The Business Contract Terms (Assignment of Receivables) Regulations 2018 — now in force

The Business Contract Terms (Assignment of Receivables) Regulations 2018 came into force on 24th November 2018.

The Regulations nullify the effect of terms in contracts that impose conditions or restrictions on the assignment of receivables, subject to an exception for contracts with large suppliers or special purpose vehicles. They will apply to contracts made on or after 31st December 2018.

This change is to be welcomed. Anti-assignment clauses are a hindrance to the availability of credit for small businesses whose main assets are their receivables. The benefit of those clauses to their customers is, in many cases, more imaginary than real. Moreover, the effect of such clauses produces uncertainty (see Beale, Gullifer and Paterson [2016] Journal of Business Law 203). The ban on their use in contracts with SMEs should therefore enhance the availability of a major source of credit for those businesses.

The Regulations were the subject of a previous post on this blog, available here.