Document Type : Original Article
Author
assistant Professor of Law, Law Dept, Faculty of Administrative Sciences and Economics , University of Isfahan, Isfahan, Iran
Abstract
Factoring is a key financing method, particularly in global supply chain finance. Recently introduced into Iran’s banking system to enhance the business environment, optimize working capital management, and facilitate financing, factoring has been officially implemented following the Central Bank’s issuance of relevant regulations. However, ambiguities in these regulations—particularly the Central Bank’s choice of legal framework (Article 10 of the Civil Code) as the basis for factoring—have raised theoretical challenges that will inevitably affect its practical implementation and judicial interpretation.
This study seeks to determine the legal nature of factoring. By analyzing its contractual foundation, the author argues that the most compatible characterization is "assignment of receivables" (Bay‘ al-Dayn), whose legal principles can be inferred from the Central Bank’s various factoring regulations.
After introducing the fundamental concepts of factoring, this study examines its legal nature in light of Iranian law. It analyzes the conditions for its formation, obligations of the parties, and key distinctions from similar financial instruments. Furthermore, the research identifies deficiencies in existing regulations and proposes necessary reforms.
Implementing the findings of this study will improve the legal and regulatory framework governing factoring, increase transparency in execution, and support legislators, economic actors, and financial institutions in optimizing its benefits. Ultimately, these efforts can facilitate the broader adoption of factoring in Iran, strengthening its role in financial markets and supply chain finance.
Keywords
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