(1) The new obligor may assert against the obligee all defences which the original obligor could assert against the obligee.
(2) The new obligor may not exercise against the obligee any right of set-off available to the original obligor against the obligee.
1. Assertion of defences
The obligation transferred to the new obligor is the very same obligation that used to bind the original obligor (and, in some cases, still binds it - see Article 9.2.5).
Whenever the original obligor would have been able to withhold or refuse payment to the obligee on the basis of a defence, such as the defective performance of the obligee’s own obligations, the new obligor may rely on the same defence against the obligee.
1. Company A owes company X EUR 200,000, due to be paid at the end of the year, as payment for facilities management services. With X’s consent A transfers this obligation to company B. X renders A extremely defective services which would have given A a valid defence for refusing payment. When payment is due, B may assert the same defence against X.
2. Defences of a procedural nature
The same solution applies to defences of a procedural nature.
2. The facts are the same as in Illustration 1, except that X sues B before a court at its place of business. B can successfully invoke the arbitration clause included in the contract between A and X.
The right of set-off relating to an obligation owed by the obligee to the original obligor may however not be exercised by the new obligor. The reciprocity requirement is not fulfilled between the obligee and the new obligor. The original obligor may still exercise its right of set-off if it has not been discharged.