Financing agreement for concession of monetary claims - Civil law

Financing agreement for concession of monetary claims

In accordance with paragraph 1 of Art. 824 of the Civil Code under a financing agreement for the assignment of a monetary claim, one party (the financial agent) transfers or undertakes to transfer funds to the other party (the client) to the money request of the client (creditor) to a third party (the debtor) arising from the provision of goods by the client, or rendering services to a third party, and the client concedes or undertakes to give this financial claim to the financial agent.

The monetary claim to the debtor may be assigned by the client to the financial agent also in order to ensure the fulfillment of the client's obligation to the financial agent (paragraph 2 of item I of article 824 of the Civil Code).

This contract is new for our civil law. From its definition it follows that it combines the signs of a contract on assignment of a claim (a cession agreement) and a loan or credit contract. In addition, the peculiarity of the contract in question is that it can include conditions for the financial agent to maintain accounting for the client, as well as provide the client with other financial services related to monetary claims that are the subject of the assignment (clause 2, Article 824 of the Civil Code ). A financing contract for the assignment of a monetary claim is applied in the practice of a developed market turnover called a factoring contract, as the party in which the financial agent is a factor.

By its legal nature, the factoring contract is payable and bilateral. This contract can be either real, and consensual, both in terms of the transfer of money by the financial agent to the client, and regarding the concession to the latter of the monetary claim to the financial agent. The factoring contract must be made in the form prescribed by law for the assignment of a claim (Article 389 of the Civil Code).

Factoring agreements are used exclusively in business, therefore only commercial organizations or individual entrepreneurs can become their participants. As a financial agent, commercial organizations may conclude financing contracts for the assignment of a monetary claim (Article 825 of the Civil Code).

The obligations of the client in the contract in question are the implementation of the assignment of a monetary claim to the financial agent and the payment of his services. According to Art. 827 GK the client is responsible to the financial agent for validity of the claim, being the subject of the assignment. At the same time, as a general rule, he is not responsible for his execution by the debtor on this demand. Thus, factoring is supposed to be non-negotiable, but the client can be held liable to the financial agent for the real performance of the assigned claim (clause 3 of Article 827 of the Civil Code). The subject of a concession for which financing is provided may be a monetary claim for which the term of payment has already come (existing requirement), and the right to receive cash that will arise in future (future demand) (item 1 of Article 826 of the Civil Code).

The client also pesetes the payment obligation for a financial agent, the amount of which is determined as a percentage of the cost of the assigned demand, in a hard cash amount, etc.

The duty of the financial agent is the financing of the customer as payment for the assigned claim. Such financing can be carried out in the form of transferring money to the client in exchange for a concession (either at a time or in separate parts) or by opening a loan secured by a possible assignment of a right of claim in the future. Under the terms of a particular contract, it is also the financial agent's responsibility to provide the client with specified additional financial services.

When calculating with the debtor, the financial agent acquires the right to all sums which he will be able to receive from the debtor in fulfillment of the claims assigned to him. Their size may exceed the amount of the loan issued by the client, and maybe less than this amount, and with non-factoring the client is not responsible for this before the financial agent.

Obligation of the debtor to make payment not to its creditor (client), and its financial agent arises only under condition of written notification about the concession of the claim. In addition, at the request of the debtor, the financial agent is obliged to provide him, within a reasonable time, with proof of the concession that has been made. If these conditions are not fulfilled, the debtor has the right to make a payment to the client, i. to the original creditor (Article 832 of the Civil Code).

As a general rule, the assignment of a monetary claim, i. its resale, a financial agent is not allowed. In the event that this possibility is provided for in the contract, the subsequent assignment of the claim must be carried out in compliance with all rules governing the factoring relationship.

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