Security of Debt
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What is direct delivery
- Deliveries of goods direct from Supplier to Customer ie the
- Client does not handle the goods.
- Otherwise known as "DROP SHIPMENTS".
What is the procedure for Direct Delivery?
- Where a right of recourse exists from Supplier direct to Customer, or where the Client is acting as AGENT, all the debts due from that
- Customer should be reserved. The Debtor should be excluded from the Agreement for the purchase of debts at the earliest
What are the concerns with Direct Delivery?
- The Supplier is aware of the ultimate Customer and may attempt
- to obtain payment direct in the event of default by the Client: their terms of
- sale may even contain the right to do so.
- Additionally, the Factor may have to rely on the goodwill of the
- Supplier to obtain Proof of Delivery, and there is always the possibility that
- the Supplier is involved in PRE-INVOICING or CONSTRUCTIVE DELIVERY.
- The client may also be acting as AGENT, not PRINCIPAL.
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