Cession de créance (Québec)

A Quebec assignment of claim (cession de créance) is a legal instrument under the Civil Code of Quebec by which a creditor, known as the assignor (cédant), transfers their right to collect a debt or obligation to a third party, known as the assignee (cessionnaire). This transaction is governed by articles 1637 to 1646 C.c.Q. and is a fundamental tool in Quebec commercial and financial law. Under article 1637 C.c.Q., the assignor may assign to a third party, in whole or in part, any claim they hold against a debtor (known as the débiteur cédé or assigned debtor). The assignment transfers the claim as it exists at the time of the transaction, including all of its accessories such as accrued interest, guarantees, security rights, and priority rights under article 1638 C.c.Q. The cession de créance is widely used in commercial transactions, factoring arrangements, debt collection, and financial restructuring. Unlike the common law concept of assignment, Quebec civil law imposes specific rules regarding notification to the assigned debtor and warranties of existence. Under article 1639 C.c.Q., an assignor who assigns a claim for valuable consideration automatically guarantees the existence of the claim at the time of the assignment, even if the assignment is made without warranty. However, under article 1640 C.c.Q., the assignor does not guarantee the solvency of the debtor unless expressly agreed. A critical aspect of the Quebec assignment regime is the requirement of notification to the assigned debtor under articles 1641 and 1642 C.c.Q. The assignment is only opposable to the debtor and third parties once the debtor has been notified or has accepted the assignment. This notification requirement protects the debtor and ensures legal certainty in the transfer of obligations.

A Quebec assignment of claim is needed in various commercial and personal situations where a creditor wishes to transfer their right to collect a debt to another party. The most common scenario is in business factoring arrangements, where a company assigns its accounts receivable to a financial institution or factoring company in exchange for immediate cash. This allows the business to improve its cash flow without waiting for customers to pay their invoices. Another frequent use is in debt collection, where a creditor assigns their claim to a specialized collection agency that has the resources and expertise to pursue payment from the debtor. The assignment of claim is also commonly used in corporate restructuring and mergers and acquisitions, where the transfer of receivables forms part of the overall transaction. In real estate transactions, assignment of claims may be used to transfer mortgage rights or rental receivables from one party to another. Personal situations also arise, such as when a lender assigns a personal loan to a family member or when an estate assigns its claims during the liquidation of a succession. The cession de créance is an essential tool for managing liquidity, diversifying risk, and facilitating the transfer of financial assets between parties in the Quebec civil law system.

The key elements of a Quebec assignment of claim include several essential components required under the Civil Code of Quebec. First, complete identification of the assignor (cédant), including full legal name, address, and contact information. Second, complete identification of the assignee (cessionnaire) who will receive the claim. Third, identification of the assigned debtor (débiteur cédé) whose obligation is being transferred. Fourth, a precise description of the claim being assigned, including its nature, origin, amount, and due date, along with any accessories such as accrued interest and guarantees under article 1638 C.c.Q. Fifth, the consideration or price paid by the assignee for the claim must be clearly stated, along with payment terms. Sixth, the assignor's warranties must be specified, particularly the warranty of existence of the claim under article 1639 C.c.Q. and whether the assignor also guarantees the debtor's solvency under article 1640 C.c.Q. Seventh, the notification requirements to the assigned debtor must be detailed, including the method of notification, the party responsible, and the deadline, in compliance with articles 1641-1642 C.c.Q. Eighth, the effects of the assignment must be outlined, including the debtor's right to raise defenses under article 1643 C.c.Q. Ninth, a good faith clause pursuant to article 1375 C.c.Q. is required. Finally, the governing law must reference articles 1637-1646 C.c.Q. and confirm Quebec jurisdiction.