[Direct answer]Whether the agreement is signed before or after the expiration date, the legal effect is different: agreements reached after the expiration of the debt performance period are generally treated as substitution of the subject matter for debt repayment or new debt repayment. If the content is clear and the goods have been delivered or registered, it is usually deemed valid and the old debt is extinguished accordingly; if it is agreed before the expiration that the debtor cannot repay and the creditor directly substitutes the goods for the debt without liquidation, it is likely to violate the prohibition of floating pledges and floating mortgages, and it is difficult to directly obtain ownership of the goods according to the agreement. According to the relevant provisions of the Contracts and Creditor's Rights Chapters of the Civil Code of the People's Republic of China (effective January 1, 2021), whether the agreement is valid also depends on whether the price is fair, whether it harms other creditors, and whether the goods have been delivered or registered. Whether the old debt is extinguished depends on whether the parties agreed on debt renewal or the coexistence of new and old debts, and this cannot be taken for granted.

1. Problem background and typical scenarios

The money cannot be recovered, and the other party has no funds in their account, yet there is a batch of goods piled up in the warehouse. Therefore, the two parties sit down to discuss taking the goods as payment—this is a common turning point in creditor-debtor and enforcement cases. There are four common scenarios. First, after the debt maturity, the debtor lacks cash flow and offers equipment, inventory, or raw materials as compensation. The two parties sign an agreement to settle the debt with goods, take the goods away, and clear the account. Second, when a loan or supply contract is signed, clauses are added stating that if the debt is not repaid on time, the goods will be directly used to offset the debt. However, the price of the goods may rise or fall sharply afterward, and one party may regret it. Third, during the enforcement stage, the two parties reach a settlement, agreeing to use goods to offset the debt and apply for a court ruling. However, the goods have already been seized or mortgaged in another case, making it impossible to transfer ownership. Fourth, the debtor owes money to multiple creditors, but offers valuable inventory to just one creditor, while the other creditors claim that the valuation is significantly too low and damages their interests. When courts in Beijing review such cases, they examine the signing date of the agreement, whether the debt has matured, the basis for valuing or pricing the goods, the completion of delivery and registration, and the recovery status of other creditors. Simply stating in the agreement that there are no further disputes does not necessarily mean that the old debt is automatically extinguished. If the goods are not delivered, registered, or have ownership defects, even a valid agreement on paper may not translate into actual possession. It's also important to note that taking goods as payment involves two sets of rules for movable property delivery and immovable property/special movable property registration. Choosing the wrong fulfillment method may lead to having to reclaim the original debt later.

II. Key points of contention

Disagreements usually arise in four areas. First, regarding the timing of the contract. If it is agreed that if the debt is not repaid by the due date, the creditor can directly offset the debt with the goods without going through liquidation, it is likely to be regarded as a guarantee and subject to the rules on pledging and hypothecation. However, if it is signed after the due date for the purpose of repayment, the effectiveness of the agreement will be judged much more leniently. Second, regarding whether the old debt is extinguished. If the parties agree to replace the old debt with a new one, the old debt and its accessory rights will be terminated; if they only agree to add a repayment method and the old debt continues to exist, the creditor can still claim the original debt before the actual delivery of the goods. A slight difference in wording can lead to vastly different results. Third, regarding the pricing and delivery. The price at which the goods are discounted, whether they have been appraised, whether there is a situation of high value and low pledge or low value and high pledge, whether the movable property has been actually delivered, and whether the registration has been completed will directly determine whether the agreement has been truly performed. If the pricing is obviously unfair and damages other creditors, it may also be subject to a request for rescission. Fourth, regarding the burden of rights. If the goods have been mortgaged, sealed up, subject to a retention of title clause, or have quality defects, the transferee may face a series of disputes. At the evidence level, there is also a frequent dispute point: only an agreement and a few photos are provided, without a warehouse delivery note, weighing note, receipt stamp, or registration receipt. If the other party claims that they have not received the goods, the effectiveness of the performance can easily be disputed. To establish a clear line of evidence from signing the contract, appraising the goods, delivering the goods, accepting the goods, and registering the goods, the dispute point can be more convincing.

