Notice of assignment of a claim

Under Article 99(1) of the Obligations and Contracts Act, an agreement assigning a claim takes effect and binds its parties: the assignor and the assignee. The debtor is not a party. Under Article 99(3), the assignment affects the debtor when the assignor serves notice that the claim has passed to the new creditor. The assignee’s entitlement to exercise the assigned rights against the debtor thus arises from and depends on that notice. This also follows from Article 99(4): the transfer takes effect against the debtor and third parties when the former creditor gives notice. To produce that effect, notice must therefore come from the former creditor. Notice is not a condition for the agreement to take effect between its parties: the rights pass to the assignee when the agreement is concluded. Notice matters in relation to third parties, including the debtor. The transfer takes effect against all third parties when the debtor receives notice (Article 99(4)). Until then, as far as third parties are concerned, the assignor remains the holder of the claim. The assignor therefore remains the debtor’s creditor until the debtor receives notice; only then does the former creditor cease to hold that position in relation to the debtor.

This article is not a legal opinion or advice on a particular situation or person. The author makes no claim to cover assignment of claims exhaustively. For legal assistance in a similar case, consult a civil or commercial lawyer experienced in litigation under the Obligations and Contracts Act.