The laws are meant to arm small businesses against unfair contracts that stop them raising money from unpaid invoices. Presently a small supplier’s contract with a larger company may prevent it from securing invoice finance from providers such as banks and other investors.
Many sales contracts contain provisions stating that assignment is prohibited or subject to certain conditions. Bans on assignment clauses used to prevent a supplier from subcontracting work or preserve confidential dealings between businesses. But, these clauses often have the unintentional consequence of blocking invoice finance arrangements, which allow businesses to apply for finance using invoices for money owed to them as security.
Under the proposed law, any such contractual restrictions entered into after 31th of December 2018, would have no effect and could be disregarded by small businesses and finance providers. This is said to help stop larger businesses from abusing their market position.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now
We welcome comments that add value to the discussion. We attempt to block comments that use offensive language or appear to be spam, and our editors frequently review the comments to ensure they are appropriate. If you see a comment that you believe is inappropriate to the discussion, you can bring it to our attention by using the report abuse links. As the comments are written and submitted by visitors of the The Paypers website, they in no way represent the opinion of The Paypers.