The Application of The Arm's Length Buyer Rule in The Context of The Civil Code

Abstract

Based on the consideration of protecting the interests of transactions, article 404 of the civil code extends the normal business buyer rule to the chattel mortgage and stipulates the constituent elements of the rule. The business activities cannot exceed the scope of the business license, and the goods are for continuous sale; Actual payment is required, but not limited to monetary form; Ownership is required, but actual possession is not required. As for the excluded application, the continuous sale of production equipment is not included in the excluded application; The existence of control relationship does not necessarily exclude the application; Bona fide elements can be added to the identification of the cover clause. The application of this rule can block the recovery of chattel mortgage, but it is still bound by paragraph 2 of article 406.