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The Civil Code of the Russian Federation

(with the Additions and Amendments of February 20, August 12, 1996,
October 24, 1997, July 8, December 17, 1999, April 16, May 15,
November 26, 2001, March 21, November 14, 26, 2002,
January 10, March 26, November 11, December 23, 2003)

Part II
Section IV
Chapter 43
Financing Against the Assignment of a Monetary Claim

Chapter 43. Financing Against the Assignment of a Monetary Claim

Article 824. The Contract of Financing Against the Assignment of a Monetary Claim


1. Under the contract of financing against the assignment of a monetary claim one part (financial agent) shall transfer or undertake to transfer to the other party (client) pecuniary means on account of the monetary claim of the client (creditor) to a third person (debtor) that follows from the granting by the client of goods, the performance of works or the rendering of services to the third person, while the client shall assign or undertake to assign this monetary claim to the financial agent. A monetary claim to the debtor may be assigned by the client to the financial agent also for the purpose of discharging the client's obligation to the financial agent.
2. Under the contract of financing against the assignment of a monetary claim the obligations of the financial agent may include the keeping of accounting for the client, and also the provision of other financial service to the client, associated with the monetary claims which are the subject of the assignment.

Article 825. The Financial Agent


Contract of financing against the assignment of a monetary claim may be concluded by banks and other credit organizations, and also by other profit-making organizations which have a permit (license) for the conduct of such activity.

Article 826. A Monetary Claim Assigned for Financing Purposes


1. Both the monetary claim, whose date of payment has already ensured (existing claim) and the right to receive pecuniary means which will arise in the future (future claim) may be a subject of assignment for which financing is granted. The monetary claim that is the subject of the assignment shall be defined in the contract of the client with the financial agent in a way that makes it possible to identify the existing claim at the time of concluding the contract, while the future claim - not later than at the time of its rise.
2. In case of assignment of a future monetary claim the latter shall be deemed to be passed to the financial agent for the emergence of the right to receive pecuniary means from the debtor, which are the subject of the assignment of the claim, stipulated by the contract. If the assignment of a monetary claim is conditioned by a definite occurrence, it shall enter into force after the advent of this occurrence. Additional formalization of the assignment of a monetary claim shall not be required in these cases.

Article 827. The Client's Liability to the Financial Agent


1. Unless the contract of financing against the assignment of a monetary claim provides otherwise, the client shall bear liability to the financial agent for the reality of the monetary claim that is the subject of the assignment.
2. The monetary claim which is the subject of assignment shall be recognized as actual, if the client has the right to transfer the monetary claim and if at the time of the assignment of this claim he is not aware of the circumstances in consequence of which the debtor has the right not to execute it.
3. A client shall not be answerable for the non-fulfilment or improper fulfilment by the debtor of the claim which is the subject of assignment in case the financial agent presents it for execution, unless otherwise stipulated by the contract between the client and the financial agent.

Article 828. Invalidity of the Ban on the Assignment of a Monetary Claim


1. The assignment of a monetary claim to the financial agent shall be actual, if even there is an agreement on its ban or restriction between the client and his debtor.
2. The provision established by Item 1 of this Article shall not release the client from obligations or liability to the debtor in connection with the assignment of the claim in violation of the existing agreement between them on its ban or restriction.

Article 829. The Subsequent Assignment of a Monetary Claim


The subsequent assignment of a monetary claim shall not be allowed by the financial agent, unless the contract of financing against the assignment of the monetary claim provides for otherwise.
In case where the contract allows for the subsequent assignment of a monetary claim, the provisions of this Chapter shall be accordingly applicable to it.

Article 830. The Execution of a Monetary Claim by the Debtor to the Financial Agent


1. The debtor shall be obliged to make a payment to the financial agent, provided that he has received from the client or the financial agent a written notification about the assignment of a monetary claim to this financial agent and that the notification defines the monetary claim subject to execution, and also indicates the financial agent to whom payment is to be made.
2. At debtor's request the financial agent shall be obliged to submit to the debtor within a reasonable period of time evidence of the fact that the assignment of the monetary claim has in fact taken place. If the financial agent fails to execute this obligation, the debtor shall have the right to make payment to the client in pursuance of his obligation to the latter.
3. The execution of the monetary claim by the debtor to the financial agent in keeping with the rules of this Article shall release the debtor from the relevant obligation to the client.

Article 831. The Rights of the Financial Agent to the Amounts Received from the Debtor


1. If under the contract of financing against the assignment of a monetary claim the client shall be financed by means of buying from his this claim by the financial agent, the latter shall acquire the right to all the sums of money he will receive from the debtor in fulfilment of the claim, while the client shall bear no liability to the financial agent for the fact that the received sums of money have proved to be less than the price for which the agent has bought the claim.
2. If a monetary claim has been assigned to the financial agent for the purpose of providing the execution of the client's obligation for him and unless the contract of financing against the assignment of the claim stipulates otherwise, the financial agent shall be obliged to submit his account to the client and transfer to him the sum of money exceeding the sum of the debt of the client, secured by the assignment of the claim. If the pecuniary means received by the financial agent from the debtor have proved to be less than the amount of the debt of the client to the financial agent, secured by the assignment of the claim, the client shall remain liable to the financial agent for the remainder of the debt.

Article 832. Counter Claims of the Debtor


1. If the financial agent applies to the debtor with the claim for payment, the debtor shall have the right, in keeping with Articles 410 - 412 of this Code, to present for the offset his monetary claims based on the contract with the client, which the debtor had by the time when he received the notice about the assignment of the claim to the financial agent.
2. The claims which the debtor could present to the client in connection with the breach by the latter of the agreement on the ban on the restriction of the assignment of the claim shall be invalid in respect of the financial agent.

Article 833. The Return to the Debtor of the Amounts Received by the Financial Agent


1. In case where the client has breached his obligations under the contract concluded with the debtor, the latter shall have no right to demand from the financial agent the return of the sums of money paid to him under the claim that has passed to the financial agent, if the debtor has the right to receive such sums of money directly from the client.
2. The debtor, who has the right to receive directly from the client the amounts paid to the financial agent as a result of the assignment of the claim, shall have nevertheless the right to demand the return of these sums of money by the financial agent, if it is proved that the latter has failed to execute his obligation to effect for the client the promised payment, associated with the assignment of the claim, or has made such payment, knowing about the breach by the client of that obligation to the debtor to which the payment, associated with the assignment of the claim, refers.

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