Assignment of Receivables, Assumption of Debt and Transfer of Contract
A change of party or right in a contractual relationship can affect not only the principal debt but also the security, defenses and objections.
- Assignment of receivables and written assignment agreements
- Prohibitions on assignment arising from law, contract or the nature of the work
- Assignment of future and conditional receivables
- Notice to the debtor and payment to the right person
- The assignor’s liability for the existence of the receivable and the debtor’s ability to pay
- Internal and external assumption of debt
- Accession to a debt and liability arising from the takeover of assets or a business
- Transfer of the contract and accession to the contract
- The position of suretyship, guarantees, pledges and other security after the transfer
- Disputes over determination, payment and restitution arising from assignment, transfer and assumption
Disputes over the existence, amount, maturity and collection of a receivable are also addressed in the Debt Claims practice area; compulsory collection proceedings are addressed in the Enforcement and Insolvency practice area.
Contractual Penalty, Binding Deposit, Withdrawal Money, Interest and Compensation
- Determining for which breach the contractual penalty arises
- A contractual penalty added to performance and one in place of performance
- Assessing an excessive contractual penalty
- The relationship between the contractual penalty and claims for damage and compensation
- The legal nature of a binding deposit, earnest money (kapora) and withdrawal money
- Refund of advances and prepayments
- Contractual interest, default interest and the start date of interest
- Disputes over foreign currency debts and exchange rate differences
- Provisions on direct loss, loss of profit and indirect loss
- Liability caps, exceptions and provisions on the calculation of compensation
Suretyship, Guarantee and Other Contractual Security
The legal nature and validity conditions of the security matter as much as its name. In particular, the distinction between suretyship and guarantee can have different consequences for the scope of liability and the conditions for making a claim.
- Ordinary suretyship and joint and several suretyship
- Form, maximum amount, date and time requirements of suretyship
- Assessing cases in which the spouse’s consent is required
- Guarantee contracts
- Bank letters of guarantee
- Parent company, shareholder or manager guarantees
- Deposit, security amount and blocked account arrangements
- Contracts connected with pledges of movables, mortgages and pledges of receivables
- Enforcement, return and release of security
- The effect of a change or ending of the principal contract on the security
Review Security by Its Function, Not by Its Name
Suretyship, guarantee, letter of guarantee and deposit can produce different consequences. The maximum liability, time limit, condition for making a claim and the expiry arrangements must be clear. It should not be assumed that security continues on the same scope when the principal contract changes.
Contractual penalty and earnest money
The review looks at which breach is tied to the sanction, whether it can be claimed together with performance, and the need to reserve rights. The word kapora alone does not give rise to an unconditional right to withdraw or to a result in which the amount is never refunded in any case.
Separate the debt and the rights in a transfer
Assignment of a receivable, assumption of a debt and transfer of a contract are not the same transaction. The required approvals, form, notice, the fate of the security and payment to the right person are arranged separately.