A factoring agreement is a so-called unnamed agreement. This means that this contract does not appear in the Polish Civil Code (hereinafter as "KC"). It does not have a separate section devoted to it in the section on obligations (contractual relations). This makes it difficult to develop a clear framework for the legal evaluation of factoring. The permissibility of freely shaping the content of such a contract derives from the provision of Article 3531 known as the 'principle of freedom of contract'. According to this provision, parties entering into a contract may arrange the legal relationship as they see fit, as long as its content or purpose does not contradict the properties (nature) of the relationship, the law or the principles of social intercourse. In the absence of a condensed legal regulation of factoring, a supplementary role is played by court decisions recognizing disputes in the field of factoring and assignment of receivables. The jurisprudence of the Supreme Court and the literature have developed the characteristics of a factoring agreement (e.g., the judgments of the Supreme Court of May 9, 2003, V CKN 218/01; October 3, 2007, IV CSK 160/07; October 17, 2012. I CSK 56/12).
What kind of contract is a contract factoring? It is assumed that it belongs to bilaterally binding, consensual, pecuniary and reciprocal contracts. A bit much - so one by one.
- The factoring agreement is unnamed agreement - As described in the introduction;
- It is understood that a factoring agreement is a contract mixed, consisting of several typical contracts, regulated by law or being a combination of factual and legal actions. The essential element of a factoring agreement is the transfer of receivables (Article 509 et seq. of the Civil Code and Article 535 et seq. of the Civil Code) combined with the provision of services by the factor (Article 734 et seq. of the Civil Code).
- Factoring is contract payable - The factor, in exchange for the transferred receivable, receives a price, the amount of which depends on several factors, in particular the extent of the risk of the debtor's insolvency assumed by the factor. The factor's remuneration is of a mixed nature, combining elements of commission and interest for the period from the date of payment to the date of maturity or payment.
- Factoring is also in accordance with Article 487 § 2 of the Civil Code. mutual agreement (bilaterally obligating), which means that, by definition, the benefit of one party is to be equivalent (equivalent) to the benefit of the other. To its essence is the bond connecting the benefits of the parties, which do not have to be objectively equivalent, and whether they will be and to what extent is determined by the will and common intention of the parties.
What provisions of the Civil Code are most likely to apply to factoring? First and foremost, those provisions that relate to the performance of obligations and the assignment of receivables.
In terms of obligations - these are the provisions of Book Three of the Civil Code ("Obligations"), in particular: Title I. General Provisions; Title II. Multiple debtors or creditors; Title III. General provisions on contractual obligations; Title VII. Performance of obligations and consequences of non-performance; Title VIII. Set-off, renewal, discharge of debt. I will discuss the more important legal aspects arising from these regulations in separate articles.
From the point of view of potential disputes between the counterparty and the factor and the factor and the factor-factor, the most relevant provisions will be those concerning the assignment of claims (Articles 509 - 518 of the Civil Code) and warranty (Articles 513 of the Civil Code and Articles 556 et seq. of the Civil Code).
Above I have indicated those provisions that most often shape the content of factoring and constitute the legal axis of litigation having factoring at its root. However, practice shows - that the legal basis for factoring disputes can be a whole host of other provisions, including, for example: provisions on defects in the declaration of intent, provisions on the warranty of the KRS, criminal provisions, provisions on the action of the debtor to the detriment of the creditor and many others.
The possible application of the Ottawa Convention will be discussed in a separate entry - at this stage I am merely reassuring you that in my practice I have looked into this convention quite occasionally.
