Factoring case law review 2020

The year 2020, or the "covid year," was not rich in factoring jurisprudence for well-known reasons. The judiciary - like other areas of life - was severely limited in the intensity of its work. Judgments were handed down less frequently. Thus, we limited the review to the entire year 2020, while hoping to return to a semi-annual review in 2021. In the following review, we have selected 5 judgments worth citing.

1. Judgment of the District Court of Szczecin-Center in Szczecin dated November 3, 2020. (File reference: XI GC 730/20) -. Electronically generated ZoC

An interesting dispute over the legitimacy of a factor in a dispute with a recipient. The case involved a full lump sum factoring. The defendant recipient alleged formal errors related to the conclusion of the contract and the issuance of the notice of assignment (ZoC), specifically, differences in the dates of the contract's signature, as well as the issuance of the notice of assignment with a date prior to the signing of the contract by the factor itself (which resulted from the generation of the ZoC from the system for handling the contract). The above, in the Court's opinion (juxtaposed with the date of receipt of the ZoC by the consignee), was irrelevant to the case. At the same time, the defendant consignee attempted to dispute the fact of notification of the assignment by the factor acting under a power of attorney from the factor. In the Court's opinion, also irrelevant to the legitimacy of the factor was the fact that already after the acquisition of the claim, the original creditor (factor) itself called the consignee for payment.

2. Judgment of the District Court in Toruń dated July 15, 2020. (Ref: V GC 623/20) -. minimum fixed commission, user fees

A seemingly straightforward case from the factor's promissory note against the factor attempted to raise numerous formal and defensive objections. The dispute largely concerned the calculation of a "minimum fixed commission." This commission occasionally appears as a subject of dispute in cases in factor-factor and factor-factor relations. In this case, the factor failed to challenge it, as did the system fees. All of the above were properly documented by the contract and the VAT invoices issued. The court also commented on printouts from the tracking system made available on the Internet by Poczta Polska S.A., evaluating this evidence on general principles, especially consistently with the proof of posting as a PP official document. The court made an interesting argument on the jurisdiction of the promissory note claim. Indeed, it is incumbent on the promissory note debtor to onus probandi The claim that the filling of the blank promissory note was not in accordance with the agreement (promissory note declaration, see Ruling. Supreme Court of February 24, 1928, IC 273/27, Rev. SN 1928, item 27; orz. SN of May 2, 1930. CII 97/30, RPEiS 1930, p.201).

3. Judgment of the District Court in Toruń dated November 24, 2020. (Ref: V GC 2379/19) -. Commission for more than timely handling of receivables in light of maximum interest regulations

The case involved a claim by a factor against a factor under an incomplete factoring agreement concluded in documentary form on an electronic platform. Whether we were actually dealing here with a factoring agreement (within the meaning of the Ottawa Convention) is not subject to analysis. quasi-loan. The factor won the dispute over the invoice receivables only in part. Admittedly, the Court criticized the entrepreneur (factor), who himself stated that he did not get acquainted in detail with the content of the agreement, including the amount of fees, despite acting in professional trade (according to the Court, according to Article 355 § 2 of the Civil Code, the factor is obliged to exercise due diligence in the scope of his business activity, and such, which is the absolute minimum, is to get acquainted with the terms on which you enter into any agreement). However, the Court of First Instance found the contract invalid in part. In the Court's opinion, taking into account the amount of the commission for more than timely handling of receivables and the fact that the plaintiff was not obliged under this agreement to do anything related to the so-called "handling of receivables", it should be considered that the position of the defendant factor under this agreement is grossly unbalanced with that of the factor. This position can undoubtedly be argued with, since the handling of an overdue receivable always involves activities on the part of the factor. The court noted that it should be remembered, That freedom of contract does not remain completely arbitrary and is subject to certain limitations. Thus, as previously mentioned under Article 353¹ of the Civil Code, the content or purpose of the legal relationship arranged by the parties must not contradict the properties (nature) of the relationship, the law or the principles of social intercourse. Meanwhile, the provisions of the agreement relating to the commission in question are contrary to the principles of social coexistence and shape the obligations of the other party to the agreement (the factor - the defendant) in a manner contrary to good morals, since the commission specified by the lender has no justification whatsoever. In the present case, the fact that the defendant was a sole proprietor was not without significance. Although in the present case we are not dealing with interest, but with a commission, in the opinion of the Court it should be considered that the said commission in the form imposed by the agreement in question is in principle no different from interest, since it is ultimately an arbitrarily calculated percentage of the amount of the invoice and is not connected in principle with any actions of the plaintiff, but only with the passage of time calculated in weeks. This, in turn, the Court considered a violation of the provisions on maximum interest. In the Court's view, therefore, the normalization of the commission for over-time service indicated in the contract had to be considered invalid under Article 58 § 1 of the Civil Code in conjunction with Article 353¹ Civil Code as contrary to the law and principles of social intercourse. Ultimately, therefore, the defendant was obliged to repay the amount of the advance paid to him as a loan, as well as the commission in part and compensation for recovery costs. It is not known at this stage whether the case has been appealed, and therefore whether the judgment is final.

