Concept and Legal Nature of Factoring
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Abstract
The article formulates the definition of factoring through analysis of law doctrine as well as national and international law. The economical concept of factoring is very close to legal and that is because of the economical nature of factoring contract. While defining the concept of factoring the article also distinguishes the main elements as well as essential features of the concept. The article goes on with analysis of the differences between factoring and financing by assignment of receivables.
The second part of the article deals with the legal nature of factoring and its relationship with other similar legal structures. The author takes the view that the foundation of the factoring agreement is the assignment, from which the factoring actually derives. When dealing with the question whether the factoring is a separate type of the assignment, the author is of the opinion that factoring may not be considered a type of the assignment as the assignment is only one of the elements, albeit essential, of the factoring agreement. Thus, the legal regulation of the assignment (cession) of the Civil Code of the Republic of Lithuania should be applied subsidiary to the factoring legal relations.
The article raises the problem of the autonomy of the factoring contract. This issue is related with the manifold nature of factoring contract – for a long time, until the legal regulation of factoring as a separate kind of contracts was included in the Civil Code of the Republic of Lithuania, the factoring contact was concluded as mixed agreement, i.e. as not provided in laws, but not contradicting to them.
Factoring contract has its own special legal regime, but is closely connected to „sister“ contracts provided for in the Civil Code of the Republic of Lithuania: sale–purchase, loan (credit), agency, commission, surety, provision of remunerated services etc. The author points out that notwithstanding inclusion of the legal regulation of factoring in the Civil Code, legal regulation of the aforementioned related separate contracts should be applied subsidiarily to the factoring, to the extent it does not contradict the essence of factoring contract.
The second part of the article deals with the legal nature of factoring and its relationship with other similar legal structures. The author takes the view that the foundation of the factoring agreement is the assignment, from which the factoring actually derives. When dealing with the question whether the factoring is a separate type of the assignment, the author is of the opinion that factoring may not be considered a type of the assignment as the assignment is only one of the elements, albeit essential, of the factoring agreement. Thus, the legal regulation of the assignment (cession) of the Civil Code of the Republic of Lithuania should be applied subsidiary to the factoring legal relations.
The article raises the problem of the autonomy of the factoring contract. This issue is related with the manifold nature of factoring contract – for a long time, until the legal regulation of factoring as a separate kind of contracts was included in the Civil Code of the Republic of Lithuania, the factoring contact was concluded as mixed agreement, i.e. as not provided in laws, but not contradicting to them.
Factoring contract has its own special legal regime, but is closely connected to „sister“ contracts provided for in the Civil Code of the Republic of Lithuania: sale–purchase, loan (credit), agency, commission, surety, provision of remunerated services etc. The author points out that notwithstanding inclusion of the legal regulation of factoring in the Civil Code, legal regulation of the aforementioned related separate contracts should be applied subsidiarily to the factoring, to the extent it does not contradict the essence of factoring contract.
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Please see Copyright and Licence Agreement for further details.
