Where the original debtor is not discharged by the creditor, the security interests survive. Otherwise, the securities granted by the original debtor or by third parties only survive with their agreement. If the assignor is discharged, his joint and several co-debtors remain liable after deducting their share of the debt.
Novation is a contract whose purpose is to substitute for an obligation, which it extinguishes, a new obligation which it creates. It can take place by substitution of obligation between the same parties, by change of debtor or by change of creditor.
Novation cannot be presumed; the intention to effect it must be clear from the instrument.
Novation takes place only if both the old obligation and the new obligation are valid, unless its declared object is to substitute a valid undertaking for an undertaking which is vitiated by a defect.
Novation by change of debtor may be effected without the involvement of the first debtor.
Novation by change of creditor requires the debtor’s consent. The latter may, in advance, agree to the new creditor being designated by the first creditor.
The extinction of the old obligation extends to all its accessories. As an exception, the original collateral may be reserved to secure the new obligation with the consent of the third-party guarantors.
Novation agreed between the creditor and one of the joint and several debtors discharges the others. A novation agreed between the creditor and a guarantor does not release the principal debtor. It releases the other sureties to the extent of the contributory share of the one whose obligation has been novated.
Delegation is a transaction by which one person, the delegator, obtains from another, the delegate, an obligation to a third, the delegatee, who accepts it as a debtor. The delegate may not, unless otherwise stipulated, set up against the delegatee any exception drawn from its relationship with the delegator or from the relationship between the delegator and the delegatee.
Where the delegator is a debtor of the delegatee and the delegatee’s intention to discharge the delegator is expressly stated in the deed, the delegation constitutes novation. However, the delegator remains bound if it has expressly undertaken to guarantee the future solvency of the delegate or if the delegate is subject to a procedure for the discharge of its debts at the time of the delegation.
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is a Registered Trademark of
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182, rue de Rivoli
75001, Paris France
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is a Registered Trademark of
PETROFF LAW FIRM (SELARL LEGASTRAT)
182, rue de Rivoli
75001, Paris France
RCS Paris n°814433470
Paris Bar Registration n° (Toque) C2396
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