Cession of claims by contract

Cession of claims by contract is governed by the provisions of Articles 436 to 445 of the Law on Obligations and resulting in a substitution of creditor in obligations.

Subject of Contract

A creditor may carry out the cession of his claim by a contract entered into with a third person, except a claim whose transfer is not permitted by statute, or which is restricted to creditor’s
person, or whose very nature is incompatible with transferring to another.

Cession of claim by contract respectively a contract of cession shall have no effect for a debtor if he and the creditor have stipulated that the latter shall not be able to assign the claim to another, or that he shall not assign it without the debtor’s consent.

Accessory rights shall pass with the claim to the recipient, such as the right of preferential payment, mortgage, security, rights on the ground of contract with a guarantor, rights to interest, to liquidate damages, and the like.

However, an assignor (a person effecting cession) may deliver the object pledged to the recipient only should the pledger agree; otherwise, it shall remain with the person effecting assignment, to be kept by him for the account of the recipient. It shall be presumed that due and outstanding interest is assigned (ceded) together with the principal claim.

Notifying a Debtor

Consent of debtor shall not be necessary for the assignment of a claim, but the assignor (person effecting cession) shall be bound to notify the debtor of the assignment (cession) effected.

Fulfilment effected to the assignor (person effecting cession) before notification about the assignment (cession) shall be valid and shall exempt the debtor from obligation, but only if he was not aware of the assignment (cession); otherwise, the obligation shall remain valid and he shall be bound to fulfil it to the recipient.

Multiple Cession

Should a creditor assign one and the same claim to various persons, the claim shall attach to the recipient being the first notified as such to the debtor by the assignor (person effecting cession) or to the assignee (recipient) who was the first to contact the debtor.

Relationship between a Recipient and Debtor

An assignee (recipient) shall have the same rights against a debtor otherwise pertaining to the assignor (person effecting cession) against the debtor before the assignment (cession).

A debtor may raise against an assignee (recipient), in addition to objections he has against him, also those which he was able to raise against the assignor (person effecting cession) until the moment of his being notified of the assignment (cession).

Relationship between an Assignor (Person effecting cession) and Anassignee (Recipient)

Presenting a Document on Debt

An assignor (person effecting cession) shall be bound to present to the assignee (recipient) a debenture bond or some other document on debt, should such be in his possession, as well as other proof on the assigned claim and on accessory rights.

Should the assignor (person effecting cession) transfer to an assignee (recipient) only a part of the claim, he shall be bound to present to him a certified copy of the debenture bond or of some other document proving the existence of the assigned claim.

An assignor (person effecting cession) shall be bound, on request of the assignee (recipient), to issue to him a certified acknowledgment of the assignment.

Guaranteeing the Existence of a Claim

After an assignment is effected by a contract with consideration, the assignor (person effecting cession) shall guarantee the existence of a claim at the moment of effecting the assignment.

Guaranteeing Collectibility

An assignor (person effecting cession) shall guarantee the collectibility of an assigned claim, should this be stipulated, but only to the amount received from the recipient, as well as the collectibility of the interest, expenses relating to assignment and expenses of proceedings against the
debtor.

Particular Cases of Cession of Claims

Cession Instead of Fulfilment for Collection

Should a debtor, instead of fulfilling his obligation, assign to a creditor his claim or a part of it, the debtor’s obligation shall be terminated up to the amount of the assigned claim by the fact of entering into contract on assignment. However, should a debtor assign his claim to his creditor only in order to effect payment, his obligation shall be terminated, or reduced, only after the creditor has collected the assigned claim.

In both cases the recipient shall be bound to hand over to the assignor (person effecting cession) everything collected by him over the amount of his claim to the latter.

In case of assignment for the purpose of collection, the debtor of the assigned claim may fulfill his obligation also to the assignor (person effecting cession), even after he has been notified of the assignment.

Cession for the Purpose of Guarantee

Should assignment (cession) be effected for the purpose of guaranteeing the assignee’s claim against the assignor, the assignee shall be bound to proceed as a good businessman or good head of household, in seeing to the collection of the assigned claim; after the collection and after deducting the amount necessary for settling his own claim against the assignor (person effecting cession), he shall hand over the difference to him.