13. Cession
General
- Transfer of claim/personal right by one person to another
Characteristics
- Always possible unless prohibited by statute, common law/contract.
- Contractual prohibition: courts argue prohibition which not in same contract
as right that purportedly ceded is invalid unless can be shown that debtor had
interest in such prohibition.
- Right can’t be ceded if so inextricable w/identity of creditor that performance
to another person will change nature of obligation.
- Consent of debtor not required for valid cession.
- Done by agreement between creditor & third party.
- Debtor is protected; cession only valid if debtor not prejudiced.
- Not regarded as prejudice if new creditor is simply stricter.
- Can be made w/out compliance w/any formalities, sometimes formalities
prescribed
- Can take place w/out any assistance of debtor.
- Possible that debtor may not know who real creditor is.
- Cedent: old creditor
- Cessionary: real creditor
- Debtor performs in good faith to cedent = good as performance to cessionary
- Advisable to notify him so to ensure debtor doesn’t pay cedent in good faith.
- Cedent can never transfer more rights ton cessionary than he had himself.
- Debtor retains every defence which he had against cedent
- Claims have to be instituted against cedent because only transferred personal
rights & no obligations.
Cession of Debt or Debts as Security
- In commercial world cession is used as form of security
General
- Transfer of claim/personal right by one person to another
Characteristics
- Always possible unless prohibited by statute, common law/contract.
- Contractual prohibition: courts argue prohibition which not in same contract
as right that purportedly ceded is invalid unless can be shown that debtor had
interest in such prohibition.
- Right can’t be ceded if so inextricable w/identity of creditor that performance
to another person will change nature of obligation.
- Consent of debtor not required for valid cession.
- Done by agreement between creditor & third party.
- Debtor is protected; cession only valid if debtor not prejudiced.
- Not regarded as prejudice if new creditor is simply stricter.
- Can be made w/out compliance w/any formalities, sometimes formalities
prescribed
- Can take place w/out any assistance of debtor.
- Possible that debtor may not know who real creditor is.
- Cedent: old creditor
- Cessionary: real creditor
- Debtor performs in good faith to cedent = good as performance to cessionary
- Advisable to notify him so to ensure debtor doesn’t pay cedent in good faith.
- Cedent can never transfer more rights ton cessionary than he had himself.
- Debtor retains every defence which he had against cedent
- Claims have to be instituted against cedent because only transferred personal
rights & no obligations.
Cession of Debt or Debts as Security
- In commercial world cession is used as form of security
