A Research On Chinese Factoring Legal Issues

With the vigorous development of modern international trade and market economy, credit trading has spread on a global scale.The creditor’s right of receivable has become important assets of traditional industries and one of the main obstacles of cash turnover. So how to speed up receivable turnover becomes an important issue. In this context, factoring, as a new tool of trade finance, whose characteristics meet the requirements of market competition, has made a rapid development. But factoring originated from foreign countries and has a short development period in China, there are a lot of legal problems and the factoring parties’ interests face significant legal risks. These problems restrict the further development of factoring. In order to improve our present legal system, we should learn from foreign legal system, which is based on the current situation.This paper is divided into four chapters, the first chapter is an overview of factoring business, which is divided into three sections. The first is to define the concept of factoring. The author introduces the factoring business mode of operation and different criteria for classification so readers could have a comprehensive understanding. Second, it is to explore the legal nature of factoring. The author describes the three popular theories and analyzes the pros and cons, then makes a conclusion: the legal nature of factoring should be identified as the assignment of creditor’ rights. Finally, the author analyzes the present situation of legislation and finds that there are lots of problems to apply the existing legal system, which is used for dealing with factoring business.The second chapter analyzes the problem of the assignment of the creditor’ future rights, which is divided into three sections. The author analyzes some theories and accounting standards, then defines the concept. Based on the experience of foreign countries, the author puts forward special comments.The third chapter analyzes the effect of the assignment clause, which is divided into two sections. The first section is a comparative study and describes the three representative national legislation and international laws. The second section makes suggestions based on analyzing the value orientation of legislation.The fourth chapter is the assignment of notice, which is divided into three sections. Because our legislation in the field of Credit notification is quite rough, by analyzing the relevant international provisions of factoring and combining legislation development trends, the author puts forward reified suggestions to improve the factoring system.