Research On The Rules For Determining The Validity Of Factoring Contracts

The determination of the effectiveness of factoring contracts is a key link in resolving factoring contract disputes.There are still many controversies in the theoretical and practical fields regarding the determination of the effectiveness of factoring contracts,which urgently require in-depth research.This article mainly adopts literature research method,normative analysis method,comparative research method,case analysis method,etc.,and conducts research around "which rules for determining the effectiveness of factoring contracts should be established in China".Firstly,by examining the understanding of factoring outside the region and in China,it is believed that factoring is a comprehensive financial service centered on debt transfer;Factoring differs significantly from debt transfer and borrowing;Factoring is a mixed contract in legal nature;Factoring can be classified in various ways,including recourse factoring and non recourse factoring,based on whether the factoring provider has recourse.Secondly,analyze the theory of determining the effectiveness of factoring contracts.On the basis of clarifying the establishment and effectiveness requirements of factoring contracts,as well as the effectiveness of factoring contracts,this paper analyzes the formal and substantive requirements required to form an effective factoring contract relationship.The formal requirements are that the factoring agent has the qualifications for factoring operations and both parties sign a written contract;The substantive requirements are based on the transfer of accounts receivable,the factoring agent’s subjective goodwill,and the rights and obligations are consistent with the factoring contract.Thirdly,review the rules for determining the effectiveness of factoring contracts in China’s Civil Code.By comparing extraterritorial legislation with Chinese legislation and reviewing the current judicial situation in China,it is found that there are the following issues in the rules for determining the effectiveness of factoring contracts in China:disputes over whether factoring firms do not have factoring business qualifications,disputes over whether existing accounts receivable include bill claims,unclear scope of future accounts receivable,and unclear definition of "knowing" factoring firms in false accounts receivable.The existence of these problems may disrupt the financial order,lead to the proliferation of fictitious debt behavior,and hinder the development of the factoring industry.Finally,there are suggestions for improving the rules for determining the effectiveness of factoring contracts in China.The determination of the effectiveness of factoring contracts should adhere to the principles of balancing interests,balancing efficiency and safety,and respecting commercial practices.Suggestions for improving specific rules:Firstly,clearly define the main qualifications of factoring firms.Administrative regulations or rules clearly stipulate that factoring firms should have factoring business qualifications,and factoring contracts where factoring firms do not have business qualifications are invalid;The second is to clarify the scope of accounts receivable.Recognize the bill debt as the object of the factoring contract,limit the scope of future accounts receivable,and clarify the effective time point of its transfer;The third is to clarify the criteria for identifying factoring firms as "knowingly" in false accounts receivable.We should limit the interpretation of ’knowledge’,which only refers to ’knowing’ and does not include ’should know’.We should establish an obligation to review factoring firms primarily through formal review and supplemented by substantive review.