Provided for in the Portuguese Civil Code, credit assignment allows a creditor to transfer the ownership of a credit to a third party without the debtor’s consent – unless legally prohibited or otherwise agreed by the parties. However, it is not uncommon for this mechanism to be used abusively, particularly to circumvent enforcement proceedings, such as ongoing judicial attachments, constituting a fraudulent practice that requires special attention.
According to our experience, the formalization and notification of a credit assignment to a particular Debtor often conceal an illegal intent, such as manipulating or frustrating the legitimate collection expectations of a third-party creditor.
Nevertheless, there are indications that can help identify these fraudulent practices, among which we highlight the most common:
• A prior and informal request (by phone or email) asking that the usual payment for a product or service be made to a different account than the one initially or contractually provided;
• The identification of the new payment account being held by a person related to the company, namely its managing partner;
• In the case of companies, where, for security reasons, they are unlikely to comply with such informal requests, a subsequent notification of a credit assignment may arise.
As a general rule, and in accordance with Article 577 of the Civil Code, credit assignment is valid without the debtor’s consent, requiring only its notification.
However, every rule has exceptions. In cases of potential abuse of rights – as provided for in Article 334 of the Civil Code, which forbids the exercise of a right contrary to good faith and economic purposes – it is legitimate for the notified debtor to refuse to be affected by the (illegality of the) assignment.
It is therefore advised that, in case of suspicion, payment to an account other than the registered supplier’s account should be refused for internal security reasons, with the assignor being informed accordingly.
If, despite this, insistence on payment persists, and since credit assignment does not require the debtor’s consent, when there is a reasonable doubt about who should be paid, the debtor may opt for Consignment in Deposit, thus safeguarding their rights until the doubts are definitively clarified.
In the legal advisory services we regularly provide to clients in the litigation department, we warn that there may be credit assignments of an unlawful nature and that, therefore, it is imperative to adopt and maintain a vigilant stance.
The early identification of suspicious practices – such as informal requests for payment to alternative accounts and, in the event of a debtor’s refusal, the subsequent formalization of a credit assignment contract – is essential to prevent abuses.
At Belzuz Abogados, S.L.P., we have a team of lawyers specialized in this area, capable of offering robust legal support to our clients.
Belzuz Abogados SLP
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