UK Draft Regulations Restricting the Assignment of Receivables Published
07/06/2018The draft Business Contract Terms (Assignment of Receivables) Regulations 2018 have been laid before Parliament. The draft Regulations will invalidate terms in business contracts that prohibit or restrict the assignment of receivables, including terms that prevent the enforcement of a receivable. A receivable in this context is a right to be paid under a contract for the supply of goods, services or intangible assets. The Regulations will not apply if the person to whom the receivable is owed is a large enterprise or a special purpose vehicle.
The Regulations will also not apply to certain types of contracts, including among others: (i) contracts regulated under the Consumer Credit Act 1974; and (ii) contracts for financial services as defined in the Small Business, Enterprise and Employment Act 2015, which includes, among others, the following types of financial services: financial leasing and loans, insurance, payment and money transmission services, providing guarantees or commitments, money brokering, asset management, settlement and clearing services for financial assets, derivatives and trading for own account or for account of customers, whether on an investment exchange, OTC or otherwise. Furthermore, contracts where none of the parties to the contract enter into the contract in the course of carrying on a business in the U.K. are excluded.
The draft Regulations will come into force on the day after the day on which they are made.
View the draft Assignment of Receivables Regulations.
View the explanatory memorandum.
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