The factoring includes two contracts: a contract for sale of goods or for supply of services between the supplier and its customers(debtors), on the one hand, and a factoring contract between the supplier and the factor, on the other hand. This article analyzes cancellation of the contract for sale of goods or for supply of services and its effect on the factor. The most important legal consequence which arises because of cancellation of the contract for sale of goods or for supply of services is the debtor’s refusal to pay. It is concluded that the debtor may set up against the factor all objections to cancellation arising under the contract concluded between the debtor and supplier. The article examines the means of defence of the factor in case of non-payment by the debtor and analyzes how does the factor recoup damages from cancellation of the contract for sale of goods or for supply of services. The above mentioned problems are explained in light of the Bulgarian Legislation
