Withdrawal of Draft Regulations on Contractual Terms with respect to Assignment of Receivables

The draft Business Contract Terms (Assignment of Receivables) Regulations (the "Regulations"), which were expected to facilitate the assignment of receivables, have been withdrawn.

The draft Regulations were published pursuant to the Small Business, Enterprise and Employment Act 2015 (the "Act"). The Act provides for regulations to be made to provide that any terms in commercial contracts for goods, services or intangible assets (other than certain financial services contracts) which prohibit or impose a condition or restriction on the assignment of receivables would be ineffective. The intention was to improve access to finance for businesses by allowing them to assign the right to payment under their invoices to a finance provider. A number of other countries have similar so-called "legal override" provisions with respect to commercial contracts, for example, in the New York Uniform Commercial Code, the French Commercial Code and the German Commercial Code.