Study On The Rights And Obligations Of Factors In Recourse Factoring

The recourse factoring business was introduced into China in 1980 s.After nearly40 years of development,the factoring industry has made tremendous progress and formed a huge service industry.The Civil Code of the People’s Republic of China,which came into effect in 2021,includes recourse factoring as a kind of typical contract,and also defines the rights and obligations of the factor.However,the provisions on factoring contracts in the Civil Code are relatively simple,and the provisions on the rights and obligations of the factor are not complete.Whether in theory or in practice,there are still many disputes over the rights and obligations of a recourse factoring factor.For example,the range of accounts receivable for recourse factoring is too wide,and the factoring company may use the name of factoring to carry out loan business and circumvent financial regulation;the Civil Code does not stipulate that the factor shall review and pay attention to the basic transaction relationship,which reduces the factor’s liability;the imperfect rules for the exercise of the recourse factoring have resulted in the unclear order of the factor’s claims on the accounts receivable and the claim of the recourse;the transfer of priority right of repayment when factoring construction project contract payments is not clear,etc..In order to protect the lawful rights and interests of all parties and maintain the normal order of the factoring market,it is necessary to further strengthen the research on the rights and obligations of the factor and improve the basis of the provisions of the Civil Code on recourse factoring contracts,and provide clear legal guidance for the healthy development of factoring industryThis article believes that to clarify the rights and obligations of the factor in recourse factoring,it is necessary to proceed from the following aspects: First,combine the nature,purpose and trading habits of recourse factoring contracts to further clarify the scope of application of recourse factoring.Provide a restrictive interpretation on the scope of application of the factor’s accounts receivable claims and prohibit the use of bills and accounts receivable arising from personal and family life for factoring.Second,improve the rules of the rights and obligations of the factor,and stipulate that the factor with the right of recourse shall review and pay attention to the basic transaction relationship,as well as the obligation to notify the transfer of the creditor’s rights of the accounts receivable.Third,improve the rules for the exercise of the factor’s right of recourse,requiring the factor to claim the debtor’s rights before exercising the right of recourse.Finally,when the construction project contract payment is used as factoring,the factoring party cannot obtain the priority right of transfer at the same time.