Factoring

Who can notify and priorities

 

Notice of assignment is normally given by the client. However, notice can also be given by the factor.

"The statute does not say who has to give notice so either the assignor or the assignee may give it " ( Law and Practice of Credit Factoring by Biscoe pg 101)

 

Priorities

First to give notice

The one who gives notice first and without knowledge of prior assignment ( both legal and equitable) will have priority . ( Dearle v. Hall).

Hence even if the factor is the first one to give notice but if they are aware of prior equitable assignment, they will lose priority.

Examples of knowledge of prior knowledge of equitable assignment are:

1. Floating charge- once the charge is filed with ACRA, the factor is deemed to have constructive notice. It does not matter whether the factor conduct a search or not

2. Trust receipt-the banker has the right to the receivable under a trust receipt