An obligation to pay money or render other performance may be transferred from one person (the “original obligor”) to another person (the “new obligor”) either
a) by an agreement between the original obligor and the new obligor subject to Article 9.2.3, or
b) by an agreement between the obligee and the new obligor, by which the new obligor assumes the obligation.
As is the case with the assignment of rights covered by Section 1 of this Chapter, also the transfer of obligations may serve useful economic purposes. For instance, if company A can claim payment from its customer B, but itself owes a similar amount to its supplier X, it may be practical to arrange for the customer to become the supplier’s obligor.
Such a transfer of an obligation may occur in two different ways.
1. Transfer by agreement between the original obligor and the new obligor
In practice, the more frequent of the two ways indicated in this Article to transfer an obligation is by agreement between the original obligor and the new obligor, with the obligee’s consent as required by Article 9.2.3.
1. Company A owes its supplier X EUR 50,000, and customer B owes the same sum to A. A and B agree that the latter will take over the former’s obligation towards X. The obligation is transferred if X agrees to the transaction.
2. Transfer by agreement between the obligee and the new obligor
Another possibility is an agreement between the obligee and the new obligor, by which the new obligor accepts to take over the obligation.
2. The products of company X are sold by distributor A on a certain market. The contract between the parties is close to termination. Distributor B enters into negotiations with X, proposing to take over the distributorship. In order to gain X’s acceptance, B promises that it will assume a debt of EUR 50,000 still owed by A to X, and X accepts. B has become X’s obligor.
3. Obligee’s consent necessary
In both cases, the obligee must give its consent to the transfer. This is obvious when the transfer occurs by agreement between the obligee and the new obligor. If it occurs by an agreement between the original obligor and the new obligor, the requirement is stated in Article 9.2.3. Consent may be given in advance under Article 9.2.4.
Without the obligee’s consent, the obligor may agree with another person that the latter will perform the obligation under Article 9.2.6.
4. Transfer by agreement only
Only transfers by agreement are governed by this Section, as opposed to situations where the applicable law may provide for legal transfers (such as, under certain jurisdictions, the automatic transfer of obligations in the case of the merger of companies – see Article 9.2.2).
5. Obligations in respect of payment of money or other performance
This Section is not restricted to the transfer of obligations in respect of payment of money. It covers also the transfer of obligations relating to other kinds of performance, such as the rendering of a service. Nor are transferable obligations limited to obligations of a contractual nature. Obligations deriving from tort law or based on a judgment, for instance, can be governed by this Section, subject to Article 1.4.
6. What is meant by “transfer”
The “transfer” of an obligation means that it leaves the original obligor’s assets to enter those of the new obligor.
However, in some cases although the new obligor becomes bound towards the obligee, the original obligor is not discharged (see Article 9.2.5).