Assignment Of Receivables Agreement Template for England and Wales

An Assignment Of Receivables Agreement is a legal document that transfers your rights to collect outstanding debts from customers to another party. Under England and Wales law, this agreement allows you to sell your receivables to improve cash flow while ensuring the assignee gains legal authority to pursue payment from your debtors.

When do you need this document?

You'll need this agreement when your business requires immediate cash flow improvement through factoring or selling receivables. It's commonly used by companies facing seasonal cash flow challenges, those seeking working capital for expansion, or businesses restructuring their debt portfolio. The document is essential for invoice factoring arrangements where you sell outstanding invoices to finance companies, debt collection agencies purchasing receivables at a discount, or when transferring receivables as part of business asset sales. Manufacturing and retail businesses often use these agreements to convert slow-paying receivables into immediate working capital.

Key legal considerations

The agreement must clearly identify all parties, provide detailed descriptions of the receivables being assigned, and specify the consideration being paid. You must include comprehensive warranties about the validity and collectability of the receivables, ensuring the assignee understands any potential risks. Notice provisions are crucial as proper notification to debtors may be required under Section 136 of the Law of Property Act 1925 for legal assignments. The document should address potential insolvency issues under the Insolvency Act 1986, particularly rules regarding transactions at an undervalue that could affect the validity of the assignment. Consider whether the assignment creates security interests requiring registration under the Companies Act 2006, and ensure compliance with the Financial Collateral Arrangements Regulations if the receivables qualify as financial collateral.

Legal requirements in England and Wales

Under England and Wales law, your assignment must comply with Section 136 of the Law of Property Act 1925 for legal assignments, requiring the assignment to be absolute, in writing, and with written notice to the debtor. The agreement must clearly distinguish between legal assignments and equitable assignments, as different notice requirements apply. Companies Act 2006 may require registration of certain charges created by the assignment, particularly if structured as security rather than an outright sale. The Insolvency Act 1986 provisions must be considered to ensure the assignment cannot be challenged as a transaction at an undervalue or preference if insolvency occurs. Common law principles require the assignment to be absolute rather than by way of charge, and the receivables must be clearly identifiable and existing at the time of assignment.