Document Type : Original Article
Author
assistant Professor of Law, Law Dept, Faculty of Administrative Sciences and Economics , University of Isfahan, Isfahan, Iran
Abstract
Factoring constitutes a vital financing mechanism, particularly within the context of global supply chain finance. Recently incorporated into Iran’s banking system to foster a more conducive business environment, enhance working capital management, and facilitate access to financing, factoring has been formally implemented following the Central Bank’s issuance of relevant regulatory provisions. However, ambiguities within these regulations—especially regarding the Central Bank’s selection of the legal framework, namely Article 10 of the Civil Code, as the governing basis for factoring—have engendered theoretical complexities that are likely to impact its practical application and judicial process. This study aims to elucidate the legal nature of factoring. Through an analysis of its contractual foundation, the author contends that the most coherent characterization aligns with the concept of "assignment of receivables" (Bay‘al-Dayn), with its legal principles deriving from the Central Bank’s various regulations on factoring. After outlining the fundamental principles of factoring, this research critically evaluates its legal status within the framework of Iranian law. It examines the conditions for its conclusion, the obligations incumbent upon the involved parties, and delineates key distinctions from analogous financial instruments. Moreover, the study identifies critical deficiencies within the existing regulatory framework and proposes targeted reforms. The implementation of its recommendations aims to strengthen the legal and regulatory environment surrounding factoring, enhance transparency in its execution, and support policymakers, economic activists, and financial institutions in leveraging its full potential. Ultimately, these efforts aspire to promote the broader adoption of factoring in Iran.
Keywords
References
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