In a judgment on July 11, 2017 (no. 23 Cdo 906/2017), the Supreme Court addressed a special – and previously unresolved – issue related to consideration for an assignment of debts. The court considered whether a party may demand monetary compensation if arrangements to pay via a set-off proved invalid.
The court found that if the parties explicitly agree to set off their debts in a debt assignment agreement and that set-off fails, then the assignor may rescind the agreement. In these circumstances, the assignor may not demand monetary payment in lieu of the set-off. The same principle applies if the assignor’s claim is rendered invalid because the parties did not agree on monetary consideration and they instead stipulated that if the set-off failed, the assignor would be allowed to rescind the agreement and the assignee would be obliged to re-assign the debt to the assignor by a set deadline.
The Supreme Court, thus, held that that assignor could not claim monetary compensation for the assignment of a debt if the parties had agreed that a debt set-off was the only valid consideration. If the intended set-off failed, the assignor’s remedy was rescission of the agreement.