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The Factoring Agreement serves as the primary legal instrument for businesses seeking to improve their working capital position through the sale of receivables in Malta. This document is essential when a business wishes to convert its accounts receivable into immediate cash flow while potentially outsourcing receivables management and collection activities. The agreement, governed by Maltese law and regulated under the Financial Institutions Act (Chapter 376), details crucial aspects such as purchase price mechanisms, advance rates, fees, eligibility criteria for receivables, and collection procedures. It's particularly valuable for businesses with significant B2B transactions, extended payment terms, or seasonal cash flow variations. The document includes comprehensive provisions for compliance with Maltese financial services regulations, anti-money laundering requirements, and data protection laws, while also addressing operational procedures, reporting requirements, and risk allocation between the factor and the client.

1. Parties: Identification of the Factor and the Client (seller of receivables), including full legal names, registration details, and addresses

2. Background: Context of the agreement, nature of the Client's business, and purpose of the factoring arrangement

3. Definitions: Detailed definitions of key terms used throughout the agreement, including 'Receivables', 'Eligible Receivables', 'Purchase Price', 'Advance Rate', etc.

4. Sale and Purchase of Receivables: Core provisions regarding the assignment and transfer of receivables from Client to Factor

5. Purchase Price and Payment Terms: Calculation of purchase price, advance rate, reserves, and payment mechanics

6. Eligibility Criteria: Specific criteria that receivables must meet to be eligible for factoring

7. Representations and Warranties: Client's representations regarding business, receivables, and authority to enter agreement

8. Covenants: Ongoing obligations of the Client regarding business operations and receivables management

9. Collection and Management: Procedures for collection of receivables and management of customer relationships

10. Fees and Charges: Detailed breakdown of all fees, charges, and interest applicable

11. Events of Default: Circumstances constituting default and consequences thereof

12. Term and Termination: Duration of agreement and termination provisions

13. Indemnification: Client's obligations to indemnify Factor for losses or claims

14. Confidentiality: Provisions regarding confidential information and its protection

15. Notices: Methods and requirements for formal communications between parties

16. Governing Law and Jurisdiction: Specification of Maltese law as governing law and jurisdiction for disputes

17. General Provisions: Standard boilerplate provisions including assignment, amendments, severability, etc.