On July 6, 2018 the draft Business Contract Terms (Assignment of Receivables) Regulations 2018 were published. These prevent the parties to certain types of contract from restricting the assignment of receivables.
Regulation 2 of the new draft regulations, made under the Small Business, Enterprise and Employment Act 2015, provides that, subject to certain exceptions, a term in a contract entered into on or after December 31, 2018 will have no effect to the extent that it prohibits or imposes a condition, or other restriction, on the assignment of a receivable. A receivable is defined as “a right to be paid any amount under a contract (other than an excluded contract) for the supply of goods, services or intangible assets”.
So far as corporate transactions are concerned, Regulation 4 sets out exclusions for specific types of contract, including a term in a contract "entered into for the purposes of, or in connection with, the acquisition, disposal or transfer of an ownership interest in a firm, wherever it is incorporated or established, or of a business or undertaking or part of a business or undertaking, and which includes a statement to that effect". “Firm" in this context has the same meaning as in the Companies Act 2006, meaning any entity that is not an individual and includes a body corporate, a corporation sole and a partnership or other unincorporated association.
The draft regulations must be approved by the Houses of Parliament.
(Business Contract Terms (Assignment of Receivables) Regulations 2018 – 06.07.18)
For more information, see this Norton Rose Fulbright briefing: