Assignor and assignee - who are they using examples

Many companies operating in the domestic market have uncovered debts to their counterparties. Often, such organizations transfer property rights to each other, which leads to various conflicts. To resolve controversial issues, the assignment system is used. Below we propose to discuss who the assignor and assignee are by examining several practical examples.

The assignor and the assignee are the main actors (parties) in the agreement for the assignment of rights (assignment agreement)

What is "cession"

Assignment is the transfer (assignment) of rights to claim debt. Currently, the most understandable example of assignment is the transfer of the right to collect receivables or a loan issued to a legal entity or individual by a bank to a collection agency.

Also, the concept of “cession” is used in Russia to refer to an agreement for the transfer of rights and obligations within the framework of shared construction from one shareholder to another (occurs with the consent of the developer). However, due to the fact that in this case not only rights and obligations are transferred, in the strict sense it is impossible to call such an agreement “assignment”.

The concept of “cession” is used in Russia to refer to an agreement for the transfer of rights and obligations within the framework of shared construction from one shareholder to another.

Assignment: the essence of the concept

The term "cession" is used to refer to the process during which one organization transfers to another the right to collect an outstanding debt . One of the simplest examples of this process is a situation in which a banking organization transfers to a collection service the right to claim debt on an outstanding loan.

It should be noted that a banking organization can transfer to collectors not only the debts of individuals, but also of organizations.

In addition, the term in question is used to refer to a contract for the transfer of obligations and rights from one shareholder to another. As a rule, this concept is often used in the construction industry. It should be noted here that in this example, the shareholder transfers to his counterparty not only the rights and obligations assigned to him. This means that this type of agreement cannot be considered as a full-fledged assignment agreement.

Legislative regulation of assignment in Russia

The basis of the Russian legislative framework in the field of assignment agreements is Chapter 24 of the Civil Code “Change of persons in an obligation”, Articles 155 and 279 of the Tax Code. Letters from the Ministry of Finance and clarifications from the Supreme Court are devoted to certain regulatory parameters.

The activities of collection agencies are regulated by Federal Law 230-FZ, dedicated to the protection of the rights and interests of individuals when returning overdue debts and carrying out the activities of microfinance organizations.

Please note that in January 2021, changes were made to this law that significantly reduced the rights of collectors.

Parties to the process of transfer of foreclosure rights

In simple terms, assignment is the transfer of rights to claim debt repayment. Now let's look at which parties are involved in this process and what rights they are endowed with, that is, who are the assignor and assignee?

The assignor is the original owner of the rights to the debt. This role is most often played by banks and credit organizations that provide loans to legal entities and individuals. In problematic situations, when debt repayment is delayed, these organizations, as a rule, trying to avoid losses, transfer the right to collect debt to a “profile” organization. Russian legislation gives banks and credit organizations such a right, therefore the transfer of rights to claim the repayment of loans is completely legitimate if the requirements of the law are met. The main requirement is the transfer of rights to return only the debt, but not associated expenses, for example, moral damage. Please note that the amount of debt includes interest and penalties. However, the loan is transferred exclusively in the form in which it is described in the agreement. Changing the terms of the loan - adding additional fines, interest, changing the rate - is strictly prohibited.
Assignee is the recipient of the rights to claim repayment of the debt. Banks and collection agencies most often act in this capacity. An assignee is a third party who was not initially involved in the conclusion of the agreement between the borrower and the creditors. The new owner of the rights to repay the loan has the same powers as the original one - no less, but no more. For example, if the original agreement provided for the option of repaying the debt by transferring property, the assignee also receives the right to do so. Conversely, if there is no option to repay the loan through the sale of property, the assignee does not have the right to demand repayment of the debt in this way.
Debtor is a legal entity or individual who has a problem debt (overdue loan).

The new owner of the rights to repay the loan has the same powers as the original

Assignor and assignee. Who is this?

Assignor (from the English “cedent” - transferor of the right) is a party to a transaction (individual or legal entity) who transfers (assigns) the rights of claim to another person (for example, the right to receive money on a bill). If we are talking about credit relations, then the assignor (original creditor) cedes his right to the debt. For example, a bank transfers the right to claim a debt to a collection agency. At the same time, the bank eliminates problems associated with protracted debt collection (the presence of overdue debts worsens the bank’s performance when preparing reports for the Central Bank of the Russian Federation), and at the same time receives “real” money, which makes up a small part of the debt amount (5-10%). He seems to be selling his “bad” debts (although it is incorrect to say so). In the insurance industry, the concept of assignor is applied to those insurance companies that transfer the risks they have assumed for reinsurance to other companies.

Assignee (from the English “cessionary” - legal successor) is a party to an assignment agreement that assumes the obligation to act as a new creditor or a legal successor receiving ownership rights. In cases of sale and reorganization of a business, the assignee will be the new owner of the enterprise, and when transferring property during a divorce, the assignee will be the spouse who accepts the property. In insurance, this term is assigned to the reinsurer, i.e. the company that accepted all risks from another insurance company. Collection agencies are often assignees if the right to claim under an assignment agreement is transferred to them. But this does not always happen, since collectors can work under an agency agreement.

Below are several examples of assignment agreements where there is a assignor and assignee:

Sale of business. In this case, the original owner of the enterprise (assignor) changes, but the name and field of activity of the company often remain the same, becoming the property of the new owner (assignee).
Sale through business reorganization. Here, in addition to the official owner, the name of the enterprise will also change. Only the “insides” will remain untouched - production facilities, field of activity, sales market, etc.
Assignment of debt. As a result of this procedure, the right to demand the fulfillment of monetary obligations is transferred under the assignment agreement. Most often used in the field of credit relations.
Divorce. Here, one of the spouses can transfer part of the property registered in his name to the other spouse under an assignment agreement. This practice exists abroad, but has not yet taken root here.

The triangle of relationships: assignor, assignee and debtor must be equilateral in the sense that no one’s rights, enshrined in law, should be violated when assigning rights. Let's look a little at the articles of the civil code regulating the relations between these three parties.

So, according to Art. 388 of the Civil Code of the Russian Federation, assignment of a claim by the assignor to the assignee is allowed if it does not contradict the law. Also, the assignor cannot transfer the right to claim under personal obligations:

obligation to pay alimony;
compensation for moral damage;
compensation for damage to a third party resulting from harm to human life or health, etc.

It is curious that, in accordance with the above article (clause 3), if the original creditor (assignor) entered into an agreement with the debtor to prohibit assignment (such a possibility may be present in the agreement), but the assignment agreement was nevertheless concluded with the new creditor (assignee) , then this agreement will still have legal force. In this case, the assignor is not released from liability to the debtor for violation of the agreement.

A joint creditor has the right to assign a claim to a third party only with the consent of other creditors.

Article 389 of the Civil Code of the Russian Federation speaks of the need to formalize the assignment in writing.

According to Art. 389.1 of the Civil Code of the Russian Federation, the claim passes to the assignee at the time of concluding the assignment agreement (unless otherwise provided by law or agreement). The assignor is also obliged to transfer to the assignee everything received from the debtor on account of the assigned claim (for example, part of the repaid debt), unless otherwise provided by the agreement.

In accordance with Art. 390 of the Civil Code of the Russian Federation, the assignor is liable to the assignee for the invalidity of the claim transferred to him, but at the same time is not responsible for the failure of the debtor to fulfill this requirement. An exception is if the assignor assumed guarantee for the debtor to the assignee.

If the assignor violates the legal rules, in particular those provided for in the above article, the assignee has the right to demand from the assignor the return of everything transferred under the assignment agreement, as well as compensation for losses caused.

If there were relations between several persons to whom the same claim was transferred from one assignor, then the claim is recognized as transferred to the person in whose favor the transfer was made earlier. Accordingly, if the debtor fulfills obligations to another assignee, the risk of the consequences of such performance is borne by the assignor or assignee who knew or should have known about the assignment of the claim that took place earlier.

And now a few words about the assignment agreement.

