The New Czech Civil Code has introduced several changes to the assignment of receivables and new instruments for such purposes.
Assignment of receivable
The New Civil Code (Act No. 89/2012 Coll., civil code, as amended; the NCC), unlike the previous one (Act No. 40/1964 Coll., civil code, as amended; the CC), does not require an agreement on the assignment of receivables to be made in writing. It can be made in oral form or implicitly. However, for legal certainty and for better proof of assignment, the written form is recommended. The assignment agreement must also identify the transferred receivables in a sufficiently specific manner.
Rights attached to the receivable
By assignment of debt, the assignee acquires also appurtenances to the debt (eg, interest, default interest and costs of enforcement of the debt) and other rights connected to the debt (including security).
The assignment is effective towards the debtor / security provider only upon its notification / proof of assignment. The notification is not a requirement for validity of the assignment. A change is that the obligation for such notification is not expressly stipulated by the NCC. Until such notification or proof of assignment, the security provider / debtor could fulfil its liability by performance to the assignor. In the case of multiple assignments, the assignment of which the debtor first obtains knowledge is effective. This might have practical consequences for silent assignments.
As a general rule, any receivable that can be alienated can also be assigned, unless the parties to an agreement agree otherwise or other statutory conditions apply. The NCC, unlike the CC, does not prohibit the assignment of a receivable that is excluded from enforcement. Only future practice will show the use of such extension of assignable receivables. The NCC explicitly allows assignment of a part of a receivable; it is probably possible even in the case of a receivable consisting of indivisible performance, which would result in a plurality of creditors.
Under the NCC, the assignor is liable up to the amount of remuneration and interest for the existence and for the collectability of the assigned debt. The assignor is not liable if the debt became uncollectable after the assignment, through the fault of the assignee or if the assignee was aware at the time of the assignment that the debt was a future or unsure debt or not collectable.
Global cession of receivables
The NCC, unlike the CC, explicitly allows the global cession of a set of receivables. Under this instrument, all receivables, present or future, may be transferred if the group of receivables is sufficiently specified; that is, if the receivables are of a certain type, arise in a specific period of time and are under the same legal title or another sufficient specification of the receivables.
Assignment of contract
A change is that the NCC introduces an instrument consisting of the assignment of a contract or its part. This was not explicitly allowed under the CC, and previously parties generally assigned only rights and transferred the debts from an existing contract. The assignment of a contract is permissible if the nature of the contract does not exclude this, if the other party agrees (also prior approval in the respective contract is allowed) and it was not fully fulfilled.
As of the effectiveness of the assignment, the assignor is released from its obligations to the extent it was assigned. The ceded party might, however, preclude this through a declaration towards the assignor that it refuses the release. Such declaration must be made within 15 days from when the ceded party had or should have had knowledge that the assignee did not fulfil its obligation.
If the ceded party is late with this declaration, it does not change its effect: the ceded party must reimburse any damage from the delay. This might have huge consequences as the assignor will have no certainty that it is really released from its obligation until the full fulfilment of the contract. We are of the view that the original parties might agree on a waiver of such declaration directly in a contract.
Quote: If the ceded party is late with this declaration, it does not change its effect: the ceded party must reimburse any damage from the delay.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.