Glossary · Factoring
Letter of release (LOR)
Also called: LOR, Release letter, NOA release
Definition
A letter of release (LOR) is a factor's written notice that it no longer claims a carrier's invoices, so debtors pay the carrier or its new factor.
Releases happen when a carrier changes factors or stops factoring. The new factor typically wants an LOR from the old factor sent to each debtor, a payoff or buyout of open invoices, and a UCC-3 that terminates or amends the old factor's UCC-1. Without the release, brokers keep paying the old factor, because under UCC §9-406 a debtor that has received a valid notice of assignment discharges its debt only by paying the assignee.
A release should identify the carrier by legal name and USDOT or MC number, state which invoices or dates it covers, and say where payment should go from now on. Partial releases, for one debtor or a set of invoices, are common in buyouts.
Draft a clean release with the NOA and release letter generator. General information, not legal advice: confirm state-specific questions with your counsel.
Sources
- 01UCC §9-406: Discharge of account debtor; notification of assignment · Cornell LII
- 02UCC §9-513: Termination statement · Cornell LII