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Delay in outlawing bans on assignment

The Department for Business, Innovation & Skills (“BIS”) announced its intention to bring forward legislation outlawing bans on assignment in commercial contracts as long ago as December 2014.

The draft Business Contract Terms (Restrictions on Assignment of Receivables) Regulations 2015 included significant caveats for both supply chain financiers and for “terms giving rise to a duty of confidence”, but following an extensive consultation process which involved both ABFA and groups of businesses from various industry sectors, including energy, retail and construction, it is understood that BIS has dropped any special protection for supply chain financiers and has taken on board at least some of ABFA’s concerns that an unrestricted definition of “duty of confidence” could drive a coach and horses through the intended effect of the legislation.

The BIS response document indicating these changes was published in August 2015, together with a rather bombastic press release which indicated that “Ban on anti-invoice finance terms in contracts will come into force early next year ”(ie. 2016.)

Unfortunately there have been no further developments, presumably as a result of the workload imposed on government lawyers by Brexit, so we must await publication of amended Regulations hopefully later this year before the impact of the legislation will begin to become clear.