RECOURSE AND NON-RECOURSE FACTORING AGREEMENTS

Abstract

The article states that the factoring agreement is a complex contractual construction combining financial, accounting, settlement, and security elements, which determines the emergence of different models of its implementation. It is emphasized that one of the key classification criteria of factoring agreements is the distribution of the risk of the debtor’s failure to perform monetary obligations, which allows distinguishing between recourse and non-recourse factoring agreements. The provisions of the Law of Ukraine «On Factoring» are analyzed, in which this distinction is for the first time legally enshrined, and a comparative analysis of approaches to the interpretation of these agreements in foreign doctrine is provided. It is noted that recourse factoring implies that the risk of non-performance of the monetary claim lies with the client, whereas in non-recourse factoring, this risk is borne by the factor. It is highlighted that recourse factoring tends toward credit-loan obligations, since the financing provided to the client must be repaid in case of the debtor’s insolvency, while non-recourse factoring, by its nature, approximates a purchase-and-sale transaction, as the right to the monetary claim fully and finally passes to the factor. The economic consequences of each model are underlined: in recourse factoring, the factor does not assume the full risk, so its remuneration is lower, whereas in non-recourse factoring, the risk of non-payment is compensated by higher remuneration. It is established that the choice between recourse and non-recourse models depends on the creditworthiness of the client and the debtor, the level of trust between the parties, and the structure of risks within a specific transaction. Special attention is given to the partially recourse factoring agreement, which combines the features of both previous models and provides for a shared distribution of the debtor’s insolvency risk between the factor and the client. It is emphasized that despite the absence of legislative regulation, this type of agreement may be applied in practice based on the principle of freedom of contract and by analogy of law. It is concluded that the legislative differentiation between recourse and non-recourse factoring agreements enhances legal certainty, ensures a fair balance of interests between the parties, promotes a transparent risk allocation mechanism, and strengthens the stability of civil turnover.