Types of assignment agreements

In legal practice, there are several options for assignment agreements:

Paid. In this case, the assignor pays the second creditor to buy out the debt, and then compensates for losses by repaying the loan by the debtor.
Free. There is no payment for such assignment of debt.
Paid - the assignor pays collectors for the assignment.
Free - the assignee works under a free agreement.
Trilateral. The debtor participates in signing the agreement.
By court decision or writ of execution.

Assignment agreement: what is it, its types, when it cannot be applied and features of the transfer of rights

The legal literacy of citizens largely determines the level of their well-being and safety.
The term “cession” is unlikely to be familiar to a small number of citizens, but ignorance, as we know, is not an excuse from responsibility. In relation to an assignment agreement, such ignorance can lead to unpleasant consequences. From the article you will learn what an agreement for the assignment of a right of claim is, how to form it, what are the features and nuances of such a document.

Dear readers! Our articles talk about typical ways to resolve legal issues, but each case is unique.

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Assignment agreement

Speaking in simple words about what it is - a debt assignment agreement, we immediately note that the assignment implies the replacement of the creditor. When signing various transactions and making settlements, situations arise when the counterparty is not able to pay the debt on time. If a debt arises, one of the methods of resolving the problem is to sign an assignment agreement.

For its correct execution, it is important to understand the features of this document and the specifics of its use. Upon its conclusion, the rights of claim are transferred.

Reference . Claim rights are a type of obligations that are formed between the parties to an agreement in accordance with a previously concluded agreement.

In such relationships, one of the parties is recognized as a creditor, and the other as a debtor. Rights and obligations approved by the agreement are created between them. This phenomenon is especially popular in the banking industry, where such an algorithm for solving the problem is very convenient.

The most common transfer of bad debts is made. Collecting debts on your own is extremely expensive, because a positive court decision does not guarantee repayment of the debt. The assignment agreement allows the creditor to receive at least part of the funds. Therefore, this method of resolving the issue of overdue debts in the banking industry is especially in demand.

There are three parties involved in the assignment agreement:

assignor - an individual or legal entity who has decided to assign the rights of claim;
assignee - a subject who decided to acquire rights of claim;
debtor - a borrower who owes a specified amount to the creditor.

Types of assignment agreements

Before drawing up the agreement, you will need to discuss the terms of the assignment, taking into account various subtleties.

Based on them, contracts are divided into several types:

tripartite assignment agreement. Signed when a third party, in addition to the assignor and assignee, is involved in the assignment procedure. A sample can be viewed on our website. It is important to note that in such a situation, debt restructuring standards are agreed upon with the debtor;
with paid and unpaid change of debtor . It is understood that collectors will be able to carry out work both free of charge and for a certain amount;
paid and gratuitous assignment agreement . The assignor has the right to sell obligations for a set amount, although he may be forced to make this decision, in the hope of receiving at least part of the funds;
based on the writ of execution . In this situation, the subtleties of transferring the rights to claim debt are established in the arbitration court.

Between individuals

An individual who is not a representative of any organization also has the right to sign agreements of this type. The type of operation and the period for its execution are determined by individuals independently in accordance with the Civil Code of the Russian Federation.

The agreement must stipulate how the transfer of rights of claim is made:

In addition, the amount of the debt, the period of its payment, passport details, and the obligations of the parties are indicated.

A standard example of an assignment agreement can be viewed on our website.

Important ! In cases where the debtor’s obligations are established by the court and relate to the repayment of personal debts - for example, alimony payments or compensation payments for harm caused, an assignment agreement between individuals cannot be concluded.

Between legal entities

The reason for signing an assignment agreement by legal entities is the emergence during their economic activities of such factors in which obligations are transferred between persons.

Thus, two entities form and enter into an agreement, which must contain established conditions, rights and obligations of the parties in relation to the debt.

As a rule, these are bilateral compensation agreements. The agreement contains the reasons for the transfer of claims, information about the procedure and details of the parties to the agreement. Having signed an agreement, legal entities are required to have it certified by a notary. In this case, the primary creditor must provide genuine information established by legislative acts.

