The factoring agreement is regulated in the first paragraph of article 38 of the Financial Leasing, Factoring and Financing Companies Law No.6361.
The factoring agreement is a consent agreement and this agreement must be made in writing. Under the name Factoring, there is a Regulation on the Principles and Procedures is to be implemented to Factoring in Turkey.
Factoring companies basically have three functions. These are; warranty, service and financing function. Under the factoring agreement, when the buyer or the borrower has difficulty in payment, the factor can guarantee that the amounts will be paid within the limits stipulated in the agreement. In case the receivables are transferred to factoring companies, follow-up transactions regarding the receivables in question pass to the factor. This falls into the service function. Financing function appears when the company that has transferred its receivables takes advances from the factor over the total amount of its receivables. There is a Financial Institutions Union in our country.
Factoring is divided into two. Real factoring is a type of factoring in which all factoring transactions are undertaken. In this case, in the relationship between the customer and the debtor, the customer accepts the risk in cases where the debtor refrains from paying due to situations such as failure of the customer to perform, incomplete or defective performance, invalid receivable, and absence of receivables. Unreal factoring, on the other hand, occurs in cases where the debtor's nonpayment risk is not undertaken. The client firm is held responsible not only for the existence of the receivable, but also for the non-payment.
Domestic factoring is a factoring transaction between a buyer, seller and a factoring company in the same country. Factoring contracts are three-sided transactions. We can show the parties of factoring transactions as the factoring company that receives the receivable, and the former creditor (the customer of the factoring company) who has assigned it and borrower who has a fundamental relationship with the former creditor. (11. Civil Chamber 2020/4686 E. , 2020/3742 K.)
International factoring agreement is divided into "export factoring" and "import factoring" according to whether the commercial activity is import or export. In export factoring, the borrower and the buyer are located in another country, the customer and the seller are in their own country. In import factoring, it is a type of factoring that ensures that the factor in the country of the importer can be imported through the correspondent factor abroad, by guaranteeing that the payment will be made to the foreign company. In other words, in this type of factoring, the customer is not a seller but a buyer. However, thanks to the fact that the factor gives a guarantee to the foreign company, the customer can communicate with the foreign company more easily and import without the need to find a letter of credit. 75% of the factoring transactions in our country are domestic factoring transactions.
There are two different systems of foreign factoring transaction. The first of these systems is two factor system. This system means the cooperation of two factoring companies, one in the country of the seller and the other in the buyer's country. Here the seller delivers the goods to the buyer. The seller transfers its receivables via the export factor to the import factor as previously understood. The export factor makes a prepayment to the seller regarding the receivable that it undertakes to collect and guarantee. The import factor follows the collection in accordance with the terms of the contract between the seller and the export factor.
The borrower makes a payment to the import factor within the required time and the import factor transfers the amount collected to the export factor. The export factor closes the prepayment to the seller and pays the balance to the seller.
Single factor system (direct factoring) involves the purchase of receivables arising from the commercial relationship between the seller and the debtor by a factor in the country of the buyer and the seller or both in domestic transactions, follow-up of the collection and financing on demand. More than 95% of the factoring volume in the world is applied as a single factor.
Factors sign a contract with the correspondent factors they want to do business with internationally in the foreign factoring work. With this inter-factor agreement, they are deemed to have agreed on matters between factors. By signing this document, members agree to be bound by the International Factoring General Rules.
GRIF is a service and guarantee agreement between export factoring and import factoring. In this context, after the export factoring receives the accounts receivable from the seller, it transfers the same accounts receivable to import factoring. This means that import and export factors only sign a single agreement to cover transactions from many sellers.
In accordance with the Factoring Rules, it has been determined that the dual factor system in the country of the importer and exporter is applied in export transactions. In case it is decided that the International Factoring General Rules (GRIF) will apply to the dispute between the parties in factoring agreements, According to the general factoring agreement and the General Rules of International Factoring, it has been decided that the goods in question are not covered by the guarantee since the loading of the subject goods was made after the notification of limit cancellation. (11. CC 2020/5933 E. , 2020/6025 K.)
Transactions that factoring companies cannot do are shown in the Law No. 6361 on Financial Leasing, Factoring and Financing Companies. Even if the factoring company is based on bills of exchange within the framework of the procedures and principles determined by the Banking Regulation and Supervision Board, it cannot take over or undertake the collection of receivables that cannot be confirmed by an invoice arising from the sale of a good or service and receivables arising from the sale of goods or services that cannot be certified within the framework of the procedures and principles determined by the same board. The total amount of partial assignments made to multiple factoring companies based on the same invoice cannot exceed the invoice amount.In the event that a bills of exchange are transferred to a factoring company through endorsement, the person who is referred to him / her due to the bills of exchange cannot claim the defenses against the factoring company based on the direct relations between the issuer or one of the previous holders; Unless the factoring company acted to the detriment of the borrower even while acquiring the bills of exchange.. In addition, they cannot engage in activities that are not directly related to factoring activities. They cannot give a letter of guarantee.
The court of first instance had decided that the claim of personal defenses in terms of other foreign exchange debtors included in the endorsement chain of the check, which is the subject of the case, could also be put forward against the factoring companies that were assigned. The 11th Civil Chamber of the Court of Cassation reversed the decision based on the relevant article of the Financial Leasing, Factoring and Financing Companies Law.The decision to reversal is based on the following reasons.” The check has passed through the second endorsement of the relevant factoring company with a separate legal personality, so the factoring company is not malicious.”