Assignment – sale of receivables against public institutions

Below are some frequently asked questions about sale of receivables against public institutions.

1. Is the assignment / sale of receivables against public institutions (e.g. hospitals financed by the governmental health fund) possible?

According to laws of Bosnia and Herzegovina, these public institutions (hospitals and health funds) when purchasing products have the same legal status as other business entities. This means that the same general assignment provisions shall be applied to the assignments where the public institutions as debtors.

2. How can the assignment / sale of receivables be effected? Is there any specific form to be complied with? Does the assignment / sale of receivables have to be registered?

The assignment or sale of receivables can be effected by the execution of the assignment or sale contract. For this purpose, usually very simple contracts are concluded, and typically by the assignor, the assignee and the debtor, although, the contract would also be valid if only entered into between the assignor and assignee. This contract has to be made in written without any further requirement in respect of the form. The law provides that assignor shall deliver to the assignee documents that constitute proof of the existence of the transferred receivables.  It will not be necessary to perform a registration of these contracts.  Also, the assignment / sale of receivables would not trigger any stamp duty.

3. Is it possible to assign / sell the receivables undisclosed or does the public institution have to be informed? Is written consent required?

According to the laws of Bosnia and Herzegovina it is not possible to assign receivables undisclosed. This means that the debtor (e.g. hospital) does not need to be a contracting party but that the distributor needs to inform the hospital about the assignment. The law also stipulates that if the debtor (hospital) fulfilled its obligation to the distributor before they were informed about the assignation, then it is to be regarded that the debtor fulfilled its obligation.

However, the notification of the debtor about the completed assignment is essential in the event that the assignor has performed more than one assignment of the same receivable to different parties. In this case, the law stipulates that the assignment was concluded with the assignee of which the debtor was informed, or that the assignment of receivables was performed with the assignee who first contacted the debtor in order to collect the transferred claims.

4. Are there any legal distinctions between an assignment and a sale of these receivables ?

There are legal distinctions between assignment of receivables and the sale of receivables. The law regulates only the assignment as the institute of civil law with which an assignment of claims by the creditor to a third party is made. The law regulates the conditions of the transfer and the legal consequences of the executed transfer, but does not engage in the legal transaction that is the legal basis for the transfer of claims. Thus the general provisions on the assignment of receivables are applied regardless of whether the legal basis for the transaction is a purchase, gift or any other legal basis for the transfer of claims.

Domestic regulation contains special rules on so-called named contracts. But at a time when the law was passed, the factoring was not developed and was not regulated by a special agreement. For this reason, the sale of receivables is not regulated by a particular contract; and therefore general rules of the contract on sale and general rules on the transfer of receivables shall apply.

Huskic Law Office

July 2013

1. Is the assignment / sale of receivables against public institutions (e.g. hospitals financed by the governmental health fund) possible?

According to laws of Bosnia and Herzegovina, these public institutions (hospitals and health funds) when purchasing products have the same legal status as other business entities. This means that the same general assignment provisions shall be applied to the assignments where the public institutions as debtors.

2. How can the assignment / sale of receivables be effected? Is there any specific form to be complied with? Does the assignment / sale of receivables have to be registered?

The assignment or sale of receivables can be effected by the execution of the assignment or sale contract. For this purpose, usually very simple contracts are concluded, and typically by the assignor, the assignee and the debtor, although, the contract would also be valid if only entered into between the assignor and assignee. This contract has to be made in written without any further requirement in respect of the form. The law provides that assignor shall deliver to the assignee documents that constitute proof of the existence of the transferred receivables.  It will not be necessary to perform a registration of these contracts.  Also, the assignment / sale of receivables would not trigger any stamp duty.

3. Is it possible to assign / sell the receivables undisclosed or does the public institution have to be informed? Is written consent required?

According to the laws of Bosnia and Herzegovina it is not possible to assign receivables undisclosed. This means that the debtor (e.g. hospital) does not need to be a contracting party but that the distributor needs to inform the hospital about the assignment. The law also stipulates that if the debtor (hospital) fulfilled its obligation to the distributor before they were informed about the assignation, then it is to be regarded that the debtor fulfilled its obligation.

However, the notification of the debtor about the completed assignment is essential in the event that the assignor has performed more than one assignment of the same receivable to different parties. In this case, the law stipulates that the assignment was concluded with the assignee of which the debtor was informed, or that the assignment of receivables was performed with the assignee who first contacted the debtor in order to collect the transferred claims.

4. Are there any legal distinctions between an assignment and a sale of these receivables ?

There are legal distinctions between assignment of receivables and the sale of receivables. The law regulates only the assignment as the institute of civil law with which an assignment of claims by the creditor to a third party is made. The law regulates the conditions of the transfer and the legal consequences of the executed transfer, but does not engage in the legal transaction that is the legal basis for the transfer of claims. Thus the general provisions on the assignment of receivables are applied regardless of whether the legal basis for the transaction is a purchase, gift or any other legal basis for the transfer of claims.

Domestic regulation contains special rules on so-called named contracts. But at a time when the law was passed, the factoring was not developed and was not regulated by a special agreement. For this reason, the sale of receivables is not regulated by a particular contract; and therefore general rules of the contract on sale and general rules on the transfer of receivables shall apply.

