With and Without Recourse

Definition

With and Without Recourse. In the case of with recourse, the finance provider relies on the vendor (of a receivable or claim) for any shortfall in the event of non-payment. In a without recourse facility or agreement, the finance provider relieves the vendor of any further liability for the debt and accepts the entire credit risk of non-payment itself. Even where without recourse facilities are provided in respect of the credit risk, it is likely that limited recourse to the vendor is maintained for warranties given in respect of, or disputes arising out of, the quality of products, fraud, and the correctness of the transactions.