Assignment OF Credits AND Other Incorporeal Rights PDF

Preview

Summary

Assignment OF Credits AND Other Incorporeal Rights...

Description

ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS Assignment of Credit—an agreement whereby credits, rights or actions pertaining to a person (called assignor) are transferred by him to another (called assignee) either onerously or gratuitously who acquires the power to enforce the same against the debtors. Nature of Assignment of Credits and other incorporeal rights: Has all the elements of a contract of sale: (1) consent (2) Object which is the credit, right , action assigned and (3) consideration which is the price paid for the assignment, or liberality of the assignor if the assignment is gratuitous. Distinction between Contract of Sale and Assignment of Credits Basis Contract of Sale Assignment of Credits Object Property Credit, incorporeal rights or rights of action Manner of Delivery of Object It need not be through It must be through a public public instrument instrument (1625) Subject obligated Ownership when transferred

The whole world A definite third person Transfer of ownership need Ownership is transferred upon not be upon delivery of the delivery of the documents thing. The parties may agree evidencing the credit or that ownership be transferred incorporeal rights only after full payment (1478)

Consideration

It is always a requisite

It is not always a requisite. Action may be maintained by the assignee based on his title even if there is no consideration.

Distinction between Dation in Payment and Assignment of Credits Basis Dation in Payment Assignment of Credits Nature It is an alienation of property of The alienation of credits or a debtor in satisfaction of a rights, need not be in satisfaction of debtor’s debt debt in money Object

Determinate property

Effect

Obligation is extinguished

Credits, incorporeal rights or rights of action Obligation is not extinguished

Consent of debtor is not necessary for the assignment. He is therefore released from the obligation if he pays the creditor before having knowledge of the assignment (1626) Scope of Assignment: All accessory rights, such as guaranty, mortgage, pledge or preference (1627) Art. 1628 What the Assignor of the Credit Warrants? (ELS) 1. The existence of the credit at the time of the assignment 2. The legality of the credit unless he sold the thing as “doubtful”, meaning, he is not sure of the validity of his acquisition of the thing sold which fact he has disclosed to the assignee 3. The solvency of the debtor, if expressly stipulated or if the insolvency of the debtor was prior to the sale and of common knowledge Scope of Liability in case of breach of warranty 1. In good faith: Assignor shall pay (a) consideration of price which he received from the assignee; (b) expenses of the contract (c) other legitimate expenses occasioned by the assignment 2. In bad faith: Same liabilities as in above but with damages...