Research On Legal Issues Of The Validity Of Factoring Contracts In China

The total amount of factoring business in China ranks first in the world for many years and is one of the most important factoring markets in the world.However,due to the fact that China did not establish a unified and complete legal rule system for factoring before,judicial organs could only invoke the provisions of the original Contract Law on anonymous contracts to adjudicate when assisting in resolving disputes over the validity of factoring contracts,resulting in the problem of insufficient operability of legal provisions in practice when determining the validity of factoring contracts.After the promulgation of the Civil Code of the People’s Republic of China(hereinafter referred to as the "Civil Code"),in the case of fictitious accounts receivable,modification or termination of the basic contract,and the issuer issuing a notice of assignment of accounts receivable,the adjudication of the validity of the factoring contract has normative guidance,but this legislation is after all a preliminary exploration of the factoring contract system,and it is not enough to cover the validity of the factoring contract.In addition,the principle of the relevant provisions in the Civil Code has led to controversy over their application in judicial practice,especially the validity of factoring contracts,such as how to determine the validity of factoring contracts under fictitious accounts receivable;Whether the modification or termination of the underlying contract will affect the validity status of the factoring contract;and whether the notice of assignment of factoring receivables will have a substantial impact on the validity of the contract.Based on the above problem awareness,this paper starts from the elements related to the validity of factoring contracts involved in the Civil Code,combines case data and theoretical analysis results,and studies the legal issues related to the validity of factoring contracts from the perspective of legal interpretation theory according to the current legal provisions,and puts forward targeted suggestions,so as to provide a reference for the improvement of the validity of factoring contracts.In addition to the introduction,this article is divided into four parts.Part Ⅰ,Status quo and issues in the validity of factoring contracts.This part first introduces the legislative status of factoring contracts and the current situation of judicial practice,after the promulgation of the Civil Code,factoring contracts have their own legal guidelines,and issues involving validity can refer to the relevant provisions of the factoring contract chapter,but due to the more principled nature of the legislation,the current law has not made clear provisions on many issues,and there is no uniformity in the application of provisions in judicial practice,resulting in many problems in the process of determining the validity of factoring contracts,and its influencing factors are mainly manifested as fictitious accounts receivable,basic contracts,Factoring receivable assignment notification defective.The second part is the analysis and countermeasures of the impact of fictitious accounts receivable on the validity of factoring contracts.This section begins with article 763 of the Civil Code and analyses the reasons why the provision is still insufficient to address the question of validity;Then,it analyzes the situation that fictitious accounts receivable may violate the criminal law,and introduces the analysis of the validity of factoring contracts under criminal conditions.In addition,this section also proposes countermeasures to the above problems from the perspective of supplementing the content of the specifications to make the determination of effectiveness evidence-based,standardizing the obligations of the parties to reduce the incidence of fictitious accounts receivable,and the rules for handling the validity of fictitious accounts receivable when they are involved in criminal punishment.The third part is the analysis and countermeasures of the impact of the basic contract status on the validity of the factoring contract.This part mainly distinguishes between the authenticity of the underlying contract,and first analyzes the attitude of article 765 of the Civil Code to the validity of the factoring contract under the conditions of modification or termination of the real underlying contract;Then,against the background of the untrue underlying contract,different views on the impact of the change on the validity of the factoring contract are introduced,and the impact of the invalidity of the underlying contract on the validity of the factoring contract is analyzed.Finally,from the perspective of supplementing the standards for the change of the basic transaction contract and clarifying the responsibilities of the parties to the contract,countermeasures are proposed for the above problems.The fourth part is the analysis and countermeasures of the impact of defects in the notification of the assignment of factoring receivables on the validity of the factoring contract.For the first time,the Civil Code establishes in a legal form that the factor can also act as the issuer of the notice of the assignment of accounts receivable,and this part first starts with the subject of the assignment and analyzes the state of impact on the validity of the factoring contract when the notice is issued by different entities;It then analyzes whether the form and effect of the notice of assignment will have a substantial impact on the validity of the factoring contract.Finally,from the perspective of enhancing the effectiveness of the factor’s notice,improving the notification mode,and learning from the experience of registration and publicity,countermeasures are proposed to improve the notification system for the assignment of accounts receivable,thereby reducing the effects caused by the notice defects.