Assignment

Section 398 of the Bürgerliches Gesetzbuch (BGB) contains the civil-law legal definition of the term assignment. It refers to the transfer of a claim from a transferring creditor, called the assignor (Zedent) in this case, to a receiving creditor, called the assignee (Zessionar). For the debtor, this means that by transferring the claim to another creditor, that creditor becomes the new creditor to whom the debtor must render performance. This type of change in an obligation relationship takes place by contract between the assignor and the assignees.

What is an assignment?

From a legal-technical perspective, the assignment (also called "cession") is a change in the personal aspect of the obligation relationship on the creditors' side. This distinguishes an assignment fundamentally from an assumption of the debt by a new debtor (a personal change in the obligation relationship, for example in the context of a surety) and from a so-called novation, which is a substantive change of an obligation relationship.

The purpose of an assignment is to be able to transfer claims. A claim already represents an economic asset in itself. With the assignment, this asset (the claim) can be transferred to someone else like a tangible object. In an assignment the transferring creditor (assignor/Zedent) loses all rights to the assigned claim. The receiving creditor (assignee/Zessionar), on the other hand, acquires by the assignment all claims, together with the associated rights and ancillary rights, to the claim.

According to the abstraction principle firmly established in the Bürgerliches Gesetzbuch (BGB) (strict separation between the obligation transaction and the disposition transaction), the assignment corresponds to a disposition transaction. Fundamentally, however, an obligation transaction underlies the assignment. That means the receiving creditor (assignee) buys the claim from the transferring creditor (assignor). An assignment of a claim is also possible in connection with a loan collateral agreement, in which case it is strictly speaking no longer an obligation transaction.

Assignments can also play a role in mortgages. Mortgages can only be transferred by an assignment contract. In this case, the mortgage is transferred by assigning the secured claim. A distinction must be made here between a registered mortgage (Buchhypothek) and a mortgage secured by a mortgage deed (Briefhypothek). The corresponding laws on mortgage law and the law of obligations are set out in the BGB.

Types of assignment

In principle, two types of assignment (cession) can be distinguished: the silent cession and the open cession.

In a silent cession the transferring creditor assigns his claim to the new creditor without informing his debtor. In this case the transferring creditor remains entitled, in relation to the receiving creditor, to claim performance from the debtor. Such an assignment is usually associated with a collection authorization by the new creditor. That means, if the old creditor has received performance from the debtor, the new creditor has the right to collect that performance from the old creditor.

In an open cession the debtor is informed about the transfer of the claim to the new creditor. In this case only the receiving creditor can demand performance from the debtor.

The requirements and significance of the assignment of claims are set out in the Bürgerliches Gesetzbuch (BGB).

Security assignment for bank loans

Today claims are mainly assigned as security for bank loans. Such an assignment, however, no longer corresponds to a disposition transaction as described above, but is made for security purposes, hence the name security assignment (Sicherungsabtretung). In a security assignment the lender, usually a bank or a credit institution, enters into a security agreement with the borrower. This security agreement is an obligation contractual relationship with the content that a claim of the borrower is assigned to the lender as security. The borrower is therefore the assignor (Zedent) and the bank is the assignee (Zessionar).

Within the framework of the security transfer, different types can also be distinguished. The assignment of individual claims is mainly considered when the borrower has large individual claims that are sufficient to secure a loan for the lender. Since many borrowers usually have a large number of smaller claims from deliveries and services, it is not worthwhile to assign each individual claim as security. The instrument of transferring the entirety is then suitable. A distinction is made here between Mantelzession and Globalzession.

The Mantelzession

In a Mantelzession only certain claims that exist at the time the loan is taken out are assigned. They are listed in a so-called register of claims and transferred to the lender by delivery. If the claims are paid by the debtors during the term of the loan, the borrower must continually add new and current claims to the register of claims in order to maintain the minimum coverage required by the lender.

The Globalzession

In a Globalzession, on the other hand, claims can also be assigned that do not yet exist and will only arise in the future. That is why the Globalzession is also referred to as an "advance assignment" or "anticipation".

Higher requirements are placed on the identifiability (individualization of the claim by legal basis, object, amount, debtor, etc.) in the case of a Globalzession. This is intended to determine which claim is to be assigned to the lender at the time it arises. These claims to be assigned are also listed in a register of claims.

In contrast to the constitutive effect of the claims register in the Mantelzession, the claims register of the Globalzession has only a declaratory (evidentiary) character and exerts only a control function. The legal effect of the assignment in the Globalzession occurs when the claim comes into existence. If claims are paid by the debtor, the borrower must replace them with newly arisen claims.

Restrictions to be observed in assignments

For the protection of creditors and debtors, there are some restrictions to be observed in the context of the assignment of claims. For example, defenses and objections that the debtor already had against the old creditor before the assignment remain after the assignment and serve to protect the obligor.

An assignment is prohibited if performance can only be rendered to the initial creditor, if an assignment has been contractually excluded between debtor and creditor, or if a claim is non-attachable. Furthermore, in assignments collisions with extended retention of title and the insolvency resistance of Globalzessionen must be taken into account.

Assignment

The purpose of an assignment is to be able to transfer claims. A claim already represents an economic asset in itself. With the assignment, this asset (the claim) can be transferred to someone else like a tangible object. In an assignment the transferring creditor loses all rights to the assigned claim. The receiving creditor, on the other hand, acquires by the assignment all rights and ancillary rights to the claim.

Types of assignment

In principle, two types of assignment (cession) can be distinguished: the silent cession and the open cession.

In a silent cession the transferring creditor assigns his claim to the new creditor without informing his debtor. In this case the transferring creditor remains entitled, in relation to the receiving creditor, to claim performance from the debtor. Such an assignment is usually associated with a collection authorization by the new creditor. That means, if the old creditor has received performance from the debtor, the new creditor can collect that performance from the old creditor.

In an open cession the debtor is informed about the transfer of the claim to the new creditor. In this case only the receiving creditor can demand performance from the debtor.

Security assignment for bank loans

Today claims are mainly assigned as security for bank loans. Such an assignment, however, no longer corresponds to a disposition transaction as described above, but is made for security purposes — hence the name security assignment. In a security assignment the lender, usually a bank or a credit institution, enters into a security agreement with the borrower. This security agreement is an obligation contractual relationship with the content that a claim of the borrower is assigned to the lender as security. The borrower is therefore the assignor (Zedent) and the bank is the assignee (Zessionar).

Within the framework of the security transfer, different types can also be distinguished. The assignment of individual claims is mainly considered when the borrower has large individual claims that are sufficient to secure a loan for the lender. Since many borrowers usually have a large number of smaller "claims from deliveries and services", it is not worthwhile to assign each individual claim as security. The instrument of transferring the entirety is then suitable. A distinction is made here between Mantelzession and Globalzession.