Supreme People's Court, Interpretation on Application of the Security Section of the «PRC Civil Code» (Draft for Comments)

Issued: November 9, 2020

Main contents: Where the extent of security liability specified by the parties exceeds the extent of the liability bearable by the debtor and the guarantor claims that it ought to only bear security liability to the extent of the liability bearable by the debtor, the people's court shall uphold such claim. If the parties have provided for a liquidated damages clause in respect of the performance of the security liability and the guarantor claims that such clause is invalid, the people's court shall uphold such claim.

If the actual amount discharged by the guarantor when performing its security liability exceeds the extent of the liability bearable by the debtor and, when the guarantor exercises its right of recourse, the debtor claims that it ought to bear liability only to the extent of the liability bearable by it, the people's court shall uphold such claim (Article 3).