There are two main forms of entrusted loan contracts: entrusted loans agreed by both parties and entrusted loans agreed by three parties. The entrusted loan agreed by both parties consists of the entrustment contract signed by the fund provider (principal) and the bank (trustee) and the loan contract signed by the bank (trustee and lender) and the borrower. The rights and obligations of the principal and the trustee, the lender and the borrower are stipulated in the two contracts respectively. The loan entrusted by tripartite agreement consists of a contract: the rights and obligations of the fund provider (principal), the bank (trustee, lender) and the borrower are all stipulated in a contract. In the trial practice, most clients engaged in entrusted loans are non-financial enterprises, while most borrowers are small and medium-sized enterprises that are difficult to obtain loans from banks. According to the existing laws and judicial interpretations, loan contracts between enterprises are invalid contracts. This has caused a legal problem, that is, whether the government departments, enterprises and institutions issue loans to enterprises through entrusted loans naturally evolve into effective contracts. Some people think that the General Principles of Loans stipulates that the clients are "government departments, enterprises, institutions and individuals", but there is no restriction on the identity of the clients. Therefore, it should be considered that the law allows all "government departments, enterprises and individuals" to entrust funds to banks as "clients". Entrusted loan is a lending model stipulated in the General Principles of Loans, and its contract form is either an agreement between the two parties or the mainstream view in current trial practice.

However, the author believes that whether the entrusted loan contract is a valid contract should be comprehensively reviewed in combination with the actual situation such as the identity of the client, the source of funds, the purpose of the loan, etc., and it is not appropriate to determine such a contract as a valid contract just by the coat of the entrusted loan contract. The reason is that the provisions on entrusted loans in the General Principles of Loans only describe the operation forms and characteristics of entrusted loans in general, but do not stipulate the effectiveness of entrusted loans. The General Principles of Loans also stipulates self-operated loans, but this does not mean that all "self-operated loans" contracts are valid contracts. The reason for both is obvious. As mentioned above, at present, the laws, regulations and policy framework regulating private lending in China still do not allow government departments, enterprises and institutions to engage in capital lending business. If government departments, enterprises and institutions are allowed to engage in capital lending business under the guise of entrusted loans, the current legal framework of private lending will be shaken. Although there are legal forms of entrusted loans, it has actually become a way for some government departments, enterprises and institutions to evade financial supervision and illegally engage in private lending for profit, which is obviously an act of evading the law. According to the third paragraph of Article 51 of the Contract Law, "concealing illegal purposes in a legal form" shall be deemed invalid. If we don't distinguish whether the entrusted loan contract exists "to cover up the illegal purpose in a legal form" and ignore the review of the legality of the entrusted loan contract, it may further breed the chaos of private lending due to the wrong guidance of the judicial organs, disrupt the national financial order and affect financial security.

Second, the exercise of security right in entrusted loan contract.

Article 2 of the Reply of the People's Bank of China on the Request for Instructions on the Guarantee of Entrusted Loans (Yintiao Law [19 1] 14) stipulates that entrusted loans generally do not need guarantee; Entrusted loans with guarantors, like other economic contracts, must have the true meaning of the parties and sign a formal guarantee contract, and its contents must meet the requirements of national laws, regulations and relevant policy documents. In real life, in the contract of commercial entrusted loans (to distinguish the policy-oriented capital loans issued by government departments), in order to reduce the risk of capital recovery, most of them will set up guarantees, and most of them are material guarantees. In the entrusted loan contract, because the real lender is the principal and the bank is only the nominal lender, the creditor's rights guaranteed under the entrusted loan contract should be the creditor's rights enjoyed by the principal to the borrower, and the nominal lender entrusted by the bank does not enjoy the creditor's rights and naturally does not enjoy the security right. At this time, another legal issue is involved: in the entrusted loan contract, is the guarantee contract with the entrusted bank as the guarantor valid? Can the customer enjoy the security right? In this regard, two situations are analyzed as follows:

