Assignment of Credit for Security Purposes: Commentary on Judgment No. 19358 of 2024

Judgment No. 19358 of July 15, 2024, by the Court of Cassation provides an important clarification regarding the assignment of credit for security purposes. This matter, of crucial importance in the law of obligations, deserves in-depth analysis to fully understand the legal consequences and the dynamics between the assignor and the assignee.

Legal Nature of Credit Assignment

The Court, led by President R. G. A. and Rapporteur F. M. C., reiterates that credit assignment can have an exclusive security function. This means that the assigned credit enters the assignee's assets and becomes their own credit, legitimizing them to enforce both the original credit and the credit assigned as security, provided that the obligation of the guaranteed debtor is still in effect.

• The assignee can exercise rights over the assigned credits.
• If the guaranteed obligation is extinguished, the credit would automatically return to the assignor.
• No contractual activity is required for the re-transfer of the credit.

Effects of Credit Assignment

A crucial aspect highlighted by the judgment concerns the effects of the assignment. In the event of total or partial extinction of the guaranteed obligation, the assigned credit is automatically re-transferred to the assignor's legal sphere, without the assignee having to perform further acts. This automatic mechanism is similar to that of a resolutive condition, ensuring fluidity in transactions and protection for the assignor.

Transfer of Credit for Security Purposes - Effects - In General - Collection of Credit Assigned for Security Purposes - Legitimization of the Assignee - Limits - Extinction (Total or Partial) of the Guaranteed Obligation - Consequence - Re-transfer to the Assignor's Legal Sphere, to the Same Extent, of the Assigned Credit - Existence - Automatic Operation. Credit assignment, having a variable cause, can also have an exclusive security function, entailing in such cases the same effect, typical of ordinary assignment, of immediately transferring the right to the assignee, in the sense that the assigned credit enters the assignee's assets and becomes their own credit, who is therefore legitimized to enforce both the original credit and the one assigned as security, as long as the obligation of the guaranteed debtor persists; if, on the other hand, the total or partial extinction of the guaranteed obligation occurs, the credit assigned for security purposes, to the same extent, is automatically re-transferred to the assignor's legal sphere, through a mechanism analogous to that of a resolutive condition, without, therefore, requiring any contractual activity by the assignee aimed at this purpose.

Conclusions

In conclusion, judgment No. 19358 of 2024 represents an important piece in understanding the assignment of credit for security purposes. It clarifies the rights and duties of the parties involved, as well as the methods of credit transfer. This ruling by the Court of Cassation not only provides guidance for legal professionals but also contributes to greater legal certainty in economic transactions.