4. Judgment of the Court of Appeals in Katowice dated July 7, 2020. (Ref: V AGa 387/19) -. Set-off by a factor against a factor in bankruptcy in an electronic system

Background of the dispute: factoring, mining market, Silesia, the trustee (of the factor) sued the factor without respecting the deduction made by the factor in the course of bankruptcy, which the factor defended (deduction). The defendant factor argued that it had set off the mutual claims by e-mail through an information system. There are two threads worth mentioning in the case:

The thread of the deduction made in the ICT system

The bankrupt (factor) had access to the system used to handle the factoring agreement. Documents were generated from it without handwritten signatures. There were no deductions with the signatures of the defendant's executives in the client area, and the documents only showed who drew them up. The deductions were also not sent by the defendant by mail. In the computer system in the customer area, invoices, deductions, interest notes and transaction settlement documents were made available. To this system, the customer received access data with which he could log in and download documents. The receiver did not acknowledge the reported claim on the list of claims, as well as the deduction made. However, these objections were not based on the fact of the manner in which the deduction was made electronically despite the raising of such an objection.

The thread of deduction from a claim acquired within a year before the bankruptcy date

Circumstances relating to the problem of whether the defendant made an effective declaration of set-off before the company was declared bankrupt are not relevant to the outcome of the dispute. Article 94(1) of the Bankruptcy Law expressly stipulates that the admissibility of a set-off is determined by the date of acquisition of the claim and the acquirer's awareness of the existence of grounds for declaring the countercreditor bankrupt. However, the date of the declaration of deduction itself is not relevant. The hypothesis of this provision covers both the case of filing a declaration of set-off before the declaration of bankruptcy of the debtor-countercreditor and the course of bankruptcy proceedings. The problem is viewed analogously in the judicature (cf. the resolution of the Supreme Court (7) of September 4, 2013, III CZP 26/13, OSNC 2014, No. 6, item 55 and the case law cited therein). This is because the court considered that the relevant refusal to recognize a set-off on the list of claims does not deprive the creditor of the right to raise a charge of set-off in a lawsuit brought against it by the trustee for payment of a claim owed to the bankrupt (cf. Supreme Court resolution of January 23, 2007, III CZP 125/06 As well as the judgments of the Supreme Court: of January 17, 2007, II CSK 315/06 and of January 13, 2006, III CK 360/05).

The crux of the dispute, however, was the admissibility of the offset. This is because, according to Article 94 of the Bankruptcy Law set-off is not allowed if the debtor of the bankrupt acquired the claim by transfer or endorsement after the bankruptcy declaration or acquired it within the last year before the bankruptcy declaration date, knowing of the existence of grounds for bankruptcy declaration. The Court "drove a pin" into the factor in that the factor knew exactly the financial situation of the bankrupt and assessed it as bad, and still decided to continue financing, which the Court assessed as the factor's knowledge of the existence of grounds for bankruptcy within the meaning of Article 94(1) pr up. In the Court's opinion: Given the professional nature of the defendant's business and the specifics of this activity, it should have exercised particular care and caution when entering into factoring agreements, which it de facto did because the financial and economic condition of its clients, including the bankrupt company.

