Research On Legal Problems Of Factoring Financing

Factoring derived from America, quickly spread to the whole world, and loaded on China in 1987. From the experience of its developing in each country, we can find its important role in helping boost the debt market and alleviate a economic crisis. Though factoring financing is not omnipotent, it is really a life-saving straw for middle and small-sized enterprises which is lack of fixed assets used for secured financing.In China, the potential of factoring industry has been being attached importance and developed. But still the relevant legislation is backward and preliminary, which is limited to the regulations of assignment of creditor’s rights in Contract Law. Many new problems are emerging but have not been solved well by the law, which has became a great obstacle to factoring industry."Factoring", in its own meaning, is hard to get know its nature in law. The services offered by factoring are various, including financing, collection of receivables and protection against bad debts. Thus this article will begin with defining the nature of factoring. After the analysis of the wrong ideas, this article proposes assignment of receivable claims with strong commercial characteristics. The strong commercial characteristics factoring has is reason why so many new problems come up, and also the significances of the research this article take on.According to Contract Law, receivables are immediately assigned to factor as soon as the factoring contract is achieved. Notification is the requirement for such assignment to take effect to the debtor. And the debtor reserves the right of set-off and defense which can be conducted against factor.Regardless of the inherent demand or development trend, factoring financing with its strong commercial features calls on the security, the convenience and the scale-up of receivable transactions. However, the current legislation followed the backward notion, which emphasizes the relativity of debt and the protection of debtor’s interests. Specifically, this article sums up several problems here.(1)The law recognize the anti-assignment clause and forbid the assignment of receivables with such clause; there is no regulation on potential receivables.(2)Regarding with regulations on notification, the qualified subject and the impact of not notifying are not clear.(3) There is no rule to provide protection for reliance interest of factor.(4)There is no publication system for assignment of receivables.This article adopts the method of comparative analysis and legal translation. And the innovation is that it presents the nature of factoring financing is assignment of receivables with strong commercial characteristics, and then according to such nature corresponding legislative suggestions are proposed.