VI How are sale and purchase documents understood in factoring activities? Are customers legally responsible for the accuracy of the sale and purchase documents they have provided? When requesting for factoring, can customers submit a list of sale and purchase documents instead of the original? Through today’s article, let’s learn about this issue with Pham Consult!
What are sale and purchase documents in factoring activities?
Pursuant to Clause 15, Article 3 of Circular 20/2024/TT-NHNN as follows:
Explanation of terms
In this Circular, the following terms are construed as follows:
…
13. A factoring contract is an agreement between a factoring unit and a customer to establish, change or terminate the rights and obligations of the parties.
14. A contract for providing other services related to factoring is an agreement between a service provider related to factoring, a factoring unit and other related parties (if any) to establish, change or terminate the rights and obligations of the parties.
15. Documents for purchase and sale of goods and provision of services are documents related to the seller’s request for payment to the buyer and documents related to the delivery of goods and provision of services based on a contract for purchase and sale of goods and provision of services.
16. Domestic factoring is factoring based on contracts for the purchase and sale of goods and provision of services, in which the seller and the buyer are residents.
Thus, the documents for the purchase and sale of goods in factoring are understood to be documents related to the seller’s request for payment to the buyer and documents related to the delivery of goods based on the contract for the purchase and sale of goods.
When requesting factoring, can the customer submit a list of documents for the purchase and sale of goods instead of the original?
Pursuant to the provisions of Clause 1, Article 12 of Circular 20/2024/TT-NHNN on the application for factoring as follows:
Application for factoring
1. When there is a need for factoring, the customer must send the factoring unit a request for factoring, including:
a) Documents proving eligibility for factoring as prescribed in Article 11 of this Circular and other documents as instructed by the factoring unit, including at least:
(i) Original contract, documents for purchase, sale of goods, provision of services; or copy of the contract for purchase, sale of goods, provision of services, list of documents for purchase, sale of goods, provision of services in case the factoring unit and the customer agree on measures to ensure the accuracy, honesty, and completeness of the copy or list compared to the original; or
(ii) Information and data on the purchase and sale of goods and provision of services in the form of data messages in accordance with the provisions of the law on electronic transactions and relevant laws;
Thus, customers can submit a list of goods purchase and sale documents in the factoring application file provided that the factoring unit and the customer have agreed on measures to ensure the accuracy, honesty and completeness of the list compared to the original.
Is the customer legally responsible for the accuracy of the goods purchase and sale documents that he/she has provided?
Based on the provisions of Article 24 of Circular 20/2024/TT-NHNN on the rights and obligations of customers of the factoring unit as follows:
Customer rights and obligations
1. Customers have the following rights:
a) To purchase foreign currency at credit institutions and branches of foreign banks permitted to perform their obligations under the commitment to repay factoring debts;
b) Other rights as agreed by the parties in accordance with the provisions of law.
2. The customer has the following obligations:
a) Provide complete, accurate and honest information, documents and data related to the receivable; ensure that the receivable is not used to secure other debt obligations and is not in dispute; be responsible before the law for the accuracy, honesty, completeness and validity of the information, documents, data, records and vouchers provided;
b) Transfer legal rights and interests related to the receivable as agreed;
c) Fully and timely perform the obligations and responsibilities committed in the factoring contract;
d) Use capital for legal purposes and repay debts according to the content of the agreement;
dd) Coordinate with the factoring unit and related parties in the process of implementing security measures (if any);
e) Send factoring notices to the buyer and other related parties with obligations (if any);
g) Other obligations as agreed by the parties in accordance with the provisions of law.
Thus, the customer of the factoring unit must be responsible before the law for the accuracy, honesty, completeness and validity of the goods purchase and sale documents that he/she has provided.
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