Factoring

In 2024 there were very few significant decisions directly relating to assignment/purchase of receivables which were relevant to factoring practice:

Preformulated assignment clause must be sufficiently definite

The Federal Court of Justice already considered the requirements for standard assignment clauses back in 2023. The decisions often related to the assignment of claims by injured parties in traffic accidents, although the assessments may also be important for global assignment agreements in factoring. Of the decisions handed down by the courts in 2024 in continuation of the case law of the Federal Court of Justice, a decision by Saarbrücken Regional Court (Saarbrücken RC, judgment of 20 June 2024 – 13 S 100/23) is worth mentioning. In this decision, the court had to rule on the claims of a damage assessor arising from the assigned right of the injured party.

The court had to decide, among other things, on the sufficient certainty of the global assignment agreement with regard to all claims arising from a traffic accident. In the court’s view, an assignment declaration that is not objectively limited to the claim for reimbursement of the expert’s fees, but rather covers all claims for damages resulting from a traffic accident, without breaking them down in terms of amount and order, is not sufficiently certain. Comparable requirements for the global assignment agreement in factoring, in which all claims against debtors of the factoring customer arising from delivery and performance are assigned in advance to the factor, have not yet been established by case law. In particular, it is not necessary to quantify the respective amount of the claim or to name a specific debtor (except in the case of factoring of receivables), nor can this be implemented for future claims.

The decision of Saarbrücken Regional Court is, however, an expression of a development in case law to judge standard assignment clauses more strictly in principle. Furthermore, in the light of the decision of Saarbrücken Regional Court, it may make sense, to examine the wording of assignment blanket clauses in individual cases, which the factor uses in silent factoring to disclose existing claims (with the aim of further specifying the claims concerned).

Lawyer’s travel expenses not reimburseable for the collection of purchased claims

According to Dresden Higher Regional Court (Dresden HRC, decision of 27 May 2024 – 12 W 340/24, juris), a factoring provider is normally able to inform a legal counsel at the location of the procedural court in writing or in text format; a lawyer’s travel expenses from the headquarters location of the factoring company or from a third place are usually not considered necessary costs of the legal dispute. Factoring providers usually work with lawyers who specialise in factoring to collect receivables from debtors. This is not only more efficient but also helps to identify early on the claims which do not exist or are inaccurate for which the factoring customer (and not the debtor) is liable to the factor. The decision by Dresden Higher Regional Court means that the travel expenses incurred when using a go-to local lawyer at the headquarters location of the factoring company may not be considered eligible for reimbursement. It is thus worth giving detailed grounds in the application for the assessment of costs as to why it was necessary to involve a lawyer not located at the site of the trial court. This applies especially to smaller factoring institutes without their own legal departments.

Centralised oversight of debt collection companies by the Federal Office of Justice (Bundesamt der Justiz)

Many factoring institutions are licensed to provide debt collection services in accordance with the German Legal Services Act (Rechtsdienstleistungsgesetz). Previously, collection service providers were subject to a local regulatory authority. The practices of these local regulatory authorities sometimes varied considerably. Since the start of the year, collection service providers have been subject to central oversight by the Federal Office of Justice. Collection service providers should therefore ensure that the information they provide about their regulatory authority is updated. In addition, a uniform administrative practice is likely to be established.

This article is part of the "Update Commercial 2025". All insights and the entire report as a PDF can be found here.