Factoring And Security Agreement for the United Kingdom

Factoring And Security Agreement Template for England and Wales

A Factoring and Security Agreement under English and Welsh law is a comprehensive legal document that facilitates the sale of accounts receivable from a business to a factor, while establishing security interests over related assets. It combines both the commercial terms of the factoring arrangement and the security provisions required to protect the factor's interests. The agreement is governed by English law and must comply with specific requirements under the Companies Act 2006 and other relevant legislation regarding assignment of receivables and creation of security interests.

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What is a Factoring And Security Agreement?

A Factoring And Security Agreement is essential when a business wishes to monetize its accounts receivable through a factoring arrangement while providing security to the factor. This document, governed by English and Welsh law, sets out the terms for the purchase of receivables, establishes the factor's security interests, and includes provisions for notifications to debtors, collection procedures, and ongoing operational requirements. It's particularly relevant in situations where businesses need to improve cash flow while ensuring the factor has adequate protection through security arrangements. The agreement must comply with English law requirements regarding assignment of receivables, registration of charges, and financial services regulations.

What sections should be included in a Factoring And Security Agreement?

1. Parties: Identification and details of the factor and the client

2. Background: Context of the agreement and commercial purpose

3. Definitions and Interpretation: Key terms and their meanings used throughout the agreement

4. Sale and Purchase of Receivables: Core provisions regarding the transfer of receivables

5. Purchase Price and Payment Terms: Pricing mechanism and payment arrangements

6. Security Provisions: Details of security granted and enforcement rights

7. Representations and Warranties: Standard assurances from both parties

8. Covenants: Ongoing obligations of the parties

9. Events of Default: Circumstances constituting default and consequences

10. Termination: Provisions for ending the agreement

What sections are optional to include in a Factoring And Security Agreement?

1. Cross-Border Provisions: Additional provisions for handling international receivables and cross-border factoring arrangements

2. Data Protection: Specific provisions for handling personal data in compliance with UK GDPR and Data Protection Act 2018

3. Insurance: Provisions relating to credit insurance arrangements and requirements

4. Collection Procedures: Detailed provisions regarding the collection process when factor handles collections directly

What schedules should be included in a Factoring And Security Agreement?

1. Form of Notice to Debtors: Template notification to debtors about the factoring arrangement

2. Eligible Receivables Criteria: Detailed criteria for acceptable receivables

3. Calculation of Purchase Price: Detailed pricing formula and mechanisms

4. Operating Procedures: Day-to-day operational procedures and requirements

5. Form of Debtor Schedule: Template for listing and describing receivables

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Companies Act 2006: Primary legislation governing company charges, registration requirements, and corporate authority provisions for security agreements.

Law of Property Act 1925: Fundamental legislation covering requirements for creation and transfer of property rights, and legal assignments of receivables.

Financial Services and Markets Act 2000: Regulatory framework legislation for regulated entities, including licensing requirements for factors.

Consumer Credit Act 1974: Legislation governing consumer protection provisions and requirements when underlying receivables involve consumer debtors.

Sale of Goods Act 1979: Legislation relevant for underlying commercial transactions in factoring arrangements.

Companies House Registration Requirements: Mandatory registration of charges within 21 days and Form MR01 filing requirements at Companies House.

Financial Collateral Arrangements (No 2) Regulations 2003: Regulations governing arrangements involving financial collateral in security agreements.

UK GDPR and Data Protection Act 2018: Data protection legislation governing the processing and sharing of personal data in factoring arrangements.

Late Payment of Commercial Debts (Interest) Act 1998: Legislation governing interest provisions on commercial debts in factoring arrangements.

Insolvency Act 1986: Legislation covering the impact of insolvency on security arrangements and anti-avoidance provisions.

European Union (Withdrawal) Act 2018: Post-Brexit legislation affecting cross-border factoring arrangements and their implications.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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