With the booming development of factoring industry, the practical application of factoring contracts has become increasingly widespread, and the related disputes have gradually increased. Under such circumstances, the Chinese government has made corresponding amendments and improvements to the provisions of factoring contracts. For example, the Civil Code includes new provisions on factoring contracts to better protect the market order and legitimate rights and interests. However, even so, the Civil Code does not fully meet the needs of the factoring system, and there are still some legal problems in practice. Therefore, further legislative improvement is imperative. In view of the current problems with factoring contracts, it is suggested that the legislature should take the following measures: firstly, a unified qualification regulation should be introduced to strengthen the qualification examination and supervision of factoring practitioners, so as to reduce the illegal acts of practitioners and ensure the legality and stability of factoring business. Secondly, the scope of future assignment of accounts receivable needs to be clarified to prevent ambiguity in the assignment process, so that both parties have a clear understanding of the scope of assignment of accounts receivable at the beginning of the contract. This can not only avoid legal disputes caused by unclear contracts, but also provide market players with more convenient financial services. Finally, the provisions on fraudulent accounts receivable transactions should also be improved. Since false accounts receivable transactions are one of the main problems in factoring contracts, and such problems are very easy to occur in practice, they should be given priority consideration in the legislative process, and corresponding legal provisions should be formulated to increase the efforts to combat false accounts receivable transactions. Through the reasonable application of the above measures, the legality and stability of factoring business can be better guaranteed, providing more robust legal protection for the development of factoring market, thus promoting the further healthy development of factoring industry in China.

Shi Xue’en. Study on the Legislative Improvement of Factoring Contracts. The Frontiers of Society, Science and Technology (2023) Vol. 5, Issue 3: 11-18. https://doi.org/10.25236/FSST.2023.050302.

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