Assignment of claim - a salutary French tale

by Reed Smith
Contact

[authors: Anker Sorensen, Andrew Tetley, Brice Mathieu]

Where a claim is assigned, the debtor must be notified of the assignment strictly in accordance with the law, failing which the debtor may pay the claim to the assignor rather than the assignee.

Case

Groupama had insured a number of vehicles. The assureds obtained repair of the insured vehicles using their selected repair company. The repair company took an assignment of the assureds' rights under the policy of insurance with Groupama to cover the cost of the repairs. The repair company notified Groupama of the assignment by sending Groupama a registered letter with acknowledgment of receipt.

Groupama (the debtor) nevertheless continued to pay the repair costs directly to its assureds (the assignors) and not to the repair company (the assignee). Groupama argued that it had not been notified of the assignment in accordance with article 1690 of the Civil Code.

The French Court of Cassation upheld Groupama's argument. It was not enough that Groupama was aware of the assignment. The formalities of article 1690 had to be met before the assignment could be validly asserted against Groupama.

Comment

Article 1690 is of general, and therefore wide, application in commercial and civil matters.

For an assignment of a claim to be valid as against third parties (including the original debtor), article 1690 requires that notification be done by way of 'signification' - i.e. through a bailiff; alternatively, that the assignment be acknowledged by the debtor in an 'acte authentique' - i.e. in a formal deed before a notary public.

The French courts have at times varied as to how strictly article 1690 must be observed. And legal practitioners have at times suggested procedures to palliate the somewhat burdensome and often slow legal notification process, particularly where the debtor is based overseas.

However, this recent decision illustrates the modern technical and literal approach being taken by the Cour de Cassation in this area. It reveals the dangers inherent for assignees of claims who try to take shortcuts, even very reasonable ones.

In Europe, under Rome I, the law governing a claim also governs its assignability, including as to the relationship between the assignee and the debtor. The danger illustrated by the case under comment is therefore not avoided by providing for a foreign law to govern the deed of assignment.

If the claim to be assigned is governed by French law, parties should be mindful of the formalities of French law. If the formal requirements of article 1690 of the French Civil Code are not met, the notion of equitable assignment will not come to the rescue of a disgruntled assignee.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Reed Smith | Attorney Advertising

Written by:

Reed Smith
Contact
more
less

Reed Smith on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.