Assigning Contracts, Receivables and Debts Under French Law: Three Regimes, Three Consent Rules

Assigning contracts, receivables and debts under French law: three regimes, three consent rules

Since the 2016 reform, the Civil Code organises the transfer of contractual positions around three named mechanisms. The cession de contrat (assignment of contract), Articles 1216 to 1216-3, transfers the quality of party itself and requires the agreement of the ceded counterparty. The cession de créance (assignment of receivables), Articles 1321 to 1326, transfers a monetary claim and requires no consent from the debtor, only notification. The cession de dette (assignment of debt), Articles 1327 to 1328-1, moves an obligation onto a new debtor and produces effect against the creditor only with the creditor's agreement. All three must be in writing on pain of nullity.

Choosing the wrong instrument, or performing the wrong formality, leaves the transfer valid between assignor and assignee but ineffective against the very person it was meant to bind. This article takes the four questions in order: which contracts can be assigned at all; what consent and form the assignment of contract requires; what becomes of the assignor, the defences, the sureties and the co-debtors; and how the parallel regimes for receivables, debts and contractual substitution differ.

Which transfer mechanism does your operation need?

What counts as an assignment of contract, and which contracts can be assigned

The cession de contrat (assignment of contract) is an autonomous act characterised by one feature: the transfer of the quality of party to the contract, by the holder of that quality (the cédant, assignor) to a third person (the cessionnaire, assignee). The case law decided before the reform keeps its value on qualification. The sale of a portfolio of insurance contracts is an assignment of contracts, not of clientele (Cass. 1e civ., 5 févr. 2009, n° 08-10.230). Conversely, the assignment of a claim born of the contract and detachable from it is not an assignment of the contract (Cass. com., 9 oct. 2012, n° 11-21.528; CA Versailles, 31 mars 2015, n° 14/05768), and neither is the act by which a party substitutes a third person for itself, examined at the end of this article.

Some assignments are prohibited. Since the parties are free to fix the content of their agreement and the law lets them contract in consideration of the person of their counterpart, they may prohibit the assignment of the contract altogether. A contract concluded intuitu personae, that is in consideration of the person, cannot be assigned without the ceded party's agreement, and the principle of privity of contracts opposes any assignment of a contract without that agreement, a solution applied notably to contracts concluded by the seller of a business. The prohibition is not breached, however, where a dissolved single-member company transmits its entire assets to its sole member and the transmission bears not on the contract itself, already terminated, but on the sums the counterparty still owed the company (Cass. com., 7 juin 2006).

Some assignments are regulated. Assignments subject to a special statutory regime escape Articles 1216 and following: the assignment of a commercial lease, the transmission of the lease or of the insurance policy to the buyer of the insured building, the transmission of employment contracts to the acquirer of a business, the transmission of a publishing contract with the publisher's business, and the assignment of electricity subscription contracts (C. énergie, Art. L 111-59; Cass. com., 10 mai 2011, n° 09-67.744).

All other assignments are free, subject to one public-policy condition. Free assignments are governed by contractual freedom, provided they are concluded in writing: the writing is required not merely as evidence but on pain of nullity of the assignment, and that requirement is public policy. The other Civil Code provisions on the assignment of contract are suppletive, so the parties may adjust them; the only fixed limits are the written form and, where applicable, public policy.

The ceded party's consent: in advance, at the time, or not at all

Article 1216, paragraph 1, states the rule: a contracting party, the assignor, may assign its quality of party to a third person, the assignee, with the agreement of its counterparty, the cédé (ceded party). The agreement of the ceded party is subject to no particular form; it need only be unequivocal, and it may be proved by any means (Cass. com., 24 avr. 2024, n° 22-15.958).

Consent given in advance. The parties may insert in the contract a clause authorising its assignment by anticipation (C. civ., Art. 1216). In that case the assignment takes effect against the ceded party only when it is notified to it or when the ceded party takes note of it, and the assignment can escape those formalities only by an express waiver. Drafters should state in the clause that notification is the condition of the assignment's effectiveness against the ceded party, to shut out the older case law that accepted implied dispensations. That case law shows how conduct can bind: the ceded party who continued performing and paid invoices to the assignee, who issued its own invoices in the assignee's name (CA Toulouse, 13 sept. 2007, n° 06/01803), or who recognised the assignee as its new contracting partner in correspondence (Cass. com., 9 juin 2021, n° 19-20.157) was held bound towards the assignee.

Approval clauses. The contract commonly subjects any assignment to the ceded party's approval and organises the procedure: notice, response period, approval by unanimity or majority where several parties are ceded. To resist a claim of abusive refusal, the parties have every interest in stating the criteria on which approval may be refused. One limit exists: a clause requiring the counterparty's approval is void, as contrary to the freedom to assign, where it conditions the assignment of a real right created by the contract, opposable to all by nature, as held for the right born of a bail à construction (building lease) (Cass. 3e civ., 24 sept. 2014, n° 13-22.357).

