UNIDROIT Convention on International Factoring

General Information

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What is it about?

This Convention governs factoring contracts and assignments of receivables. A "factoring contract" refers to a contract concluded between one party (the supplier) and another party (the factor). The supplier may assign to the factor receivables arising from contracts of sale of goods made between the supplier and its customers (debtors) other than those for the sale of goods bought primarily for their personal, family or household use. This Convention applies whenever the receivables assigned pursuant to a factoring contract arise from a contract of sale of goods between a supplier and a debtor whose places of business are in different States and 1) those States and the State in which the factor has its place of business are Contracting States; or 2) both the contract of sale of goods and the factoring contract are governed by the law of a Contracting State.

Why is it relevant?

International factoring is an important aspect of the financing of international trade operations and allows for the protection of exporters against risks of non-payment. Acceptance of this Convention provides a country with a suitable legal framework to develop factoring businesses on their territory.

Additional Information

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