III. Professional analysis by Hengluo Lawyers

When settling debts with goods, it may seem like a different way of repaying money, but legally, it must pass three hurdles: the validity of the agreement itself, whether the goods have been truly delivered, and whether the old debt has been settled. When handling creditor-debtor and enforcement cases at Beijing Hengluo Law Firm, we typically break down these three hurdles one by one, verify the evidence for each item, and then determine whether to continue delivering the goods as required by the agreement or to reclaim the original creditor's rights. Returning to the validity judgment, courts usually first examine whether the debt has matured: agreements signed before maturity stipulating that the goods will belong to the creditor if not returned within the time limit and not liquidated are typically handled as assignment guarantees or fixed-price clauses, where the creditor cannot directly acquire ownership but can only receive compensation for the goods' value; agreements signed after maturity, with assessed valuations or mutual confirmations, and actual delivery or registration, are generally recognized as having settlement effect. Secondly, regarding the old debt relationship, if the agreement stipulates debt renewal and the original creditor's rights are extinguished, the rights are settled together; if it only stipulates settling the debt with goods corresponding to a certain amount without mentioning the old debt's existence or termination, it is generally understood that the new and old debts coexist, and the original creditor's rights can still be claimed before the goods are delivered. Thirdly, regarding third-party interests, if the debtor, who is already insolvent, transfers major inventory at a low price to individual creditors, other creditors may request rescission according to the rules on creditors' right of rescission in the Civil Code of the People's Republic of China (effective January 1, 2021). The claims of both parties often diverge here: the creditor emphasizes the black-and-white terms of the agreement and the goods having been removed, demanding confirmation of settlement completion; the debtor argues that the valuation is too low, the goods have not been inspected, or the agreement was signed under duress, demanding renegotiation of the original debt. The court's determination logic often places the agreement text, appraisal reports, out-of-warehouse weighing records, receipt stamps, and registration information on a timeline to see whether the performance actions corroborate the agreement, rather than focusing on a single sentence. From a procedural perspective, the effectiveness of debt settlement agreements signed before litigation and enforcement settlements reached during the enforcement stage differ in their sources of effectiveness and remedial paths: the latter typically accompanies an enforcement ruling, and if one party fails to perform, an application can be made to resume enforcement of the original effective document; for the former, disputes arise and require separate litigation to confirm validity or request continued performance. Clarifying these two layers prevents using a private agreement in the enforcement process to claim matters that should be handled separately in another case. 以物抵债看似是另辟蹊径还钱，但在法律层面却要过三道关：协议本身是否有效、货物是否真正交付、旧债是否随之了结。北京恒略律师事务所处理债权债务与执行案件时，习惯先把这三道关拆开，逐项核对证据，再判断是按协议要求继续交货，还是回过头主张原债权。回到效力判断上，法院通常先看债务是否已到期：在到期前签署、约定到期不还货物即归债权人所有且不清算的，多按让与担保或流质条款处理，债权人不能直接取得所有权，只能就货物变价受偿；到期后签署、经过评估或双方确认、货物已实际交付或办完登记的，一般认可其清偿效力。其次看旧债关系，协议写明债务更新、原债权消灭的，权利一并了结；只写以货抵偿相应金额、未提旧债存废的，通常理解为新债与旧债并存，货物未交付前原债权仍可主张。再次看第三人利益，债务人资不抵债却以低价将主要库存抵给个别债权人，其他债权人可依《民法典》（2021年1月1日施行）关于债权人撤销权的规则请求撤销。双方主张也常在此分叉：债权人强调协议白纸黑字、货物已拉走，要求确认抵偿完成；债务人则主张作价过低、货物未验收、或协议是被迫所签，要求按原债务重新结算。法院的认定逻辑，往往是把协议文本、评估报告、出库过磅记录、收货章与登记信息放在一条时间线上，看履行行为是否与约定相互印证，而非单看某一句话。从程序节点看，诉讼前签的以物抵债协议与执行阶段达成的执行和解，效力来源与救济路径并不相同：后者通常伴随执行裁定，一方不履行的，可申请恢复原生效文书的执行；前者产生争议，则须另案起诉确认效力或请求继续履行。理清这两层，才能避免在执行程序中拿一份私下协议去主张本该另案处理的事。

