The Effect Of Non-existent Accounts Receivable On Factoring Relationships

The civil Code defines the factoring contract as a typical contract,and it can be divided into factoring with recourse and factoring without recourse according to the types of rights enjoyed by the factoring.In essence,factoring with recourse belongs to secured financing business,which provides guarantee for financing business through transfer of receivables,while factoring without recourse achieves payment guarantee through transfer of creditor’s rights.But in fact,even in the absence of receivables,factoring or other legal relationships may still be formed between factoring and creditor and debtor.This paper is divided into three chapters to sum up three cases in which accounts receivable do not exist in factoring relationship,namely,fictitious accounts receivable,invalid basic contract of accounts receivable and transfer of future accounts receivable,and explore the sharing of rights and responsibilities of parties in factoring relationship under these three cases.The first chapter mainly discusses the influence of fictitious accounts receivable on factoring relationship,which will produce different legal consequences according to different fictional subjects.When the subject of fictitious accounts receivable is the factoring and the creditor,the hidden intention of both parties is actually borrowing.When the factoring is a commercial bank qualified for lending,the two parties shall form a legal relationship of financial lending.If the factoring is a commercial factoring institution,it is still controversial to deal with it in practice because it is not a legally permitted lending subject.The mainstream judgment holds that if factoring institutions lend money regularly in the form of "factoring,but actually lending",they actually have operational characteristics and the contract should be invalid.The difference between the validity and invalidity of the contract mainly lies in whether the factoring can claim the agreement of both parties on interest.When creditors and debtors conspire to fabricate accounts receivable,before the promulgation of the Civil Code,judicial judgment is mainly based on the civil law principle of "collusion hypocrisy shall not oppose the third party in good faith".After the promulgation of the Civil Code,the debtor can be bound according to the provisions of Article 673.At this time,the factoring has three main options: first,confirm the validity of the factoring contract and the assignment of creditor’s rights and claim creditor’s rights from the debtor.For the factoring with recourse,it can also require the creditor to perform the contractual obligations of returning the principal and interest of the financing fund or repurchasing the creditor’s rights.Second,cancel the factoring contract and require the creditors to return the factoring financing and assume the liability for damages.Third,creditors and debtors are required to undertake joint and several tort liability.Although there are many ways for factoring to protect their rights and interests,there are still many problems to be solved in practice.First,the identification of the two sides’ fiction must reach a specific degree.If the debtor only negatively confirms the existence of receivables but does not commit other fraudulent acts with the creditor,it can not be considered as fictitious receivables.Second,about the meaning of "no confrontation",this article loses the right of defense,that is,the debtor only in the lawsuit shall not claim corresponding defense,entity rights and obligations do not change.Thirdly,the duty of care should be adopted to determine whether the factoring is aware or not,which is different from ordinary civil subjects.The determination of the existence of accounts receivable by a factoring should conform to the usual commercial judgment made by prudent commercial subjects;When the creditor unilaterally fabricates the receivables,the factoring can only ask him to assume the liability for breach of contract.The second chapter mainly discusses the influence on factoring relationship when the base contract is invalid and accounts receivable does not exist.Due to the difference in the structure of rights and obligations,it is appropriate to discuss the difference between recourse factoring and non-recourse factoring in this case.In the case of non-recourse factoring,the receivables caused by commercial disputes cannot be recovered.Even if both parties agree that the receivables have no recourse,the factoring can still reverse transfer the receivables to the creditors.In the case of recourse factoring,when accounts receivable lose the basis of existence due to the invalidity,revocability or invalidity of the underlying contract,the debtor does not need to bear the liability to the assignee of the creditor’s rights,namely the factoring.However,if the debtor makes a promise to give up the right of defense to the factoring,it cannot get rid of the factoring relationship,and the debtor shall still pay off the receivables to the factoring.The third chapter mainly discusses the influence on the factoring relationship when the object of the factoring contract is the future creditor’s right.Factoring of future creditor’s rights has been widely accepted in the world,which can be defined by dichotomy,i.e.existing creditor’s rights after the establishment of the underlying contract and future creditor’s rights before the establishment of the underlying contract.In the future,the time of creditor’s rights transfer is after the factoring contract is established,so this view is more conducive to protecting the interests of factoring and can play the effect of "bankruptcy isolation".The future claims that can be incorporated into factoring must meet both "relative certainty" and "reasonable expectation" standards.After the factoring contract is established,whether the debtor ratifies it or not will not affect the validity of the factoring agreement and the assignment of the creditor’s right,and neither the factoring nor the creditor need to truthfully inform the debtor of the fact of the assignment of the creditor’s right.When the factoring knows that the future creditor’s right will not occur or has no expected interest in it,it shall assume that the two parties are in fact a legal relationship of loan.