Recourse

In general, a recourse is an action that can be taken by an individual or a corporation to attempt to remedy a legal difficulty.

Specifically, a recourse (소구/遡求, 상환청구/償還請求) is the legal effect of endorsement (배서/背書) on the negotiable instrument. In order to promote the negotiability and transferability of such instrument, the endorser is required to pay to the holder-payee the money on the instrument when the maker of the promissory note is in default.

Legal Recourse
A legal recourse is used as follows:
 * A lawsuit if the issue is a matter of civil law;
 * Many contracts require mediation or arbitration before a dispute can go to court;
 * Referral to police or prosecutor for investigation and possible criminal charges if the matter is a criminal violation;
 * Petition to a legislature or other law-making body for a change in the law if a law is thought to be unjust; and
 * Petition to a president or governor or monarch other chief executive or other official with power to pardon.

Legal Effect
As a recourse means a claim against other obligor than the principal debtor, the existence of recourse like "with recourse" amounts to guarantee. Otherwise, "without recourse" it is equivalent to no guarantee.

With recourse
For example, a factoring with recourse means the seller (client) who has transferred account receivables or invoices to a factor at a discount is required to pay to the factor if the buyer (customer of the seller) fails to pay the installment proceeds of the good sold or the work performed. In reality, such factoring with recourse is unusual and called "unreal" factoring (부진정/不眞正팩토링).

Without recourse
Project finance is typical of non- or limited recourse financing. A project company is established for the special purpose of non- or limited recourse. Therefore, the project financier should concentrate on the expected cash flows generating from the proposed project.

In a loan sale or loan participation transaction without recourse, a lead bank need not pay the principal of and interest in arrears on the loan sold to the participant when the borrower is in default.