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DELEGATION OF DEBT

  • 2010-09-15
  • By Lina Kaučikaitė, Associate Lawyer.

ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora.

The new debtor (delegee) shall have the right to invoke against the creditor all the defenses based upon the obligatory relationship between the creditor and the initial debtor. Nevertheless, the claim of the initial debtor cannot be claimed by the new debtor (delegee) for a set-off. The new debtor (delegee) cannot invoke against the creditor the defenses, based upon the relationship between the initial debtor and the person who has assumed the debt (delegee), which formed the basis for the delegation of the debt.

Upon the change of the debtor in the effect of the assumption of a debt, all accessory rights of the creditor shall remain unchanged, provided that they are not purely personal in respect of the initial debtor. Suretyship and pledge granted by a third person shall be extinguished by the delegation of the debt if the surety or the pledgor do not expressly state their consent to be liable for the new debtor (delegee).

If a contract of delegation of debt is declared null and void, the obligations of the initial creditor, likewise all his accessory rights and responsibilities arising therefrom shall be restored; though the rights of third persons in good faith shall be retained. The creditor shall have the right to claim against the person who has assumed the debt (delegee) compensation for damages resulting from the invalidity of contract of delegation of debt, except in instances where the invalidity of that contract and the resulting damages were not conditioned by the delegee’s fault.