Legal Protection Of Factor’s Rights In Non-recourse Factoring

As one of the important financing methods of enterprises,non-recourse commercial factoring has developed rapidly and played a prominent role in the post epidemic era when the state strives for "financial stability" and "finance better serves the real economy".However,China’s laws and regulations have not made relevant provisions on the establishment,effectiveness,legal effect and other contents of nonrecourse factoring,resulting that the rights of factors in non-recourse factoring cannot be effectively protected by law,the stability of their rights cannot be guaranteed,and the enthusiasm of the industry has been reduced.Based on the basic process of nonrecourse commercial factoring,combined with China’s laws and regulations,international legislation and relevant academic theories,this paper analyzes the legal rights enjoyed by the factors and the deficiencies of China’s laws and regulations,and puts forward targeted improvement suggestions to protect the legal rights of the factors.The establishment and effectiveness of non-recourse commercial factoring relationship is the basis of the generation of factoring rights.Combined with the definition of factoring contract in the civil code,this paper takes the three elements of factoring legal relationship as the baseline to judge whether the parties establish a factoring relationship,and the unique "non-recourse" and "commerciality" of nonrecourse commercial factoring as the standard to judge whether the parties establish a non-recourse commercial factoring relationship.The judgment on the validity of nonrecourse commercial factoring is the same as that of general contracts.A non-recourse commercial factoring contract is valid as long as there is no cause for invalidity of the contract.However,due to the triangular relationship in the factoring contract,the performance of the factoring contract is often confused with the validity of the factoring contract in judicial practice.This paper clarifies this issue.Non-recourse factoring,as a transfer of creditor’s rights,is based on the transfer of accounts receivable.The factor enjoys the relevant rights centered on "realization of accounts receivable",specifically including the right of auxiliary claim,the right to transfer and realize accounts receivable and its related subordinate rights.China’s laws and regulations have not made corresponding provisions on the abovementioned rights enjoyed by factors.At the same time,due to the separation provisions of the rules on changes in the rights of accounts receivable in the civil code,factors are unable to foresee the ownership of rights and take timely and effective actions to protect their rights in the process of realizing their relevant rights according to legal provisions or judicial practice.China’s laws and regulations are not perfect on the transfer of the rights of accounts receivable,the legal effect of the transfer,especially the external effect,and the priority of competing rights on the same accounts receivable.Based on the transfer of accounts receivable,combined with China’s current legal provisions and theoretical theories,this paper reviews the foreign legislative experience,and believes that the change of accounts receivable rights should follow the rules of the general change of creditor’s rights.At the same time,in terms of external effect,it should follow the principle of publicity against each other.Notification and registration are general publicity methods,in which registration takes priority over notification.In addition,according to the specific nonrecourse factoring practice,this paper takes the actual control as one of the publicity methods involving proprietary accounts.When there are competing rights in the same accounts receivable,the changes of the rights of the accounts receivable that are publicized have priority over those that are not publicized.The changes of the rights of the accounts receivable that are publicized are determined according to the time sequence of the publicity,and those that are not publicized enjoy the rights of the accounts receivable according to the proportion of the creditor’s rights.