Difference from assignment

It is important to understand the difference between an assignment and a standard assignment. The usual assignment of rights to another person, in addition to the rights of the creditor, also transfers the obligations that arise with them .

For example, the assignment of lease rights to real estate will not be an assignment, since it does not lead to additional costs (utility payments, rental payments, etc.).

Often agreements are referred to as assignment, according to which the shareholder engaged in the construction of a residential building transfers his rights and obligations to another person, having secured the consent of the developer. But this is fundamentally wrong, since such an agreement implies the transfer of not only rights, but also responsibilities.

Source: https://101jurist.com/nedvizhimost/dokumenti/dogovor-tsessii-i-ego-osnovnye-osobennosti.html

What debts are transferred under an assignment agreement?

Not all types of debt can be transferred by assignment. The most common ones include:

overdue loans, credits, advances;
bills and other securities;
accounts receivable for any material goods - goods and products.

The Civil Code provides for only one significant limitation on the transfer of debt to a third party (Article 388) - the transfer limitation is the essential importance of the identity of the creditor for the debtor. Thus, debts based on the identities of the creditor and the borrower (for example, between close relatives) cannot be transferred.

Is the assignor obligated to notify the debtor of the transfer of rights of collection?

Now that we have understood the basic concepts and active parties, let’s take a closer look at their rights and responsibilities. To begin with, is the assignor—the original creditor—obligated to notify the debtor of the transfer of rights to collect the debt?

To fully answer this question you need to know two nuances:

The assignor is not required to obtain the borrower's consent to assign the debt. He may enter into a contract with a third party without the approval of the debtor.
The assignor must notify the borrower in writing of the conclusion of an assignment agreement with a third party. However, in practice, creditors often neglect this responsibility.

Notification of the transfer of the right of collection to a third party will avoid confusion in the processing of payments and document flow. After all, if the borrower is not informed about the need to pay the debt to the new creditor (using new payment details), he will create another debt.

The only exception to this rule is the situation when the possibility and conditions for transferring debt are directly stated in the contract. However, remember that even in the absence of notification, the assignment agreement will be considered legitimate.

Notification of the transfer of the right of collection to a third party will avoid confusion in the processing of payments and document flow.

What is required from the debtor

We have already found out that the assignee is a third party to the transaction, which is introduced in extreme cases. Let's look at another important question: is a debtor as such needed when concluding a title? According to the legislation of the Russian Federation, the bank has the right to enter into an assignment agreement without direct contact, approval or signature by the borrower. Formally, the financial institution is obliged to notify the debtor that his case has been transferred to a third party, but in fact no one bears any responsibility for the lack of notification.

The second option is to change the lender. In this case, the consent or notification of the borrower is also not required, but there is one exception: the identity of the borrower should not be key to the debtor. In the case of financial institutions, this does not cause problems, but if a son borrows money from his mother, then a similar situation may arise.

If non-property transactions are considered, an encumbrance of the debtor may occur . To do this, they invite him to a meeting and ensure that he agrees to the transfer of rights, i.e., written confirmation is required from the original party to the transaction.

What is the benefit of the parties

For the assignor, the main benefit is the ability to partially or fully compensate for losses. There are two options here - when the debt is completely purchased by a third party or transferred free of charge for collection, but then receives reimbursement of the debt minus interest.

There are several options for making a profit for the assignee:

compensation for transfer of debt;
the opportunity to receive material benefits if the loan was in kind.

In most cases, only overdue debts with losses, the prospects for recovery of which are unclear, are transferred by assignment. In this case, it is more profitable for the creditor to transfer the rights to it to another organization with compensation than to seek repayment of the loan and losses on their own.

How conflict situations between creditors are resolved

Let's look at the situation when the assignee did not pay the assignor under the assignment agreement. How is such a conflict situation resolved? Firstly, all conditions for the transfer of debt, including material remuneration of the parties, are clearly indicated in the agreement.

