In Italy the factoring agreement is regulated by Law nr. 52 of 21.02.1991 which has integrated the rules stated in the arts. 1260 et seq. of the Civil Code. With this law, legislator has:
- foreseen the possibility of transferring even receivables prior to the conclusion of contracts from which arise;
- allowed the transferability to the factor also of bulk existing and future receivables;
- introduced facilities in the regime of the enforceability of assignments to third parties.
Law 21st February 1991, no. 52
Rules regarding the assignment of corporate credits (bills receivable).
1_The assignment of pecuniary credits against corresponding amount is regulated by this law when the following conditions exist:
- the assignor is an entrepreneur;
- the credits assigned refer to contracts stipulated by the assignor in the execution of the business activity;
- the assignee is a company or body, either public or private, with legal status, whose corporate object is the practise of acquiring corporate credits and whose share capital, or cash endowment fund, is not less than Lire 2,000,000,000.
2_Without prejudice to the application of the Civil Code provisions in respect of the assignment of credits which do not meet the conditions indicated in paragraph 1.
Cancelled with Law Decree 385/93 which established the Special General List of Subjects operating within the Financial Sector (arts. 106 and 107)
The credits can be assigned even prior to stipulation of the contracts to which they will arise.
Existing or future credits may be assigned even in bulk.
Assignment in bulk of future credits may refer only to the credits which will arise from contracts stipulated in a period of time of up to twenty-four months.
The assignment of credits in bulk is considered to have a precise object, also in respect of future credits, if the ceded debtor is indicated, subject to the provisions of paragraph 3.
The assignor guarantees, within the limit of the agreed amount, the solvency of the debtor, unless the assignee waives the guarantee, in whole or in part.
In the event that the assignee has paid all or part of the amount of the assignment and that the date of payment is certain, objection to the assignment may be made:
- to others with claims against the assignor, whose right to purchase has not been rendered effective in respect of third parties prior to the date of payment;
- to the creditor of the assignor, who has distrained the credit after the date of payment;
- to the bankruptcy of the assignor declared after the date of payment, except for the provisions of Art. 7, paragraph 1.
Without prejudice to the faculty for the assignee to render the assignment opposable to third parties according to Civil Code provisions.
Without prejudice to the discharge effectiveness, according to the provisions of the Civil Code, of the payments made by the debtor to third parties.
The payment effected by the ceded debtor to the assignee is not subject to revocation as described in Art. 67 of the wording concerning bankruptcy regulations, arrangement before bankruptcy, temporary receivership and compulsory administrative liquidation, approved with Royal Decree dated 16 March 1942, no. 267. However this action may be proposed to the assignor should the receiver find that the assignor was aware of the insolvency of the ceded debtor on the data of payment to the assignee.
There is no prejudice to the recovery action of the assignee in respect of the assignor who has relinquished the guarantee indicated in Art. 4.
The effect of the assignments to third parties provided for in Art. 5, paragraph 1, is not opposable to the assignor's bankruptcy, if the receiver proves that the assignee was aware of the state of bankruptcy of the assignor when the payment was made and also that the payment of the assignee to the assignor was made during the year preceding the judgement declaration of bankruptcy and prior to expiry of the credit assigned.
The receiver of the assignor's bankruptcy may recede from the assignments stipulated by the assignor only in respect of credits which have not yet arisen at the date of the judgement declaration.
Should the receiver recede then he will return to the assignee the amount paid by the assignee to the assignor in respect of the assignments provided for in paragraph 2.
FOURTH BOOK OF OBLIGATIONS.
CHAPTER I - CONCERNING OBLIGATIONS IN GENERAL
ARTICLE V - ASSIGNMENT OF CREDITS
The creditor may transfer with a payment or free of charge his credit (1198) also without the debtor's agreement, provided that the credit is not of a strictly personal nature or that the transfer is not forbidden by law (323,447, 1823).The parties may exclude assignability of the credit but the pact is not opposable to the assignee, unless there is proof that he was aware of this at the time of assignment.
Magistrates of the order of judges, officers of the registry and legal secretariat, bailiffs, lawyers, defence counsels and notaries public may not, even through a third party, become assignees of rights which are the subject of dispute before the legal authority to which they belong or in whose jurisdiction they practise, under penalty of nullity and damages (1421 and following, 2043). The provisions of the preceding paragraph do not apply to assignment of inheritance actions between joint heirs, nor to this made in payment of debts or to defend the assets of the assignee.
The assignor must give the assignee any instruments of evidence of the credit in his possession. If only part of the credit has been assigned then the assignor must give the assignee an authenticated copy of the documents (2703).
By way of the assignment, the credit is transferred to the assignee with the privileges, personal and collateral guarantees (2843) and any other accessories. The assignor may not transfer to the assignee, without the agreement of the ceded debtor, possession of the pledged item; in the event of disagreement, the assignor retains custody of the guarantee (1204). Unless otherwise agreed the assignment does not include past yields (820 and following).
The assignment has effect on the ceded debtor when it has been accepted by or notified to the latter (967-2), 1248, 1407-1, 2914). However, even prior to notification, the debtor who pays the assignor is not absolved, is the assignee proves that the debtor himself was aware of execution of the assignment.
If the credit itself is the object of various assignments to different persons, the notified assignment prevails (Civil Procedures Code 137) in first case to the debtor, or the first assignment officially accepted by the debtor on a precise date (2704), as long as such date is subsequent (2559). This same regulation is observed when the credit has been the object of establishment of usufruct or pledge. (1978, 2914).
When the assignment is against payment , the assignor must guarantee the existence of the credit at the time of the assignment. It may agreed to exclude the guarantee but the assignor is still liable for his own actions. If the assignment is free of charge, the guarantee is necessary only in the event and up to the extent that the law places the onus of guarantee of eviction on the donor.
The assignor does not vouch for the debtor's solvency unless the former has undertaken a guarantee in this respect (2255). In this case he is liable up to the extent of what he has received, and must furthermore pay the interest and reimburse the costs of the assignment and those which the assignee has sustained in order to enforce the debtor and indemnify the damage. Any pact aimed at aggravating the responsibility of the assignor is without effect (1421 and following). If the assignor has guaranteed the solvency of the debtor, the guarantee ceases is the non-realisation of the credit due to insolvency of the debtor is due to negligence by the assignee in commencing or continuing proceedings against the debtor himself (1198).