Factoring Agreement Without Recourse In Harris

Category:

Contracts - Factoring

State:

Multi-State

County:

Harris

Control #:

US-00037DR

Format:

Instant download

Description

The Factoring Agreement Without Recourse in Harris is a legal document designed for businesses that seek to convert their accounts receivable into immediate cash flow without taking on additional credit risks. This agreement entails a corporation, referred to as Factor, purchasing accounts receivable from a seller, referred to as Client, without any liability on Client's part for customer insolvency. Key features include the assignment of accounts receivable, stipulations for sales and delivery of merchandise, credit approval processes, and specifications regarding the purchase price and commission. The form outlines responsibilities for both parties, including reporting returns, credit risks, and maintaining clear documentation. It serves as a crucial tool for attorneys, partners, owners, associates, paralegals, and legal assistants by clarifying contractual obligations, minimizing risk, and ensuring compliance with credit terms. This document can be customized as needed, facilitating its application across various industries that utilize credit sales.

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FAQ

In financial transactions, without recourse disclaims any liability to the subsequent holder of a financial instrument. Thus, endorsing a check and adding without recourse to the signature means that the endorser takes no responsibility if the check bounces for insufficient funds.

Factoring without recourse means that the risk of accounts receivable being uncollectible transfers from the buyer to the seller. Basically, if an accounts receivable cannot be collected, the seller does not have to reimburse the buyer like they would if the factoring was “with recourse”.

There are two types of debts: recourse and nonrecourse. A recourse debt holds the borrower personally liable. All other debt is considered nonrecourse. In general, recourse debt (loans) allows lenders to collect what is owed for the debt even after they've taken collateral (home, credit cards).

With recourse factoring, the business is responsible. But with non-recourse factoring, the factoring company is responsible, although there may be some stipulations based on the terms of the agreement. Higher advance rates (i.e. amount of funding you receive upfront). Lower advance rates.