Assignment of Credit
Assignment of credit – is a contract by which one person
(assignor/creditor) transfers to another his rights and actions against
a third person (debtor) in consideration of a price certain in money or
its equivalent. (see Art. 1468.)
Warranties of the assignor of credit.
(1) When a creditor assigns his credit, he warrants only the (a)
existence and (b) legality of the credit at the perfection of the
contract. He is not even liable for the warranty if the credit had been
sold as doubtful.
(2) There is no warranty as to the solvency of the debtor un less it is
expressly stipulated or unless the insolvency was already existing
and of public knowledge at the time of the assignment.
If there be any breach of the above warranties, the assignor vendor
shall be held answerable therefor.
Liabilities of the assignor of credit.
(1) For violation of the above warranties, the liability o the vendor
(assignor) in good faith is limited only to the P rice received and to
the expenses of the contract, and any other legitimate payments by
reason of the assignment.
(2) The assignor in bad faith is liable not only for the payment of the
price and all expenses, but also for damages. An assignor in bad faith
is one who has knowledge of any of the circumstances mentioned
above while an assignor in good faith is one who is ignorant of them.
It is really a sale. Thus, the subject matter is the credit or right
assigned; the consideration is the price paid for the credit or right;
and the consent is the agreement of the parties to the assignment of
the credit or right at the agreed price.
It depends. Art. 1630. One who sells an inheritance without
enumerating the things of which it is composed, shall only be
answerable for his character as an heir.
It depends. Art. 1626. The debtor who, before having knowledge of
the assignment, pays his creditor shall be released from the
obligation.
General Provisions
Thing or chose in action – is any claim or right which may be pleaded
in a suit at law, such as claim of reparation for a tort (civil wrong) or
right guaranteed under certain types of contracts.
Legal tender – is that currency which a debtor can legally compel a
creditor to accept in payment of a debt in money when tendered by
the debtor in the right amount. Both are not included in the term
"goods."
"Document of title to goods" includes any bill of lading, dock warrant,
"quedan," or warehouse receipt or order for the delivery of goods, or
any other document used in the ordinary course of business in the
sale or transfer of goods, as proof of the possession or control of the
goods, or authorizing or purporting to authorize the possessor of the
document to transfer or receive either by indorsement or by delivery,
goods represented by such document.
A person is insolvent within the meaning of this Title who either has
ceased to pay his debts in the ordinary course of business or cannot
pay his debts as they become due, whether insolvency proceedings
have been commenced or not. (3) Goods are in a "deliverable state"
within the meaning of this Title when they are in such a state that the
buyer would, under the contract, be bound to take delivery of them.
It depends. Art. 1637. The provisions of this Title are subject to the
rules laid down by the Mortgage Law and the Land Registration Law
with regard to immovable property.
Barter of Exchange
Art. 1638. By the contract of barter or exchange one of the parties
binds himself to give one thing in consideration of the other's promise
to give another thing.
The contract of barter is similar to sale with the only difference that
instead of paying a price in money another thing is given in lieu
thereof.
Perfection and consummation of the contract of Barter.
(1) The contract of barter is perfected from the moment there is a
meeting of minds upon the things promised by each party in
consideration of the other.
(2) It is consummated from the time of mutual delivery the
contracting parties of things they promised.
Art. 1639. If one of the contracting parties, having received the thing
promised him in barter, should prove that it did not belong to the
person who gave it, he cannot be compelled to deliver that which he
offered in exchange, but he shall be entitled to damages.
Art. 1640. One who loses by eviction the thing received in barter may
recover that which he gave in exchange with a right to damages, or
he may only demand an indemnity for damages. However, he can only
make use of the right to recover the thing which he has delivered
while the same remains possession of the other party, and without
prejudice to the rights acquired in good faith in the meantime by a
third person.
The Bulk Sales Law
Merchandise – must be construed to mean such things as are usually
bought and sold in trade by merchants. It means something that is
sold every day, and is constantly going out of the store and being
replaced by other goods.
Fixtures – refers to such articles or merchandise usually possessed
and annexed to the premises occupied by merchants to enable them
better to store, handle, and display their wares and which are
commonly known as trade fixtures, although removable without
material injury to the premises at or before the end of tenancy.
A sale and transfer in bulk under the Bulk Sales Law is any sale,
transfer, mortgage or assignment of
(1) A stock of goods, wares, merchandise, provisions or materials
otherwise than in the ordinary course of trade and the regular
prosecution of the business;
(2) All or substantially all, of the business or trade; or
(3) All or substantially all, the fixtures and equipment used in the
business of the vendor, mortgagor, transferor, or assignor.
Purpose of the law. The "Bulk Sales Law" is designed to prevent the
defrauding of creditors by the secret sale in bulk of all or substantially
all of a merchant's stock of goods.
Scheme of the law. The general scheme of the law is to declare such
bulk sales fraudulent and void as to creditors of the vendor, or
presumptively so, unless specified formalities are observed, such as
the demanding and the giving of a list of creditors, the giving actual
or constructive notice to such creditors, by record or otherwise, and
the making of an inventory.