is signed but not registered", which may lead to the failure of the guarantee.

Q3: What fees are involved in handling a maximum-amount guarantee?

The fees mainly include the registration fee and the possible attorney's service fee. The guarantee registration fee is paid according to the charging standards of the relevant registration authority, usually per item or a certain percentage of the subject matter, with a limited amount; if a lawyer is entrusted to draft and review the maximum guarantee contract, handle the registration and subsequent creditor's rights determination matters, the attorney's fee will be charged according to the complexity of the transaction, the guarantee amount and the workload, either on a per-item basis or as a percentage of the subject matter. The specific fees shall be subject to the entrustment contract and there is no unified government pricing. Compared with the huge losses that may be caused by the loss of guarantee, the cost of standardized establishment and registration is usually far lower than the risk. It is recommended to include it in the budget at the early stage of the transaction.

Q4: How long does it usually take to determine the maximum amount of the guaranteed creditor's rights, and what is the maximum guarantee period?

The time of determining creditor's rights depends on the "period for determining creditor's rights" stipulated in the contract: if the period expires, the creditor's rights are determined; if statutory circumstances occur (such as the debtor being declared bankrupt, or the impossibility of new creditor's rights arising), the creditor's rights are determined from the time such circumstances arise. The length of the period is determined by the transaction arrangements, which may be as short as a few months or as long as several years. After the creditor's rights are determined, the guarantee liability remains effective within the statute of limitations. The ordinary procedure in the first instance lasts six months, and the summary procedure lasts three months. However, the determination of creditor's rights itself is more of a matter of contractual stipulations and factual judgments, and does not necessarily require litigation. It is recommended to settle accounts and assert rights in a timely manner before the expiration of the period to avoid the risk of statute of limitations. For more details, please refer toFinancial capital and cross-border legal services involving foreign affairs.

Q5: As a creditor, how can I actually use the maximum amount of the guarantee?

There are four steps recommended: Firstly, when signing the contract, it is necessary to specify the maximum amount of the creditor's claim, the period for determining the creditor's claim, and the scope of the guarantee (including interest and default penalties) to avoid ambiguous expressions; Secondly, carry out statutory registration according to the type of property to obtain opposable effect; Thirdly, establish a loan ledger to monitor whether the limit or period is exceeded and prevent the guarantee from being withdrawn; Fourthly, when a definite event occurs or the period expires, timely settle the creditor's claim and assert the guarantee rights, and, if necessary, claim priority compensation according to the contract and registration. The guarantor should also keep definite evidence to cap the liability. For complex transactions, it is advisable to seek assistance from professionals.Special services and other case servicesReview the plan.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudication standards in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Financial capital legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In the event of a dispute, please consult a practicing lawyer in a timely manner.