The Legal Effect Of Fictitious Accounts Receivable In Factorin

The commercial factoring business is based on the assignment of accounts receivable arising from the underlying transaction contract,and provides the factoring applicant with capital financing,accounts receivable management and collection,and payment guarantee for the debtor of the accounts receivable,etc.It is a multi-layered transaction model with the assignment of accounts receivable as a necessary element and any combination of factoring services as the structure.The factoring industry has emerged in response to the changing business models of international suppliers who have large amounts of accounts receivable based on credit settlements.The factoring industry in China has been in development for over 20 years and has grown rapidly under the leadership of the Ministry of Commerce,with pilot projects in various regions.However,at the legal level,the long-standing lack of special factoring legal regulations during the development of factoring has led to the co-existence of commercial and legal risks in the factoring industry.With the increased uncertainties in economic growth,the risks faced by factoring business have become increasingly complex,and the number of factoring contract dispute cases has shown a year-on-year increase.The introduction of the Civil Code in 2020 added factoring contracts as a new type of named contract in the Contracts section,which shows the importance that China attaches to the factoring industry.The factoring legal relationship has multiple constructions due to the fact that it involves two contracts and three parties.The receivables formed by the underlying transaction contract between the creditor and the debtor serve as the subject of the assignment of the claim in the factoring contract,and thus the authenticity of the receivables affects whether the factoring contract can be performed and the interests of the factor and the security of the transaction in commercial activities.Article 763 of the Civil Code provides that "If a creditor of receivables and a debtor conclude a factoring contract with a factor by fictitiously assigning receivables as the subject of the assignment,the debtor of receivables shall not rely on the non-existence of receivables against the factor,unless the factor knows of the fiction." This provision responds to the difficult question of whether the factor can claim the receivables from the debtor under the situation of fictitious receivables in judicial practice,but there are still more ambiguities,leaving some room for interpretation and not yet solving the whole problem of fictitious receivables.Based on this,this article will analyse and discuss a series of practical issues surrounding fictitious accounts receivable in factoring,study the validity of factoring contracts under different circumstances of fictitious accounts receivable,explore the jurisprudence of its validity,analyse the nature and manner of liability for different circumstances,balance the interests of creditors,debtors and factors in the level of attribution of untrue accounts receivable,and take into account The study aims to provide useful legal suggestions for the improvement of the factoring system and to promote the healthy development of the factoring industry.