Comparative Study On International Factors' Obligations In China And India

International trade settlement has always been a very important part of international trade. Under the increasingly fierce competition in international trade, Credit sales have been greatly respected by the buyer, being widely adopted. In the respect of international trade settlement, the proportion of enterprises using the letter of credit in the transaction activities is declining, but the proportion of non-credit settlement is increasing year by year. The ways of international trade settlement show a diversified development trend.As a new way of international trade settlement, international factoring meets the needs of the development of international trade, becoming more and more widely recognized and applied in the world. The core content of factoring business is offering trade finance to the supplier by means of accepting assignment of receivables from the debtor. The maintenance of the sales ledger or the credit risks guarantee by factors show up the connotation of the development of factoring business. International factoring businesses with its unique advantages obtain a spurt of growth in the field of international settlement.Factoring business starts late in China, but it is developing much rapidly, and China has become the world's largest factoring business market. The volume of factoring business in India is not as much high as China, but the India Parliament formally adopted The Factoring Regulation Act(2011) to construct the legal framework for the sustainable development of the factoring business. Comparatively speaking, the legal system of the factoring business in our country does not match the development speed of the factoring market, the respondent legal rules are urged to be perfected. China and India are big developing countries, and are the important participants of the BRICS. The two countries are now in the period of the rapid economic development, there are some similarities between the questions of the rule of law in the process of economic development. Therefore, the comparative study of the international factoring business in China and India, will provide a useful reference for the construction of the legal system of international factoring in China.This paper adopts the empirical research method, the normative analysis and the comparative method, it takes the comparison of the obligations undertaken by the factors in the international factoring business in China and India as the breakthrough point. It comparatively analyzes the factors' obligations of ensuring the validity of the assignment of receivables, informing the debtors of the assignment of receivables and the debtor's right of defense and the right of set-off, and the priority rules in the conflicts of rights in the assignment of receivables. It summarizes the common obligations of import factors and export factors, and makes a comparative study of the provisions on the management of factoring business in China and India.Besides the Introduction and the Conclusion, this paper is composed of four main parts.The first part “The legal source of international factors' obligations in China and India” discusses the sources of the international and domestic law about the factors' obligations in China and India, comparatively analyzes the domestic legal norms about the international factoring business in India and China. It points out that China's lack of specific law on factoring, resulting in the inconsistent understanding of the legal nature of the factoring business, and the applicable of the law is not uniform. It puts forward to perfecting the Contract Law, to promoting the development of international factoring business market in China.The second part “Factors' obligations undertaken in international factoring transactions” analyzes the factors' obligations of ensuring the validity of the assignment of receivables, and informing the debtors of the assignment of receivables and the debtor's right of defense and the right of set-off, and the priority rules in the conflicts of rights in the assignment of receivables. It points out that from the perspective of encouraging transactions, we should affirm the authentic of transfer with which the original contract contains "transferring prohibition clause", and affirm the factors' right to directly notify the debtor about the assignment of receivables.The third part “The common obligations of international factors in China and India” discusses the common obligations of import factors and export factors in China and India, namely good faith and mutual obligations, obligations of disclosure, ledger management obligations, payment obligations, the obligations of confidentiality. It points out that the progress of the international factoring business going on smoothly depends on the parties' mutual cooperation and assistance with each other, all parties to the contract should actively fulfill the contract in good faith.The forth part “The duty of supervising and managing of the international factors in China and India” comparatively analyzes the duties of supervising and managing of the international factors in China and India, namely the obligations of registration, the duties of management and the obligations of registration for factoring transactions. It points out that the regulatory requirements in each district of factoring companies are not uniform at this present stage of our country, which resulting in the factoring companies facing regulatory requirements at a loss. It puts forward that any factoring company's business behavior should abide by the laws of the market, so that they give full play to the strength of themselves.In the end of this paper, it holds that the international factoring will maintain a rapid growth momentum owing to the composition of foreign trade. Therefore, it is necessary to unify the supervision standard about the factoring companies. To regulate the factoring business process, to promoting the development of international factoring business market in China.The innovation of this paper are those: it comparatively analyzes the factors' obligations of ensuring the validity of the assignment of receivables, and informs the debtors of the assignment of receivables, the debtor's right of defense and the right of set-off, and the priority rules in the conflicts of rights in the assignment of receivables, then summarizes the common obligations of import factors and export factors, and makes a comparative study of the provisions on the management of factoring business in China and India.