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Draft of Executive Summary 1 (July 16, 2006)

handle is hein.nccusl/nccpub00969 and id is 1 raw text is: DRAFT 7/16/06 THE UNITED NATIONS CONVENTION ON THE ASSIGNMENT OF RECEIVABLES IN INTERNATIONAL TRADE EXECUTIVE SUMMARY July_, 2006 On December 12, 2001, the United Nations General Assembly approved an international convention providing uniform rules on the assignments of receivables. The Convention is now being considered by various nations for signature and ratification. The following is a brief description some of the key provisions of the Convention: Objectives. As the preamble to the Convention indicates, the objective of the Convention is to provide, for assignments of receivables, uniform rules that will have the effect of increasing the availability of credit and reducing the costs of credit while at the same time avoiding disruption of existing financing practices, fostering the development of new financing practices and protecting the interests of debtors.'/ Receivables and Assignments Covered. The Convention addresses the assignment of receivables which are contractual rights to payment. Covered assignments include both the creation of security interests in receivables and true sales of receivables. However, by excluding transactions in securities, derivatives and other financial assets, assignments of deposit accounts, and assignments of claims under letters of credit and independent guaranties, and by protecting those who are holders of negotiable instruments or assignees of certain real estate lease receivables, the Convention rules relate primarily to assignments of trade, loan and similar commercial and consumer receivables arising in asset-based lending, factoring, securitization and project finance transactions. Internationality. For the Convention to apply to an assignment of a receivable, either the assignment or the receivable must be international, i.e., the assignor and assignee must be located in different States or the assignor 1 The Convention refers to the person who assigns a receivable as the assignor, the person to whom the receivables is assigned as the assignee, and the person who owes the receivable as the debtor. The contract that gives rise to the receivable is referred to as the original contract. The Convention also refers to countries as States and to those countries that sign and ratify the Convention as Contracting States. BUSDOCS:1013279.5

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