1. The entrusted loan contract is valid. If the guarantee contract is signed by the guarantor and the client, and the guarantee contract is not invalid according to law, and the corresponding procedures (such as mortgage and pledge registration) have been fulfilled according to law, the guarantee contract shall be deemed as a valid contract. If the guarantee contract is signed by the entrusted bank and the guarantor, the agreed security right is the entrusted bank, or the security right registered by the security registration authority is the entrusted bank, then the effectiveness of the guarantee contract and the exercise of the customer's security right are debatable. According to the "General Rules for Loans" and the relevant reply of the People's Bank of China, the real creditor is the principal, and the nominal lender has no right to enjoy the loan issued by the entrusted bank. According to the relevant provisions of the Contract Law and the Guarantee Law, the security right exists based on the realization of the guarantor's principal creditor's right and belongs to the subordinate right. Because the entrusted bank does not enjoy the creditor's rights, there is naturally no security right established to realize its creditor's rights, so the security right registered in its name is not established because the principal creditor's rights do not exist. At this time, although the principal is a real creditor, because the principal failed to sign a guarantee contract with the guarantor and perform the corresponding procedures in accordance with the provisions of the Guarantee Law, it does not belong to the guaranteed party and naturally cannot enjoy the security right in accordance with the relevant provisions of the Guarantee Law. At this time, there is no legal basis for the principal to claim the security right from the guarantor.

2. The entrusted loan contract is invalid because it is deemed to evade the law. The entrusted loan contract is invalid, because the guarantee contract is subordinate to the contract, the main contract is invalid, and the guarantee contract is invalid. Naturally, the principal cannot ask the guarantor to bear the guarantee responsibility.

Three. According to the relevant provisions of the entrustment contract in the Contract Law, can the client directly claim the creditor's rights from the borrower?

Whether it is a bilateral agreement or a tripartite agreement, there are two kinds of contractual relationships: the entrusted contractual relationship between the principal and the entrusted bank, and the loan contractual relationship between the entrusted bank and the borrower. According to the principle of contract relativity, when the borrower fails to fulfill the repayment obligation according to the loan contract, the principal may not directly claim the creditor's rights from the borrower, but the entrusted bank shall claim the creditor's rights and transfer them to the principal after the entrusted bank implements the creditor's rights. In the trial practice, a large number of entrusted loan contract disputes are caused by the borrower's failure to fulfill the repayment obligation and the entrusted bank's delay in fulfilling the assistance obligation. At this time, how can the parties claim their rights? Some people think that because the borrower is determined by the principal and the trustee is entrusted by the principal to issue loans to the borrower, this means that the borrower knows the contractual relationship between the principal and the entrusted bank. Therefore, when the borrower fails to fulfill the repayment obligation as agreed, the principal may conclude a contract with a third party in his own name according to Article 402 of the Contract Law, and the third party knows the agency relationship between the trustee and the principal when concluding the contract. However, the Reply of the Supreme People's Court on How to Determine the Qualification of the Parties to the Entrusted Loan Agreement (Fa Fu [1996] No.6) stipulates that in the process of performing the entrusted loan agreement, if there is a dispute due to the borrower's failure to repay the loan on time, the lender (trustee) may bring a lawsuit to the people's court on the grounds of the loan contract dispute; If the lender insists on not bringing a lawsuit, the client may entrust the trustee of the loan agreement as the defendant and bring a lawsuit to the people's court with the borrower as the third party. This means that the Supreme Court has clearly defined the litigation path when there is a dispute over entrusted loans. Therefore, disputes arising from the entrusted loan contract should be tried according to the approval of the Supreme Court in principle, unless the three parties specifically stipulate in the entrusted loan contract that the principal can directly sue the borrower. For example, the Contract for Entrusted Loan with RMB Funds of China Construction Bank is a standard contract drawn up by the Construction Bank, and the provisions of Article 12 belong to this exception. At this time, the client has a contractual basis to directly sue the borrower, which does not conflict with the above reply of the Supreme Court.

Four, whether to apply mediation to close the case.

In the current field of civil and commercial trials, it is the pursuit of people's courts to try to solve cases through mediation. However, the effectiveness of the entrusted loan contract and the corresponding guarantee contract does not belong to the scope of party autonomy, but belongs to the scope of judicial review by the people's court. Therefore, when trying such cases, the people's courts should not only respect the civil rights and litigation rights of the parties in accordance with the law, but also strengthen the judicial review of the contents of the mediation agreement between the parties. Invalid entrusted loan contract and its guarantee contract cannot be confirmed as valid through mediation, otherwise it will not only violate the legal provisions, but also damage the legitimate rights and interests of other creditors. Undoubtedly, mediation is applicable to disputes over entrusted loan contracts. However, mediation must be carried out in strict accordance with the provisions of the Civil Procedure Law, and the principles of "the parties have the right to dispose of their civil rights and litigation rights within the scope prescribed by law" and "voluntariness and legality" should be strictly examined to ensure that "mediation is conducted on the basis of clear facts". If mediation fails, it shall be handled in a timely manner in accordance with the principle of "combining judgment with mediation" to ensure that

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