Secondly, failure by the assignee to fulfill its obligations towards the assignor in a timely manner may give rise to legal proceedings. Thirdly, the transfer of the right to claim debt is in any case unconditional, that is, Russian legislation does not provide for the possibility of returning rights to the original owner.

Therefore, if the assignment agreement is signed, but the assignee does not fulfill its obligations to collect and return funds, the original creditor must collect the overdue debt not from the borrower, but from a third party. The concluded assignment deprives him of the right to appeal to the debtor.

Conflict situations among creditors

The assignee's primary responsibility to the assignor is to transfer funds in accordance with the terms of the agreement. When concluding a contract, the parties can agree to make an advance payment or cover the debt after receiving funds from the debtor. All financial obligations of each party must be specified in the contract. However, in practice, the assignee may violate the procedure for fulfilling its obligations.

In this case, the assignor who has not received the promised funds may file a claim in court. It is important to note that Russian laws prohibit the reverse transfer of rights to a debt from the assignee to the assignor. This means that in the event of a violation of contractual obligations on the part of the assignee, the assignor must demand the return of his money from the third party to the transaction. The assignment agreement implies that the assignor loses the opportunity to demand coverage of debts from the primary borrower.

By assignment, only and exclusively the rights of the assignor are transferred

In what form should an assignment agreement be concluded?

A unified form of debt assignment agreement has not currently been developed. The parties have the right to conclude it in a free form, taking into account certain mandatory requirements:

Indication of the date of the agreement.
Full name of the parties entering into the agreement.
Subject of the transaction. This could be financial debt, products, real estate. The subject of the agreement should be described in as much detail as possible.
Mutual rights and obligations of the assignor and assignee.
Conditions for transferring rights to claim debt - price, interest, and so on.
Liability for failure to fulfill obligations.
Details of the parties, including payment details, in the form of a table.
Signatures of responsible persons with transcript.

A unified form of debt assignment agreement has not currently been developed.

What is the difference between assignment and assignment

People new to the financial sector are unlikely to be able to distinguish an assignment contract from an assignment agreement. These types of agreements have minimal differences from each other. According to the assignment contract, the party acting as the assignor transfers to the assignee only the right to demand repayment of the outstanding loan. In the case of an assignment agreement, the original owner of the debt can transfer to a third party not only his rights, but also certain obligations.

As an example, consider an agreement for the assignment of rights to lease a property. This form of agreement cannot be regarded as the object of an assignment contract. This fact is explained by the fact that the lease agreement implies the establishment of a certain tariff according to which the rented premises are paid. However, when the assignor and assignee enter into an agreement for the assignment of rights under securities, the concluded contract receives the status of an assignment agreement. In this case, the new owner of the rights acquires the opportunity to receive dividend payments. It should be noted here that obtaining such rights does not impose any obligations on this participant in legal relations.

When can a contract be invalidated?

In most cases, the debtor does not participate in the signing of this agreement and is faced with the fact of a change of creditor. Many are dissatisfied with this change and go to court with a demand to declare the assignment invalid.

Russian judicial practice shows that the majority of such claims are unsatisfied , especially if, from the point of view of legislation and paperwork, the contract was drawn up correctly. Please note that even the presence in the original agreement of a ban on the sale of debt is often not a restriction. Therefore, there is practically no chance of challenging the assignment agreement in court.

The assignee is

The rights of the assignee at the conclusion of the transaction have the same scope and the same limits as those of the original lender. For example, the agreement provided for the possibility of repaying obligations by transferring property. The creditor can thus turn it to his advantage. The assignee also has the same opportunity. This will not depend on whether notice of the transaction was sent to the debtor. Payment (repayment of obligation) can be made in any form (cash/in-kind). But in all cases it is necessary to determine the powers that the new creditor has. In practice, payments are rarely made in cash. Typically, repayment of obligations is made by crediting to an account held by the assignee. This can also be done by issuing promissory notes, checks, and other negotiable documents. In accordance with the principle of autonomy of the will of the participant, the parties to the assignment agreement may differently resolve the issue concerning the rights of the assignee to sums of money and property received in pursuance of the original agreement.

Please note => Payment procedure under the supply agreement