The legal effect of factoring is the transfer to the factor (assignee) not only of the claim itself, but also of other rights related to the transferred claim. There are doubts as to whether, along with the assignment, the so-called "assignment" also passes to the factor. compensation for recovery costs in the amount of EUR 40 (Article 10(1) of the Law of March 8, 2013 on payment terms in commercial transactions, hereinafter: "Law").
What is the point of compensation?
The right to demand compensation arises in the case of commercial transactions, the exclusive parties to which are entrepreneurs and other entities designated in the Law (e.g., freelancers). A commercial transaction means a contract the object of which is the delivery of goods for a consideration or the provision of a service for a consideration in connection with the performance of an activity. In practice, this includes the vast majority of transactions subject to factoring and virtually every sale of goods between businesses.
How does compensation work?
If the creditor (factor) has fulfilled its performance (e.g. delivered goods, performed a service), then after the expiration of the due date, by law it is entitled to the equivalent of EUR 40 from the debtor (without having to call). This is known as compensation for recovery costs. In practice, compensation is due for any invoice that is not paid on time.
Does the factor acquire the right to compensation?
Personally, I am of the opinion that as a rule, as a result of factoring (assignment), the factor is entitled to compensation, although this issue requires an individual assessment for each case. After all, he acquires the claim along with the associated rights, which follows directly from Article 509 § 2 of the Civil Code. There would have to be an exceptionally strong legal justification to conclude that such compensation does not fall within the scope of the assignment and should 'remain with the original creditor'. I do not find such justification in standard cases.
The problem, however, is that due to the very small value of such cases (EUR 40 or multiples thereof), they are generally heard in the first instance by District Courts, and in the second instance by District Courts. It is possible to find decisions of common courts recognizing that compensation is due to the factor (e.g., the judgment of the District Court in Piotrków Trybunalski dated 30.12.2015 ref: I C 471/15). However, there are no Supreme Court rulings ("SN") with which to support your theories. One exception is one of the Supreme Court rulings indicated below.
Doubts raised by the judgment of the Supreme Court of 7.07.2017 (V CSK 660/16)
After the issuance of the above-mentioned judgment, there were theses that "the compensations provided for in the Payment Deadlines Act are due only to the creditor of the original contract." In my opinion, these premature comments were due to the fact that they were made before the written ruling was published by the Supreme Court.
Meanwhile, the judgment does not dispute that the factor is entitled to the compensation referred to in Article 10(1) of the Act (€40). It only marginally indicates that a factoring agreement should be evaluated to see whether it also provides for the assignment of compensation. The judgment addresses other issues. This is because it questions the permissibility of such a construction in which the factor first charges the factor with substantial collection commissions, then the factor charges these commissions to the debtor and assigns the receivable back to the assignor. In this way, the amount generated in the case recognized by the Supreme Court grew to PLN 49,081.22 and significantly exceeded the multiple of EUR 40.00. Indeed, the court did not question the compensation in the amount of €40.00, but in that part covering the collection costs referred to in Article 10(2) of the Act.
However, I am far from drawing such unequivocal positions from the above-mentioned ruling that "the compensations provided for in the Payment Deadlines Act are due only to the creditor from the original contract." Indeed, in the case recognized by the Supreme Court, there was an attempt to obtain the same costs twice from different entities to the detriment of the creditor. Therefore, one cannot simply transfer sentences from the Supreme Court ruling out of context and create universal theses out of them, especially one that would question the factfinder's entitlement to compensation as a rule.
Is there a risk that the court will dismiss the factor's claim for compensation?
Yes, because there is no established line of jurisprudence in this regard. The risk of such judgments in my opinion may arise, for example, when:
- The factor bought invoices of small denomination - e.g., PLN 200 and claimed payment of EUR 40 from each of them in bulk, which made the claim for compensation a claim of equivalent or even higher value than the factored claim itself);
- Factor just before the statute of limitations period came out en masse with the compensation claims themselves;
In standard situations, where the factor makes the invoice(s) the subject of the lawsuit and adds compensation, I see no reason why the trial court should dismiss the lawsuit in the part concerning compensation.
This post is an excerpt from a series of articles categorized as "the scope of factoring (assignment)."