IV. Practical Suggestions and Legal Basis

The entity mainly relies on the provisions of the Contract Chapter and the Creditor's Rights Chapter of the Civil Code of the People's Republic of China (implemented on January 1, 2021) for its legal basis, and the validity of the agreement, the substitution of performance, the right of revocation, and the rules of property rights transfer are developed based on these provisions. The delivery of movable property and the transfer of property subject to registration shall be judged in accordance with the requirements of property rights transfer. In terms of procedures, the Enforcement Chapter of the Civil Procedure Law of the People's Republic of China (amended on December 24, 2021 and implemented on January 1, 2024) applies, and enforcement settlements, decisions on substitution of performance for debt repayment, and resumption of enforcement are all within its framework. Regarding fees, the "Measures for the Payment of Litigation Fees" (implemented on April 1, 2007) charges case acceptance fees based on the amount of the litigation subject, but the charging basis is different for cases only requesting the confirmation of the validity of the agreement and those also requesting the delivery of goods and compensation for price differences. The suggested four-step action sequence is as follows: First, verify the signing date and the maturity date of the debt to determine whether the agreement is a pre-maturity guarantee type or a post-maturity settlement type; Second, fix the pricing basis and retain the appraisal report, market quotations, and confirmation forms from both parties, indicating the name, quantity, quality, and storage location of the goods; Third, complete the delivery chain by obtaining the removal of goods from the warehouse, weighing slips, logistics slips, and receiving stamps, and completing the transfer of registered property and retaining the receipt; Fourth, clarify whether the old debt is still valid or whether there are both old and new debts to avoid conflicting interpretations afterwards. For cases involving large amounts or goods subject to mortgages or seizures in other cases, it is advisable to first conduct ownership verification before signing the acceptance. For a systematic understanding of the handling approach for the connection between creditor's rights realization and enforcement, please refer to the relevant materials.The realization and enforcement of creditor's rightsColumn.

5. Henglu Law Firm's Reminder

When signing an agreement to settle debts with goods, the most common pitfall is mistaking the validity of the paperwork for actual receipt of the money. There are three key points to remember. First, clarify the timing. If the agreement stipulates that the goods will be yours if not returned by the due date, you likely won't gain full ownership immediately—you'll only be able to claim compensation based on the goods' resale value. Only if the agreement is signed after the due date, the price is clearly specified, and the goods have been delivered, will the settlement be closer to actual repayment. Second, make it clear whether the old debt is still valid or has been extinguished. If the old debt remains outstanding before the goods are removed, don't rush to return the original loan notes and contracts to the other party. Third, keep hard evidence of delivery. Documents like warehouse receipts, weighing slips, receiving stamps, and registration receipts are far more reliable than on-site photos. If the goods are mortgaged, sealed, or have quality defects, check ownership before accepting them and negotiate a discounted price afterward. Judicial practice in Beijing is strict about verifying original evidence and timelines. If the appraised value significantly deviates from market prices and occurs after the debtor's insolvency, other creditors may legally request revocation, and the goods received by the transferee might be reclaimed. Additionally, note that the legal remedies for settlements via goods reached during enforcement and those signed privately differ. For the former, non-performance allows for reinstating the original enforcement order; for the latter, litigation is typically required. Understanding these differences saves costs compared to disputing the authenticity of the agreement after the fact.

VI. Frequently Asked Questions

Q1: If it is agreed that the debtor will use the equipment as collateral for the debt if they cannot repay the debt before it matures, can the creditor directly acquire ownership of the equipment?

Generally, this is not allowed. If the parties agree that the creditor will directly obtain ownership of the goods if the debt is not repaid by the due date and without going through liquidation, according to the relevant provisions of the Contract Chapter and the Creditor's Rights Chapter of the Civil Code of the People's Republic of China (effective January 1, 2021), this arrangement has the characteristics of a pledge or assignment of guarantee. Courts generally do not support direct transfer of ownership according to the agreement, but only allow compensation for the goods through discounting, auction, or sale. The problem with such agreements is not that the parties did not sign them, but that they skipped the liquidation process: the value of the equipment, the amount of debt it offsets, and how to make up for the difference have not been clearly calculated, which may harm the interests of the debtor and other creditors. If an agreement to offset the debt with the goods is reached after the due date, and the valuation is confirmed or evaluated by both parties and the equipment has been actually delivered, the effectiveness of the agreement will be much more leniently judged. The key points are: to obtain the equipment, first complete the due date of the debt, the basis for valuation, and the delivery records, and then discuss the ownership; if there is only a pre-written clause for offsetting the debt, claiming direct transfer of ownership is likely to fail.

Q2: To prove that the goods have actually been delivered, are the warehouse delivery note, the weighing slip, and the receiving stamp all indispensable?

It's not necessary to have all three elements, but a set that can form a closed loop is required. For movable property, the delivery serves as the node of change in ownership. The court will examine whether the goods have left the debtor's control and entered the creditor's or their designated warehouse. The out-of-warehouse note indicates where the goods came from, the weighing note shows the quantity and weight, and the receiving stamp demonstrates that the other party has signed for receipt. These three pieces of evidence mutually corroborate each other and provide the most reliable proof. If one of them is missing, it can be supplemented with logistics shipping documents, warehouse entry records, on-site inspection photos, and subsequent disposal certificates, which can also form a chain of evidence. According to the provisions of the Contract Chapter of the Civil Code of the People's Republic of China (effective January 1, 2021), the validity of the agreement does not equal the completion of performance. If there is only a signed agreement on the exchange of goods for debt, but no delivery certificate can be provided, the other party's claim that they haven't received the goods will put the claimant at a disadvantage. Beijing courts are strict in verifying original documents. The receiving stamp must correspond to a specific entity, and the proof of replacement has lower evidentiary value than the documents issued at the time. When organizing the evidence, arrange the appraisal, out-of-warehouse, transportation, inspection, and warehouse entry documents by date, and attach a page of the goods list. This is much clearer than just piling up scattered documents.

