The Legislative Development of International Factoring and Its Practice in China

With the formation of the buyer-oriented market in the international trade and an increase of export turnover of China, international factoring, which provides a trade financial service for exporters under the credits of Open Account (O/A) and Documents against Acceptance (D/A), will constantly develope forward. As the core of legal relationship of international factoring, namely, the assignment of receivables, both UNIDROIT and UNCITRAL have made clear provisions through conventions successively, and FCI has enacted the new General Rules of International Factoring in 2007, thus a unified international legal environment on international factoring has been formed. Compared with unified substantive private law pact of entity, our country has not enough provisions about assignment of credit. In particular, there exists no provisions on the assignment of future credit. Consequently, Chinese international factoring system is confronted with many legal problems in pracitice. In order to solve this problem, assignment of future credit should be clearly defined in Contract Law and provisions about the situation when parties agree that credit cannot be assigned should be abolished.