Concession of claim rights

The concession of the rights of the claim (cession) is an agreement in which one party (the old creditor) gives the other party (new creditor) the right to demand the performance of obligations by a third party (debtor), on the terms of not worsening the debtor’s situation.

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The assignment of the right of claim is one of the reasons for the replacement of the creditor in the obligation (Article 512 GCU). This is a transaction (contract) on the basis of which the old creditor transfers its rights to a new creditor, and the new creditor accepts these rights and (1) undertakes or (2) undertakes to pay them. The contract of assignment of the right of requirement is also called “contract of the concession” in the practice of business turnover, and its subjects are respectively “cedens” (old creditor) and “concessionary” (new creditor).

(1). A contract of assignment of the right of claim may be remunerative if it provides for the obligation of the new creditor to provide the old creditor with any property provision instead of the right of claim. In this case, the relationship of the concession is subject to the provisions of the contract of sale (Article 656 GCU).

(2). If the contract of assignment of the right of claim is free, i.e. the right to the obligation is transferred to a new creditor without any counter-provision, such relations are governed by the rules relating to donation (Article 717 GCU).

As a matter of fact

conceding the right claim is a transaction that only transfers the right claim from the original lender to the new lender

The law clearly defines the rights and obligations of each party in such agreements:

• The old creditor completely loses its claim to the debtor;
• The new creditor receives all the rights of the old creditor in that amount and on the terms that were in force at the time of the transfer of rights;
• The assignment of the rights of the claim does not require the consent of the debtor, but leaves him the right to suspend the performance of the obligations until he receives confirmation of the legality of the contract of the concession.

The law firm AGTL provides services for contract assignment of claim rights, as well as offers legal assistance in arbitration disputes related to the contracts of the concession.

The assignment of the treaty requirement rights has a number of features that need to be taken into account, namely:

The concession belongs to the area of property law, i.e. it is a separate value, separated from the personalities of the owner. Therefore, claims relating to the identity of the creditor and the debtor cannot be transferred to a third party. This excludes, for example, the transfer of alimony rights to another creditor, which have been awarded in favour of a particular individual.

The concession of the rights of the contract requirement must be made on a remunerative basis, otherwise such an agreement may be considered by the court as a gift agreement, the conclusion of which is not allowed between commercial organizations. As a result, the transaction will be deemed insignificant and the new creditor will lose the right to file a lawsuit.

Responsibility for the validity of the transferable claim rights rests with the old creditor, and if such a right is invalidated, it is obliged to recover all losses of the new one. In practice, there are often cases when the old creditor is mistaken about its legality of its claims to the debtor or- in case of bad faith – concludes concession contracts with several new creditors. Only a thorough analysis of the transaction before its commission will allow the new lender to insure itself against losses.

The term “secure assignment of the right of claim” is also often used. In this case, the old lender entitles the new creditor to the debtor’s claims for a while as collateral for its own liabilities. The main difference between an interim assignment of claim rights and a conventional one is that rights are not transferred at all times, but only for the time it takes the old creditor to meet its own obligations, after which they are repaid.

The drafting and enforcement of the contracts of assignment of the rights of the requirement is associated with a thorough knowledge of the existing legislation. An incorrectly drafted contract can cause significant financial damage.