Deed Of Assignment Of Receivables Template for Canada

A Deed of Assignment of Receivables is a formal legal document that transfers your company's accounts receivable to another party, typically a financial institution or factoring company. Under Canadian law, this document creates a legally binding transfer of your right to collect outstanding debts from your customers, providing immediate liquidity while ensuring compliance with federal and provincial regulations.

When do you need this document?

You need a Deed of Assignment of Receivables when your business requires immediate cash flow by selling outstanding invoices to a third party. This document is essential for factoring arrangements where you transfer receivables to access working capital without waiting for customer payments. It's also required when using receivables as security for business loans, during corporate restructuring where assets need redistribution, or when establishing syndicated financing arrangements involving multiple lenders. The deed ensures legal clarity and protection for all parties involved in the receivables transfer.

Key legal considerations

Your deed must include comprehensive warranties about the validity and collectibility of assigned receivables, as these protect the assignee from potential losses. The document should clearly define which receivables are included, specify any excluded debts, and establish the assignor's ongoing obligations regarding collection and customer relationships. Priority provisions are crucial, as they determine ranking against other creditors in bankruptcy scenarios. You must also address notification requirements to debtors, collection procedures, and representations about the legal status of the receivables. The deed should include indemnification clauses protecting both parties from losses arising from breaches of warranty or representation.

Legal requirements in Canada

Under Canadian law, your Deed of Assignment of Receivables must comply with provincial Personal Property Security Act (PPSA) requirements for creating and perfecting security interests. Registration under the appropriate PPSA regime is typically necessary to establish priority over competing claims and protect against subsequent creditors. In Quebec, assignments must comply with Civil Code provisions governing claim transfers, which may have different formal requirements. The document must meet federal Bankruptcy and Insolvency Act considerations to ensure enforceability in insolvency proceedings. You should also consider Income Tax Act implications, as assignment of receivables may trigger tax consequences. The deed must be executed as a formal deed under provincial law, often requiring witnessing or notarization depending on your jurisdiction.