Transfer of receivables-cession contract

With the cession contract, a creditor who has a certain claim (owed something) to another person - a debtor - transfers that claim to a third party. In this way, the principal will have to be transferred to that third party, the transferor of the claim losing his rights to the person liable. The most common reason for such a transfer of receivables is the inability to collect a certain claim. The possibility to transfer receivables between different persons is regulated in Art. 99 and Art. 100 of the Obligations and Contracts Act.

Use Cession Agreement if:

You are a lender and want to transfer all or part of your claim to a third party.

You are willing to pay a certain portion of the original creditor's claim, and then you want to collect the entire claim for yourself and make a profit.

 

The cession contract must be communicated to the debtor in order to take action against him. Otherwise, it will be able to fulfill its obligation valid to the original creditor.

The cession contract can not be transferred to a custody and maintenance contract, as well as a right to non-pecuniary damages. The law prohibits transferring pension, maintenance, scholarship, salary, public benefits, and the like.

The claim shall be transferred to the condition of the conclusion of the contract, together with all adjudicated rights thereto (interest, collateral, etc.), unless otherwise agreed. The debtor's rights are also not prejudiced, and he retains all his objections to the new creditor.

 

What must necessarily be included in a Cession Agreement:

 

The principal thing that the parties agree is the relationship between them that arises in relation to the existing receivable - its type and size, as well as the existence or absence of a price against which the claim will be transferred, respectively its amount.

The parties to the contract can be both people and companies, and this does not affect its content in any way. When both parties are traders, the provisions of the Commerce Act must be taken into account.

The rights and obligations of the parties are related to the transfer of the claim and the payment of the price when agreed.

 

Additional Terms in a Cession Agreement:

 

In addition to the underlying clauses, you will be able to add additional arrangements, such as the primary creditor's responsibility for the solvency of the debtor - this must be explicitly agreed so that the new lender can rely on it. You will be able to specify when the debtor should be notified of the cessation, as well as the time of transmission of the documents certifying the existence of a claim. Last but not least, you will be able to provide for default in case of non-performance of the contract and provisions for resolving any litigation that may arise.