Research On The Risk Precaution And Relief Of Factor In The International Factoring System

In the past 20 years, International trade competes intensely and the trade procedure gradually becomes simple, fast and convenient. The economy environment on which the means of settlement relies is changed because of the Global economy integration. It also makes a great impact on the development of settlement. The letter of credit is facing a great challenge. Under the current situation of buyer's market, International factoring which is an alternative method of international settlement and financing has gained wide recognition and application in the world. From the point of law, it is a kind of comprehensive financial service provided by factors, which deals with the account receivables produced along with the basic trade. International factoring involves several parties such as exporters,importers and factors (in the two-factor system, there are export factor and import factor), among whom exist intricate relationships referring each party's rights and duties. The core of international factoring is account receivables assignment, which is easy to bring many legal issues. These issues may affect the risk and how to control the risk. The paper researches how to protect the factors' benefits from theory of law angel.This paper consists of five chapters. After introducing the factoring's common problems, the paper proves and clarifies that the legal foundation and core of International Factoring is credit assignment. Then the author analyses the legal relation among the parties. Revolved the account receivable, this article summarizes the risk that factor faces coming from its validity, negotiability, right conflict and so on. In order to prevent the risk occurring and guarantees the factor's benefits, the last two chapters separately put forward some measures to the exporter and the importer. To make the exporter's obligation specific and fixed, it mainly depends upon the clauses such as exporter's pledge and guarantee in the International Factoring Agreement. When the risk is not been prevented and the dispute occurs, the factor may exert recourse and sue to protect his rights and interests. And it is the most advantageous for the factor to sue for breaking a contract. In view of the risk from the importer, the factor may exercise the right of subrogation (in Germany, Switzerland the factor may enforce),the right of revocation as well as the right of suspending in transit. If the importer refuses to pay, the factor may sue in its own name or associate with the exporter to proceed.