An introduction to the Business Contract Terms (Assignment of Receivables) Regulations 2018
Introduction The Business Contract Terms (Assignment of Receivables) Regulations 2018 (the Regs) were introduced to invalidate contract clauses which restrict or prohibit the assignment of contracts containing a right to payment (also known as a receivable). This is because receivables are used by businesses as collateral for short-term finance, which provides additional liquidity to meet financial needs. The Regs were a reaction to the prevalence of anti-assignment clauses (AACs), which restricted the ability of small-to-medium-size enterprises (SMEs) to maximise wealth, especially when other avenues of raising finance, such as issuing share capital or bank loans, were unavailable to them. The commercial rationale for including AACs in contracts is to protect purchasers from having to deal with third parties, to whom the supplier’s right to payment is transferred. One reason why this is undesirable for the buyer is the uncertainty about the party they are now paying. Another reas...
