THESIS
2016
Abstract
This study examines early twentieth-century Chinese legal reform of partner’s liability
towards external creditors and the reaction of Shanghai Chinese businessmen to such reforms.
Drawing from legal cases, commercial contracts, diplomatic archives, and mass media reports,
I provide a case study of how a transplanted, supposedly more efficient, ‘global’ Western
commercial legal rule came into conflict with ‘local’ business practice in Shanghai. Starting
from the 1910s, in order to increase the credibility of partnership and to protect foreign
creditors, lawmakers in the late Qing, Beiyang, and Nanjing Governments tried to introduce
the new legal norm that every partner was fully liable for all the debts owed by a partnership.
This had not been the case in the Qing law and prevai...[
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This study examines early twentieth-century Chinese legal reform of partner’s liability
towards external creditors and the reaction of Shanghai Chinese businessmen to such reforms.
Drawing from legal cases, commercial contracts, diplomatic archives, and mass media reports,
I provide a case study of how a transplanted, supposedly more efficient, ‘global’ Western
commercial legal rule came into conflict with ‘local’ business practice in Shanghai. Starting
from the 1910s, in order to increase the credibility of partnership and to protect foreign
creditors, lawmakers in the late Qing, Beiyang, and Nanjing Governments tried to introduce
the new legal norm that every partner was fully liable for all the debts owed by a partnership.
This had not been the case in the Qing law and prevailing commercial custom in China
whereby each partner should only pay for his own share of debt. In Shanghai, although some
creditors readily adopted the new liability provisions to claim debt, local merchant
organizations continuously petitioned to revise the new rule so that it could be aligned with
the long-standing commercial custom. In their petitions, Chinese businessmen complained
that the transplanted liability greatly increased the risk of their investment, and tried to
persuade lawmakers that their custom were more beneficial for business development.
Examining the pre-existing institutional arrangement devised by early twentieth-century
Chinese investors, I argue that their objection can be explained by economic calculation, and
according to this economic logic, the transplanted partnership liability could damage their
indigenous way of risk management.
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