DELEGATION OF DEBT

ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora.

Delegation of debt is a situation when the debtor changes, because the new debtor assumes the debt, but the creditor remains the same. According to the Civil Code of the Republic of Lithuania, delegation of debt can be made in two ways:

1) By a contract between the creditor and the new debtor (delegee);
2) By a contract between the debtor and the person who assumes the debt (delegee).

In the first case a third person shall be able, by the effect of a contract with the creditor, to accept the rights and duties of the debtor. But in the second case, delegation of debt may be effectuated by the debtor exclusively with the consent of the creditor. The consent shall be given only after the creditor is notified of the intended delegation by the debtor and the person who assumes the debt (delegee). Until the creditor has consented, the contract may be modified or terminated by the parties.

After the consent of the creditor is received, the contract between the initial and the new (delegee) debtor may not be modified. The creditor’s consent for delegation of the debt may be given in advance. The creditor shall have no right to revoke his consent given in advance, unless he has reserved this right in the said consent. If the creditor has not given his consent, delegation of the debt shall be deemed not to have been effectuated.

In the event where the debtor and the person who assumes the debt (delegee) establish a time-limit during which the consent of the creditor must be given, the consent may be given within the period provided. If no consent of the creditor is given within the established time-limit, it shall be deemed that the creditor has not consented to the delegation of the debt. Pending the expression of consent or dissent by the creditor, the person who assumes the debt (delegee) shall be bound to the debtor for the performance of the obligation in favor of the creditor. It should be mentioned that contractual delegation and assumption of a debt must be made in writing.

(continued next issue)