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Shortfall Fees in Factoring Pact

In a recent decision, Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of New York applied New Jersey law in ruling that a shortfall fee charged by a factoring company was enforceable, pursuant to an alternative fee structure under a certain factoring agreement.

20 minute read February 29, 2008 at 08:19 AM
By
Shlomit Ophir-Harel and Chaim Rybak
Shortfall Fees in Factoring Pact

As financial circumstances become more difficult, it is expected that many businesses will turn to funding solutions such as factoring agreements to weather the storm. These agreements typically involve the advance of money from a financial institution to a business against proceeds from the business's outstanding accounts receivables.

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