Commercial Law: Negotiable Instruments, Insurance, Securities, Trust (票据法、保险法、证券法、信托法)
This domain covers negotiable instruments, insurance, securities and trusts. The exam tests formal requirements, rights and liabilities of parties, disclosure, fiduciary duties and investor protection.
Instruments
- A bill must contain statutory particulars; omission of an absolute particular makes it invalid.
- Holder’s limitation periods: against the acceptor or drawer, 2 years from maturity; against an endorser, 6 months from the date of refusal; after payment, the right of recourse is 3 months.
- Endorsement transfers instrument rights. An endorser is liable to subsequent holders unless a statutory “without recourse” arrangement applies.
Insurance and securities
- Insurable interest is required. After indemnity, the insurer is subrogated to the insured’s claim against a third party; the insured must not prejudice subrogation.
- The applicant must answer the insurer’s questions truthfully. A material breach may allow rescission within statutory limits.
- Securities Law 2019 adopts registration-based issuance, continuous disclosure, and prohibitions on insider trading and market manipulation. Issuers, directors and underwriters may face misrepresentation liability.
Trust
- Trust property is independent of the trustee’s own property and is not part of the trustee’s bankruptcy estate.
- The trustee owes duties of loyalty and care, must not self-deal, and the beneficiary may sue for breach.
Worked example
A holder presents a bill at maturity; the acceptor refuses. The holder may sue the acceptor within 2 years from maturity, and may also pursue endorsers within 6 months from the date of refusal. If the holder waits 7 months before suing an endorser, the endorser may raise the 6-month limitation as a defense. The claim against the acceptor remains because the 2-year period has not expired.
Traps
- Using the 2-year period against endorsers instead of the 6-month period.
- Treating trust property as the trustee’s personal assets.
- Assuming an insurer may subrogate before paying indemnity.
- Confusing civil misrepresentation liability with criminal fraud.