Research On International Factors' Conflicts With Third Parties

Because of the heated competition in international market, more and more people now regard means of payment as an important tool to sharpen their competitive edge. The attraction of letter of credit is decreasing due to its expensive cost, low efficiency and complicated formalities. International factoring is a unique package of financial services including sales account management, receivables collection, credit risks guarantee and financing. The embodiment of the safety of L/C and the competitiveness of O/A enables international factoring to dwarf others. China's access to WTO will steer its export to a fast growth track, which definitely requires the establishment of corresponding and advanced means of settlement. Arising from different business practice, concerning different legal systems, plus its short history, international factoring has not yet built its legal framework to a sophisticated degree, which has impeded its sound development. In the aspect of international factors' conflicts with third parties, no prevailing rules could be found. Subject to the conflicts with international factors are other assignees of receivables, mortgagees, exporter's suppliers, exporter's trustees in bankruptcy, holders of negotiable instruments, merchantile agents of exporter, banks holding trust receipt and carriers. This thesis analyzed their conflicts with international factors respectively and offered some suggestions for the settlements. The most economical and reliable way is to avoid these conflicts. Preventative measures include the following, to investigate the credit status of exporters before providing the service, to achieve waivers and priority agreements with third parties, to insure international factoring business, and to perfect international factoring legal framework both domestically and internationally which is the solution to this issue.