Q3: Is the fee for settling debts with goods charged per item or based on the value of the compensation? Who should advance the appraisal fee first?

Both methods are common, depending on the stage of the case. For cases where only the validity of the agreement is reviewed and no large-scale payments are involved, lawyers' fees are usually charged on a per-case basis. For cases where the subject matter of the agreement is large and the delivery of goods or compensation for price differences are also claimed, lawyers' fees are generally calculated based on the amount of compensation or by the number of working hours, subject to the terms of the contract and without a unified government pricing. Appraisal fees are generally prepaid by the party claiming the valuation, and the final burden can be agreed upon in the agreement. If there is no clear agreement, the court will determine the burden according to the proportion of responsibility. Litigation fees are paid in accordance with the "Measures for the Payment of Litigation Costs" (implemented on April 1, 2007), which are paid in stages based on the amount of the litigation subject matter. The charging basis for requesting confirmation of the validity of the agreement and requesting continued performance of the agreement is different. Before taking action, it is better to list the lawyers' fees, appraisal fees, case acceptance fees, and possible taxes arising from the transfer of goods into a budget table, and then compare it with the realizable value of the goods. This can better judge whether it is worth proceeding with the case than simply asking how much it will cost.

Q4: If the debt-settling goods are not transferred to the creditor for a long time, when does the statute of limitations for the original debt start to run again?

It depends on whether the parties agreed to update the debt or to allow both old and new debts to coexist. The starting point for calculating the statute of limitations is different in each case. If the agreement stipulates that the original creditor's rights will be extinguished after the goods are used as compensation and there are no further disputes between the parties, the old debt will generally not be claimed separately. Instead, the dispute will shift to demanding continued performance of delivery or transfer of ownership. If the agreement only lists the use of goods as a new method of repayment without specifying whether the old debt will be preserved or eliminated, the original creditor's rights will usually still exist until the goods are delivered and registered. In this case, urging the other party to perform and keeping written records will allow the statute of limitations to be recalculated from the date of asserting rights. According to the Civil Procedure Law of the People's Republic of China (amended on December 24, 2021 and implemented on January 1, 2024), the first-instance ordinary procedure generally lasts six months, and the summary procedure lasts three months. If the original creditor's rights are claimed after the effectiveness of the agreement is confirmed in a separate case, the time period will be further extended. In practice, it's not advisable to waste the waiting period: First, send a written notice stating the performance deadline, and at the same time, track the progress of warehouse release, acceptance, and registration. Once the deadline expires, you can sue according to the established procedures to avoid losing both rights due to exceeding the statute of limitations.

Q5: If the other party proposes to use inventory as a form of payment, should we first conduct a property verification or first commission an appraisal to determine its value?

First, conduct a verification of ownership, then commission an appraisal to determine the value. Reversing the order may result in wasted appraisal fees. Three tasks that can be completed on the same day include: checking the inventory through registration or public channels to determine whether it is subject to mortgages, seizures, or retention of ownership clauses; requiring the other party to provide purchase and sales contracts, warehouse receipts, and storage locations to confirm that the goods are indeed under their disposal; and organizing existing IOUs, contracts, and transfer receipts chronologically into a creditor's draft. If there are ownership defects, even large quantities of goods cannot be used as collateral. In this case, efforts should focus on tracing property clues and conducting enforcement investigations. For clear ownership, commission an appraisal or obtain a mutually agreed valuation list, specifying the name, quantity, quality, and discounted amount. Additionally, refer to the relevant provisions of the Contracts Chapter of the Civil Code of the People's Republic of China (effective January 1, 2021) to address the validity of old debts, delivery time, and warranty of defects. While Beijing courts have high levels of enforcement informatization, it remains crucial for creditors to proactively provide clues. It is more reliable to prepare warehouse receipts, weighing certificates, receiving stamps, and registration receipts before signing the agreement rather than obtaining these documents afterward.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, so as to avoid missing the statutory time limit.\nLegal services for creditor-debtor disputes·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open 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. If a dispute arises, please consult a practicing lawyer in time.