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Insights // 16 January 2019

The Business Contract Terms (Assignment of Receivables) Regulations 2018 Explained

Partner and head of our Corporate team, David Few, explains the Business Contract Terms (Assignment of Receivables) Regulations 2018.

The new Regulations, which took effect at the start of 2019, are intended to be particularly useful for small and medium sized suppliers under commercial contracts, thinking of improving their cash flow requirements by raising finance through invoice discounting or factoring arrangements.

Under the Regulations ( subject to certain exclusions including if the supplier is a “large enterprise” or a “special purpose vehicle”), any term in a relevant contract that prohibits or imposes a condition or other restriction on assignment will be outlawed and have no effect in relation to the assignment of receivables under that particular contract.

The hope is that the Regulations will improve the access for small and medium businesses to different forms of finance by removing contractual limitations and providing an increased ability to assign receivables to providers of short term finance. 

The Business Contract Terms (Assignment of Receivables) Regulations 2018 replace the Business Contract Terms (Assignment of Receivables) Regulations 2017, withdrawn having been deemed to require changes.

The new Regulations differ most obviously in that they only apply where the supplier is a small or medium sized enterprise (SME). A number of further exceptions also apply, including in relation to contracts for the purchase of all or part of a business, meaning that M&A deals will be exempt.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

David Few

David Few

Partner, Corporate & Commercial Law & Notary Public

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