Chapter 4 - Section 6 - Novation Flashcards
The total or partial extinction of an obligation through the creation of a new one which substitutes it.
Novation
Obligations may be modified by:
(1) Changing their object or principal condition
(2) Substituting the person of the debtor
(3) Subrogating a third person in the rights of a creditor
Dual Function of Novation
(1) To extinguish or modify an existing obligation
(2) Substitute a new one in in its place
The person of the debtor is substituted
Substitution
Takes place when a third person of his own initiative and without the knowledge or against the will of the original debtor assumes the latter’s obligation with the consent of the creditor.
Expromision
Takes place when the creditor accepts a third person to take the place of the debtor at the instance of the latter.
Delegacion
A third person is subrogated in the rights of the creditor
Subrogation
Exceptions (intended to prevent fraud on the part of the old debtor)
- If the insolvency was already existing and is of public knowledge at the time of delegacion
- If the insolvency of the new debtor was already existing and known to the original original debtor at the time of the delegation of the debt to the new debtor.
Consent to parties required in conventional subrogation
The Debtor
he becomes liable under the new obligation to a new creditor.
Consent to parties required in conventional subrogation
The Old Creditor
his right against the debtor is extinguished.
Consent to parties required in conventional subrogation
New Creditor
he may dislike or distrust the debtor.
Legal Subrogation:
(1) When a creditor pays another creditor who is preferred
(2) When a third person without interest in the obligation pays with the approval of the debtor
(3) When a third person with interest in the obligation pays even without the knowledge of the debtor.
