Assignment of claims and cession

In short: An assignment (cession) transfers a claim from one creditor to another person without the debtor having to consent. It often occurs when invoices or loans are sold.

In more detail: The original creditor is called the assignor, the new creditor the assignee.

In detail

• Legal basis: Regulated in German law in the Civil Code.
• No consent needed: The debtor generally does not have to consent to the assignment but should be informed.
• Assignment ban: Contracts can exclude an assignment or tie it to conditions.
• Practical example - factoring: Companies sell open invoices to factoring firms to get liquidity faster.
• Debtor protection: Payments to the previous creditor made before knowledge of the assignment generally remain valid.
• Security assignment: Often used to secure loans through existing claims.
• Debt collection: Selling a claim to a debt collection company is also a form of assignment (buergschaft-und-mithaftung-verstehen).