Week 6 P1 Flashcards
What is the concept of assignment?
It is the transfer of a right, or obligation, or contracts to a third party without modifying the terms and conditions. So the contract is kept intact -> meaning without modifying the other terms and conditions
What is the assignment of rights?
It is the transfer by agreement from one person to another person, including transfer by way of security, of the assignor’s right to payment of a sum or performance. So it is changing the creditor.
Transfer by way of security means changing the creditor to someone you owe debt to for security or collateral reasons
What is transferred in transfer of rights?
All the assignor’s rights to payment or other performance under the contract in respect of the right assigned.
All rights securing performance of the right assigned
However, note that if rights are transferred, everything gets transferred, so obligations
How does an assignment of a right occur?
By mere agreement between assignor and assignee. The buyer (debtor) is not involved
To whom must the debtor perform?
- Until notice by the assignee of the assignment, the performance is discharged by performing to the assignor
- After notice by the assignee of the assignment, the performance is discharged by performing to the assignee
What is the transfer of obligation?
An obligation to pay money or other performance may be transferred from one person to another person
What are the conditions for transfer of obligation?
- By an agreement between the original debtor and the new debtor subject to the consent of the credior; or
- by an agreeemnt between the creditor and the new debtor, by which the new debtor assumes the obligation
Why is the creditor’s consent needed in transfer of obligation?
Because without the creditor’s consent, the payment becomes a third party performance to the creditor, which they can reject. Further, the creditor has assessed the credit risk of the original debtor, but not the new one!
What happens to the original debtor in the transfer of obligations?
It is up to the creditor’s choice.
1. Creditor may discharge the original debtor
2. The creditor may retain the original debtor as a debtor in case the new debtor does not perform properly
3. The original debtor and new debtor are jointly and severally liable
What is the assignment of contracts?
The transfer by agreement from one person to another person of the assignor’s rights and obligations with another person
What are the conditions for transfer of contract?
- Agreement between assignor and assignee
- Assignment of a contract requires the consent of the other party
What is novation?
It means we make an entirely new start, and a new contract
What are the cumulative conditions for novation?
- The intention to create a new contractual relationship: this has to be proven, which can be done through interpreting messages
- A contract is concluded: This can be done by changing the debtor, the creditor (which requires an agreement by all parties), or the object of the contract
so whats the difference between assignment and novation?
assignment -> we keep the contract intact
Novation -> it is a fresh start and we start from scratch
What are the outcomes of novation?
The old contract is entirely replaced by a new contract
1. old obligations / contracts disappears
2. Warranties and securities expire
3. Co-debtors are discharged
4. all defenses dissapear
What is subrogation?
It is replacing or putting in the same legal position, a person or good with another person or good. The initial contract is kept intact
Subrogation of a person meaning?
This is when we replace one person by another. An agreement is not needed. There is no assignment, and subrogation needs only one condition: a payment of a sum.
So a third party pays the debt of a contracting party. The third party takes the legal position of the creditor.
What is the CISG?
A B2B sales agreement applicable to international sale of goods
What are main characteristics of interntional sale of goods?
- Long distances
- uniform rules are needed to facilitate international trade
- high transport costs and time
What is article 1 of CISG?
It is limited to international sales which requires:
1. Sellers to transfer property/ownership of goods to buyers
2. buyers need to pay purchase price.
3. The goods must be tangible movable goods
What does CISG not apply to?
- Goods bought for personal, family, or household use, unless the seller at any time before or at the moment of conclusion of the contract neither knew nor ought to have known
- By auction
- On execution by authority law
- Of stocks, shares, money
- shops, vessels, aircrafts
- electricity
How does CISG apply to services and labour?
CISG does not apply to contracts where the main part of the obligation of the party is on the supply of labour or other services.
The main part is decided with economic value. We look at the value of goods compared to the value of labour/services
How does CISG apply to manufacturing goods?
CISG applies to when the supply of goods to be manufactured are considered sales, unless the party who orders the goods undertakes to supply a large part of the materials necessary for manufacturing
This is because then the manufacturer will be putting pieces together which is a service
What is the territorial scope of CISG?
It only applies to international sales. So parties whose places of business are in different states and both states are contracting states
