SU13- Cession Flashcards
Define Cession
a juristic act that allows for the transfer of personal rights created by way of a contract
Differentiate b/w Cession, Delegation, Assignment and Novation
Cession- legal act of transfer
Delegation- transfer a debt from one debtor to another
Assignment- Substitution of rights and duties that are transferred to a third party
Novation- occurs when an obligation is extinguished by an agreement between the parties and is thus replaced by another obligation
Parties to cession
Cedent- Original owner of the claim
Cessionary- New owner of the claim
Debtor- Remains the same- debtor is obliged to perform
Requirements of Cession
- Cedent must be entitled to dispose of the personal rights
- The personal right must be capable of being ceded.
- A transfer agreement
- Formalities
- Legality
- The absence of prejudice to the debtor
- A valid causa
- Cedent must be entitled to dispose of the personal rights
Nemo plus iuris- you can not transfer more than you have
- The personal right must be capable of being ceded
General rule: rights freely cedable
1. Cedable rights
a. Contingent rights: Rights subject to suspensive/ resolutive conditions can be ceded.
b. Future rights: Rights that may reasonably realize may be ceded
2.1. Rights that are not cedable
a. Rights that are too personal- claims for maintenance, pain and suffering and under the actio iniurarium
b. Delectus personae- Where the identity of the creditor is of vital importance for the debtor- Contract of employment.
c. Pactum de non cedendo: A clause stating that cession may not take place/ may only be ceded by the consent of the other party
Pactum de non cedendo is only valid if…
the debtor has a legitimate reason for the prevention of
session
*constitutes a restraint on alienation
Pactum de cendedo case law: Paiges v van Ryns Gold mine Estate 1920
Facts:
*An employee had ceded his right to wages to a general dealer in order to obtain credit
*When the cessionary tried to enforce the claim against the employer, the latter raised the defence that the cession was in contravention of a clause in the
employment contract, prohibiting cession without the consent of the employer
Held: Valid because (1) The clause served a very useful purpose to the employer (2) The clause was not contrary to public policy for 2 reasons
- served to protect the employee
- was part of the agreement creating the right which was a limited, non-transferrable one from its inception
Therefore: cedent could not transfer to the cessionary any greater right than he himself had
- Transfer agreement
Consensus- meeting of the mind
**Cedent must have intention to transfer rights and cessionary must have intention to accept with
*Agreement on nature of transaction
*Agreement on what rights transferred
*Agreement on identity of parties
*Certainty
- Formalities
General rule: No formalities are required for a valid cession
*Exceptions
>Formalities created by parties
>Formalities created by law may prescribe formalities
- Legality
A cession is illegal if
a. Prohibited by statute or common law
b. Contrary to public policy or the boni mores of the community
The illegality may relate to
a. Its conclusion
b. Its implementation
c. Its underlying purpose
5.1. Legality case law: Nedcor Bank Hyperlec Mechanical supplies 2000
May not be made with a purpose that is against public policy
- The absence of prejudice to the debtor
The debtor is protected by the rule that the cession should not prejudice the debtor’s position by making it more burdensome
6.1. Prejudice to the debtor may be in two ways…
- Splitting claims
Claim can only be ceded in its entirety and can not be broken up into smaller cessions unless debtor agrees - Malafide cessions
Where the cession is made with the intention to deprive the debtor of the opportunity to raise a counter claim against the cedent