The limitation of set-off provided for in the provision is intended to ensure equal treatment of all creditors in bankruptcy proceedings by preventing situations in which some creditors - taking advantage of their knowledge of the counterparty's insolvency - would acquire claims for the sole purpose of making a set-off, thereby avoiding payment of their own debt to the bankrupt. Such a situation would lead directly to a reduction in the funds of the bankruptcy estate and, consequently, to a reduction in the size of the satisfaction of the other creditors in these proceedings. The provision was applied in the case, since, as evidenced by numerous testimonies (including the client's counsel and other witnesses), the defendant factor had knowledge of the fact of the bankruptcy filing from telephone conversations and e-mail correspondence. In the Court's opinion, having knowledge of the factor's insolvency, the defendant factor acquired claims against the factor only to pay its own debts to the factor - as evidenced by the subsequent statement of set-off. Therefore, in light of Article 94(1) pr.up. the set-off was not permissible.

5. Judgment of the District Court in Konin dated September 4, 2020. (signature act: V GC 302/20)

Exceptionally voluminous justification of the judgment at dozens of pages (largely due to the fragmentation of individual claims) - but congratulations on your hard work. The factor's claims in the case arose from recourse claims, claims arising from cost invoices and commission claims. Interestingly, the signing of the factoring agreement by the defendant took place at a meeting... at a gas station 🙂

The issue of signing a contract without reading its contents

In the body of the agreements, the defendant (factor) made a statement that he had read the agreement, including the terms and conditions, and stated that he understood and accepted the provisions of the agreement, including the terms and conditions and price list. The factoring defendant, explaining at the hearing the reasons why he signed the contract containing this provision, indicated that he had not read this provision. In the Court's opinion, such an explanation does not deserve approval, since a person who signs a document without reading it first, knowingly makes a statement of intent without knowing its contents. In this way, the person accepts every provision contained in the document being signed (see Supreme Court resolution of May 31, 1994 ref: III CZP 75/94, OSNCP 1994, No. 12, item 238). The jurisprudence indicates that a person who signs a document without familiarizing himself with its contents may be accused of failing to exercise the diligence that can reasonably be expected of a rational participant in legal transactions (so: the Court of Appeals in Łódź in its judgment of April 19, 2016 ref: I ACa 1452/15, Legalis), or even it is considered that the The behavior of a party who did not read the contract before signing it bears the hallmarks of gross negligence and therefore, as culpable, cannot enjoy protection (so: the Court of Appeals in Warsaw in the judgment of December 12, 2012 ref: VI ACa 719/12, Legalis).

characteristics of the components of remuneration from the factoring agreement

In the Court's opinion:

• The commission for the period from the date of financing the invoice to its due date constituted remuneration for the factor's services, the nature of which was similar to the provision of short-term credit, and therefore the commission thereon was not only a form of interest on the amounts financed, but also included a commission for the acquisition of receivables;
• after the due date of the invoice, it was related solely to the factoring counterparties' delay in monetary performance, for which the factor was ultimately responsible, since it was obliged to return the financing amount in such a situation.

The issue of "exorbitant" commission

In such circumstances, the assessment of the provisions of both agreements - more specifically, the price lists forming an integral part of the agreement - with regard to the amount of the commission for payment during the period of tolerated delay, the amount of the commission for payment during the period of extended tolerated delay and the amount of the commission for late payment of the amount due, had to be made through the prism of the content of the provisions of Article 481 § 2¹ k.c. in conjunction with article 481 § 2² c.c. The disposition of the standard arising from the provisions indicated stipulates that the maximum amount of interest for delay may not exceed twice the amount of statutory interest for delay on an annual basis, and if the amount of interest for delay exceeds the amount of maximum interest for delay, the maximum interest for delay is due. In addition, in the Court's opinion, such a grossly exorbitant commission violated the principles of social intercourse, which prohibit usury, i.e. the reservation of grossly exorbitant interest that generates excessive in the given relations and unjustifiable profits for one of the parties (cf. the judgment of the Supreme Court of July 27, 2000 IV CKN 85/00, OSP 2001, No. 3, item 48). Since the plaintiff charged a penalty commission for delay each time, the Court reduced it to the maximum interest rate.