Change Of Debtor Agreement

The parties are free to exclude the assignment in their agreement (Article 3:83(2) of the Dutch Civil Code). For example, a party to a distribution agreement may prevent the distributor from withdrawing the distribution right from a third party: the initial debt may contain provisions allowing the borrower to change in the future. These provisions may take the form of an alternative clause. Such a clause could be included at the request of a lender, which would make it possible to transfer the obligation in the event of a change in ownership of the borrowers` company or transfer of the activity to the borrowers` company. The creditor company can thus protect itself against the changes made by the borrower`s group. The new debtor`s obligation will be a new debt. By Novation, an imperfect civil obligation can (naturally) become a real civil obligation. On the contrary, novation cannot be accepted in the event that the former obligation had as its object the supply of a particular individual property which, at the time of the contraction of the new obligation, was accidentally winched without fault of the debtor, because the old obligation had then been extinguished by Caducity. (Foriers, 1998, p. 69) Objective novation (mutata causa debendi) is done between the original creditor and the debtor by modifying the subject matter, cause or terms of the initial commitment. Under Article 1609(1) of the Civil Code, `the debtor enters into a new obligation towards the creditor which replaces and ceases the initial obligation`. This can happen if, for example, a final deposit is to be converted into cash debt or if the deposit of a particular thing is to be transformed into consumer credit (Mutuum), and vice versa. Transactions take place between the same persons (identity of the creditor and the debtor), on the same object (the specific asset in the case of consumer credit assets), what changes is the cause or source of the commitment or a consumer or loan contract instead of deposit.

For example, if John Sue owes $100 but Sue George owes $100, the liability between the two parties could be subject to a novation in which John George pays $100 directly instead of having involved Sue…