Research On The Legal Problems On Receivables Financing

There are great differences in laws relating to receivables assignment among nations with underlying divergences in basic legal systems and concepts. This essay is aimed to articulate the substantial legal aspects of that field, concentrating in the draft Convention by UNCITRAL while making reference to related laws both in Common Law and Civil Law. It is also expected to encourage the improvement of domestic legal environment for the practices in receivables assignment. There are different understandings of typical in receivables. The differences are demonstrated by different definitions of the same term, and also the applications of different terms to a same subject or a similar one. Receivables can be defined narrowly and also broadly. As a right to payment, receivables share characterizations with some other legal terms, such as rights and debts. Analysis of which facilitates the understanding of receivables. Receivables can be classified according to different considerations. An important classification is that of existing and future receivables. The classification of international and national receivables is in the sight of the Convention, for the application of which is based on that classification.The assignment of receivables are involved in many transactions, mainly, factoring, forfeiting, securitization, project finance, refinancing, swaps and derivatives transactions and loan syndicate. Receivables financing is fulfilled through the sale of receivables or the transfer in the way of security, which has similarity with the asset-based title financing.Receivables financing has never be a main way of financing until the recent 20 years for it itself have many restrictive factors, mainly, including the difficulty in evaluating the price and in buyer's or seller's perfecting it's rights. In spite of so said restrictive factors, receivables financing has seen its tide.Assignment by way of sale and security are the main form of receivables assignment. Security is a much more complex way of assignment, and there is great gap between the law of the Common Law System and that of the Civil Law System. The transfer of accessory rights is commonly executed at the time of the transfer of the receivables.Assignment by way of sale is different from that by way of security; however, the differences are hard to be clarified. In the view of security law and bankruptcy law, it is vital to the financer if the sale of receivables is recharacterized as the security of receivables.There are restrictions on the subject and the object of the assignment aiming to ensure the certainty of the transactions including that of contractual, statutory and formality.The rights and duties between the transferor and the transferee are derived from the agreement between them. The usages and practices they agreed on are also enforceable. There involves the interpretation of the contract.The presentation of the transferor is aimed to reduce the risk of the transaction. This kind of presentation is an implied duty of the transferor that can determine whether the transferee can safely collect the receivables from the debtor, the breach of which by the transferor constitutes the breach of the financing contract or assignment contract and falls in the scope of the law applicable to the responding contract.The assignor or the assignee should execute notice to the debtor in order to ensure the enforceability of the assignment against the debtor and the third party. Notice, which need not include any instruction to the debtor to pay the assignee, should be distinguished from the instruction to pay.The assignee has the rights to payment of the assigned receivables as far as they are not restricted by the contract or the preference rule. The subject matter of the rights to payment includes any proceeds of the receivables assigned.The debtor is a party independent from the financing contract and/or the assignment contract by which whose duty can never be aggravated. The basic aim of...