Research On Legal Issues Of Bank Factoring

This paper was divided into five parts:The first part was introduction.Through the brief introduction to 2 typical cases in practice,the main argument in the legal practice of factoring was derived.The focus of the first case was the notification obligation of the transference of the creditors’ rights to debtors,especially whether the registration of the transference of the creditors’ rights shall be equal to the fulfillment of the notification obligation of the transference of the creditors’ rights in the receivable pledge system of the People’s Bank of China.The focus of the second case was the responsibility sharing when the underlying transaction was false,especially how to determine the prudent and supervisory obligations of the banking factor.The second part was the legal nature of factoring.The notification obligation or the prudent and supervisory obligations of the banking factor were closely related to the nature of factoring.In the part,on the basis of comparing the theory of entrusted agency,the theory of the pledge of the creditors’ rights,the theory of settling subrogation and the theory of the transference of the creditors’ rights,the rationality of the theory of the transference of the creditors’ rights was demonstrated.The third part was the notification of the transference of the creditors’ rights to debtors in factoring.On the basis of the nature of the transference of the creditors’ rights,the notification to debtors in factoring was discussed,and the focus of the argument in the first case was replied.The notification obligation of the transference of the creditors’ rights on the principal part shall not only fulfilled by the receivable assignee.There shall be some clear meaning about the transference of the creditors’ rights in the notification that the registration of the transference of the creditors’ rights shall not be equal to the fulfillment of the notification obligation of the transference of the creditors’ rights in the receivable pledge system of the People’s Bank of China.The recipient of the notification shall not be arbitrarily specified but in line with the basic transaction contract.The fourth part was the authenticity of the basic transaction.The prudent and supervisory obligations of the banking factor on the authenticity of the basic creditors’ rights and debts in the transference of the creditors’ rights were discussed.The focus of the argument in the second case was answered.The bank shall examine the parties’ creditworthiness andtransactions at the same time in terms of the authenticity of the transferred creditors’ rights.The fifth part was conclusion.It was suggested that the factoring company shall pay attention to the validity of the notification of the transference of the creditor’s rights and the examination of the relationship between the basic creditors’ rights and debts in factoring.The effectiveness of the notification shall be ensured from the subject,content and methods.The authenticity of the underlying transaction shall be examined from the legal text,signature and some relevant documents.It shall be also necessary to make use of the notarization mechanism and the receivable pledge system of the People’s Bank of China.