Introduction by Max Nathan, Jr.
A business that sells goods or furnishes services on credit owns a deceptively valuable asset—the accounts receivable of its customers. The value is "deceptive" because an account is not a hard asset of readily ascertainable value. It is not corporeal like furniture, fixtures, and equipment, but incorporeal, representing only a right or claim to be paid, the value of which may be difficult to ascertain. The account may not be worth its face value if the underlying goods sold or services rendered were not worth that amount. Moreover, even if the face value is accurately stated, the account debtor may be insolvent, unable to pay in full or in part. But while the value may be deceptive, there is value, nonetheless, and the account is an asset.
As the credit economy expanded in the nineteenth century, so did the volume and amount of accounts receivable. With that increase, commercial recognition of their value and importance was inevitable. Despite the nineteenth century roots, it has been primarily in this century that the use of accounts receivable financing to raise capital has taken on significance.
It can be fascinating to observe the evolution of legal techniques of accommodating commercial practice. The initial use of existing legal concepts is followed by the development of new concepts that seek to promote a workable security device to properly protect both creditors and debtors and, at the same time, facilitate the use of the device itself.
In that regard, the following article by Professor Sidney Posel of Rutgers School of Law is especially interesting and particularly appropriate for publication in the Tulane Law Review, which is dedicated to the civil law tradition and to comparative law and to codification. The article compares legal aspects of accounts receivable financing in France and America, affording the comparative law scholar the opportunity to study the contemporaneous approaches of two different legal systems as they accomodate and adapt to a new and highly specialized commercial phenomenon.
About the Author
Max Nathan, Jr. Professor of Law, Tulane University. J.D. 1960, Tulane University. Member of the Bar, New Orleans.
Citation
57 Tul. L. Rev. 282 (1982)