Civil Transactions
Assignment of Contract under the Civil Transactions Law
The Civil Transactions Law provides that a contracting party may assign to another person his capacity as a party to the contract, provided that the other contracting party consents thereto.
Such consent may be granted in advance if the contract to be assigned is specified. In this case, the assignment shall take effect against the obligee once the assignor notifies him of the assignment.
Provisions of the Assignment of Contract
- If the obligee consents to the assignment, the assignor shall be discharged from liability towards him with respect to future obligations. Accordingly, the assignor remains responsible only for obligations incurred prior to the assignment and shall not be liable for obligations arising thereafter.
- If the obligee does not consent to the assignment, the assignor shall remain jointly liable for the performance of the contract with the assignee, unless otherwise agreed, or unless the circumstances indicate that the effectiveness of the assignment between them is conditional upon the obligee’s consent.
- The assignee may assert against the obligee any defenses relating to the debt, but may not assert defenses relating to the person of the assignor.
- The obligee may assert against the assignee all defenses that he could have asserted against the assignor.
- If the obligee does not discharge the assignor from liability, all agreed-upon securities shall remain in place. However, if the obligee discharges the assignor, securities provided by third parties shall not remain in place, while the obligations of the joint and several debtors shall continue after deducting the assignor’s share of the debt.
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