Huskic Law Office

July 2013

1. Is the assignment / sale of receivables against public institutions (e.g. hospitals financed by the governmental health fund) possible?

According to laws of Bosnia and Herzegovina, these public institutions (hospitals and health funds) when purchasing products have the same legal status as other business entities. This means that the same general assignment provisions shall be applied to the assignments where the public institutions as debtors.

2. How can the assignment / sale of receivables be effected? Is there any specific form to be complied with? Does the assignment / sale of receivables have to be registered?

The assignment or sale of receivables can be effected by the execution of the assignment or sale contract. For this purpose, usually very simple contracts are concluded, and typically by the assignor, the assignee and the debtor, although, the contract would also be valid if only entered into between the assignor and assignee. This contract has to be made in written without any further requirement in respect of the form. The law provides that assignor shall deliver to the assignee documents that constitute proof of the existence of the transferred receivables.  It will not be necessary to perform a registration of these contracts.  Also, the assignment / sale of receivables would not trigger any stamp duty.

3. Is it possible to assign / sell the receivables undisclosed or does the public institution have to be informed? Is written consent required?

According to the laws of Bosnia and Herzegovina it is not possible to assign receivables undisclosed. This means that the debtor (e.g. hospital) does not need to be a contracting party but that the distributor needs to inform the hospital about the assignment. The law also stipulates that if the debtor (hospital) fulfilled its obligation to the distributor before they were informed about the assignation, then it is to be regarded that the debtor fulfilled its obligation.

However, the notification of the debtor about the completed assignment is essential in the event that the assignor has performed more than one assignment of the same receivable to different parties. In this case, the law stipulates that the assignment was concluded with the assignee of which the debtor was informed, or that the assignment of receivables was performed with the assignee who first contacted the debtor in order to collect the transferred claims.

4. Are there any legal distinctions between an assignment and a sale of these receivables ?

There are legal distinctions between assignment of receivables and the sale of receivables. The law regulates only the assignment as the institute of civil law with which an assignment of claims by the creditor to a third party is made. The law regulates the conditions of the transfer and the legal consequences of the executed transfer, but does not engage in the legal transaction that is the legal basis for the transfer of claims. Thus the general provisions on the assignment of receivables are applied regardless of whether the legal basis for the transaction is a purchase, gift or any other legal basis for the transfer of claims.

Domestic regulation contains special rules on so-called named contracts. But at a time when the law was passed, the factoring was not developed and was not regulated by a special agreement. For this reason, the sale of receivables is not regulated by a particular contract; and therefore general rules of the contract on sale and general rules on the transfer of receivables shall apply.

Huskic Law Office

July 2013

1. Is the assignment / sale of receivables against public institutions (e.g. hospitals financed by the governmental health fund) possible?

According to laws of Bosnia and Herzegovina, these public institutions (hospitals and health funds) when purchasing products have the same legal status as other business entities. This means that the same general assignment provisions shall be applied to the assignments where the public institutions as debtors.

2. How can the assignment / sale of receivables be effected? Is there any specific form to be complied with? Does the assignment / sale of receivables have to be registered?

The assignment or sale of receivables can be effected by the execution of the assignment or sale contract. For this purpose, usually very simple contracts are concluded, and typically by the assignor, the assignee and the debtor, although, the contract would also be valid if only entered into between the assignor and assignee. This contract has to be made in written without any further requirement in respect of the form. The law provides that assignor shall deliver to the assignee documents that constitute proof of the existence of the transferred receivables.  It will not be necessary to perform a registration of these contracts.  Also, the assignment / sale of receivables would not trigger any stamp duty.

3. Is it possible to assign / sell the receivables undisclosed or does the public institution have to be informed? Is written consent required?

According to the laws of Bosnia and Herzegovina it is not possible to assign receivables undisclosed. This means that the debtor (e.g. hospital) does not need to be a contracting party but that the distributor needs to inform the hospital about the assignment. The law also stipulates that if the debtor (hospital) fulfilled its obligation to the distributor before they were informed about the assignation, then it is to be regarded that the debtor fulfilled its obligation.

However, the notification of the debtor about the completed assignment is essential in the event that the assignor has performed more than one assignment of the same receivable to different parties. In this case, the law stipulates that the assignment was concluded with the assignee of which the debtor was informed, or that the assignment of receivables was performed with the assignee who first contacted the debtor in order to collect the transferred claims.

4. Are there any legal distinctions between an assignment and a sale of these receivables ?

There are legal distinctions between assignment of receivables and the sale of receivables. The law regulates only the assignment as the institute of civil law with which an assignment of claims by the creditor to a third party is made. The law regulates the conditions of the transfer and the legal consequences of the executed transfer, but does not engage in the legal transaction that is the legal basis for the transfer of claims. Thus the general provisions on the assignment of receivables are applied regardless of whether the legal basis for the transaction is a purchase, gift or any other legal basis for the transfer of claims.

Domestic regulation contains special rules on so-called named contracts. But at a time when the law was passed, the factoring was not developed and was not regulated by a special agreement. For this reason, the sale of receivables is not regulated by a particular contract; and therefore general rules of the contract on sale and general rules on the transfer of receivables shall apply.

Huskic Law Office

July 2013