Section 5 Mortgage of Maximum Amount
Article 59
A mortgage of maximum amount as used in this Law means that the mortgaged property shall be used to secure the creditor's claims which occur successively during a given period of time and to the extent of the total amount of the claims, as agreed upon between a mortgagor and a mortgagee.Article 60
A loan contract may be accompanied by a contract of mortgage of maximum amount. The contract executed by a creditor and a debtor for the continuous transaction of a specific commodity in a given period of time may be accompanied by a contract of mortgage of maximum amount. Article 61
The creditor's right to the principal contract secured by a mortgage of maximum amount may not be transferred. Article 62
The provisions of this section plus other provisions of this Chapter shall apply to mortgage of maximum amount.
Chapter 4 Pledge
Section 1 Pledge of Movables
Article 63
Pledge of movables as used in this Law means that the debtor or a third party transfers the possession of his movables to the creditor as a security for debt. If the debtor defaults, the creditor shall, in accordance with the provisions of this Law, be entitled to convert the property into money as payment of the debt or enjoy priority of having his claim satisfied with the proceeds of auction or sale of the pledged property. The debtor or the third party mentioned in the preceding paragraph shall be the pledgor, the creditor shall be the pledgee, and the movables transferred shall be the pledged property.
Article 64
A pledgor and a pledgee shall conclude a pledge contract in writing. A pledge contract shall become effective upon the delivery of the pledged property to the possession of the pledgee. Article 65
A pledge contract shall include the following particulars: (1) the kind and amount of the principal debt secured; (2) the time limit for the debtor to perform his obligation; (3) the name, quantity, quality and condition of the pledged property; (4) the scope of the guaranty of pledge; (5) the time for delivering the pledged property; and (6) other matters the parties deem necessary to include in the contract. If a pledge contract does not contain all the particulars specified in the preceding paragraph, the omissions may be added by amendment. Article 66
A pledgor and a pledgee may not stipulate in the contract that ownership of the pledged property shall be transferred to the pledgee if the obligation is not discharged at its maturity. Article 67
The scope of guaranty of pledge includes the principal claim and the interest thereof, default fine, the compensation for damage, the storage charges and the cost of enforcing the right of the pledge. If otherwise provided for in the pledge contract, the provisions there shall apply. Article 68
The pledgee shall be entitled to collect the fruits derived from the pledged property. If otherwise provided for in the pledge contract, the provisions there shall apply. The fruits mentioned in the preceding paragraph shall first be used to pay the expenses for collecting the fruits. Article 69
The pledgee shall have the obligation to maintain the pledged property in good condition. The pledgee shall be civilly liable for the loss or destruction of or damage to the pledged property resulting from his negligence in storage. Where the pledgee is unable to maintain the pledged property in good condition and may thus cause loss or destruction of or damage to the pledged property, the pledgor may demand that the pledgee have the pledged property deposited, or demand that his obligation be discharged in advance and the pledged property returned. Article 70
Where there is a possibility for the pledged property to perish or for its value to obviously decline to a point sufficient to impair the rights of the pledgee, the pledgee may demand that the pledgor provide additional security in like amount. If the pledgor refuses to provide the additional security, the pledgee may auction or sell the pledged property, and conclude an agreement with the pledgor that the proceeds from the auction or sale shall be used to pay in advance the debt secured or be deposited with a third party as agreed upon with the pledgor. Article 71
Where the debtor performs his obligation at its maturity, or where the pledgor pays, prior to maturity, the debt secured, the pledgee shall return the pledged property. If the pledgee is not paid at the maturity of the obligation, he may conclude an agreement with the pledgor that the pledged property be converted into money in order to pay the debt, or he may auction or sell the said property according to law. Where the money converted from the pledged property or the proceeds from auction or sale exceed the debt secured, the balance shall be paid to the pledgor. Where the money or the proceeds do not cover the whole debt secured, the difference shall be paid by the debtor. Article 72
The third party who secures the obligation of the debtor shall have the right of recourse against the debtor after the pledgee's enforcement of the right of the pledge. Article 73
The right of pledge shall lapse due to loss or destruction of the pledged property. The compensation obtained for the loss or destruction shall be used as the pledged property. Article 74
The right of pledge shall co-exist with the creditor's right secured. When the creditor's right lapses, the right of pledge shall also lapse.
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