Cession of Claims
What is a Cession of Claims
If a person (the “Debtor”) owes you (the “Cedent”) money, you have a personal right to claim the money from that person. This personal right to claim the money that is due to you can be “transferred” to another person (the “Cessionary”). The transfer of the personal right to claim the money from the Debtor takes place by way of cession. Once the cession has taken place, the Cessionary becomes the “owner” of the personal right and will be in the position to claim the money from the Debtor.
When do I need this?
A situation where the Cession of Claims Agreement is often used is where a person sells his shares in a company together with all amounts that the Company owes to the person (the person’s loan account). This type of cession is called an “out and out” cession. The “out and out” cession must be distinguished from the “security cession” that is used to secure a debt of a debtor.
Do I need a legal expert to assist?
Generally speaking, when the Cession of Claims is a “friendly transaction” and you are a seasoned business person this agreement should not be too daunting for you. However, having one of our Contract Specialists have a quick look at the agreement to ensure all the boxes are ticked is recommended.