What is transferred. The parties define the extent of the rights and obligations assigned; in case of doubt the judge determines that extent by the parties' common intention (Cass. com., 2 févr. 2010, n° 08-70.285) but strictly (Cass. com., 20 janv. 2015, n° 14-10.010). Unless excluded or limited, the assignment of the contract carries with it the claims attached to the contract (Cass. 1e civ., 5 févr. 2009, n° 08-10.230). Where the assigned contract is performed over time, the assignee is bound, save contrary indication, by all the obligations of the assignor, including those born before the assignment, once the assignee has notified the assignment to the ceded party (Cass. com., 13 sept. 2017, n° 16-16.675). The parties may also fix the date on which the assignment takes effect, including retroactively to the signature of the contract.

Assignment without the ceded party's consent. The absence of the ceded party's agreement does not make the assignment void; it makes it ineffective against the ceded party (Cass. com., 24 avr. 2024, n° 22-15.958). Between assignor and assignee the assignment is valid. It can still be made effective against the ceded party, and against third parties generally, by the formalities of Articles 1689 and 1690 of the Civil Code, because the assignment of a contract is not the assignment of a monetary claim: service of the assignment on the debtor by a commissaire de justice (enforcement officer), or the debtor's acceptance of it in a notarial deed. The service can also result from any act that informs the debtor unequivocally, such as procedural submissions handed over with a copy of the deed of assignment (Cass. 1e civ., 1 juin 2022, n° 21-12.276), and where the same right is assigned twice, the assignee who first completes the formality prevails even if it contracted second (Cass. com., 19 mars 1980, n° 78-11.672). Once the assignment is effective against the ceded party, it produces towards it the same effects as an assignment made with its agreement.

Release of the assignor, defences, sureties and co-debtors

Release requires an express clause. The ceded party may, by an express term, release the assignor from the obligations it owed under the contract (C. civ., Art. 1216-1, para. 1). The released assignor then loses the quality of creditor as well, and only the assignee can act against the ceded party to enforce the rights born of the contract (Cass. civ., 18 juill. 1979).

Without release, the assignor remains bound, solidarily by default. Failing an express release, the assignor remains liable, and, save contrary clause, solidarily with the assignee, for the obligations binding it to the ceded party (C. civ., Art. 1216-1, para. 2; TGI Strasbourg, 24 mars 1971). That continuing obligation need not be restated in the deed of assignment where it is contained in the assigned contract (Cass. 3e civ., 2 juill. 1974, n° 73-20.019). Where the obligations are reciprocal, the parties may give the assignee a fixed period to decide whether it releases the assignor; the deed should then say whether the assignment produces effect between assignor and assignee if the ceded party has not taken position, or has refused the release, when the period expires.

The assignee steps into the contract as written. The assignee is bound towards the ceded party, save contrary agreement between them, in the very terms of the contract transmitted to it (TGI Strasbourg, 24 mars 1971), and the ceded party may sue the assignee directly on the contract (Cass. 1e civ., 14 déc. 1982, n° 81-15.455).

The defences travel asymmetrically. The ceded party may set up against the assignee all the defences it could have set up against the assignor (C. civ., Art. 1216-2, para. 2). The assignee, by contrast, may set up against the ceded party only the defences inherent in the debt, such as nullity or the defence of non-performance, and never the defences personal to the assignor (C. civ., Art. 1216-2, para. 1).

Sureties and co-debtors follow the release. Article 1216-3 draws the line through the release. If the assignor is not released, the sureties that were agreed subsist. If the assignor is released, the security it granted and the security granted by third persons subsist only with their consent, and its solidary co-debtors remain liable only after deduction of the released assignor's share of the debt. Any release negotiation must therefore be run in parallel with the guarantors: a release obtained from the ceded party without the guarantors' consent strips the deal of its security precisely when the counterparty's covenant changes hands.

Is the assignor released, and is the assignment effective?

Assignment of receivables: no debtor consent, but notify before the debtor pays

The cession de créance (assignment of receivables) of Articles 1321 to 1326 is an operation autonomous from the assignment of a "right or action" of Articles 1689 to 1701; the "claim" it covers is best understood as the monetary claim, the claim whose object is a sum of money. Parties should say expressly that their act is an assignment of receivables within Articles 1321 to 1326, because the courts are regularly asked to choose between assignment, pledge and recovery mandate; the qualification agreed binds the judge between the parties, but never determines effectiveness against third parties.

Which claims can be assigned. The assignment may bear on one or several claims, present or future, determined or determinable (C. civ., Art. 1321, para. 2). All claims are freely assignable save statutory prohibition, and the debtor has no control over the motives of the assignment notified to it. Future or contingent claims may be assigned provided they are sufficiently identified (Cass. 1e civ., 20 mars 2001, n° 99-14.982). The debtor's consent is not required, unless the claim was stipulated to be non-assignable (C. civ., Art. 1321, para. 4). The contract may validly subject assignment to the debtor's prior written approval, or prohibit it (CA Colmar, 19 janv. 1999), but an approval clause is not opposable to an assignee who acquired the claim without the clause being respected, since the assignee is not party to the contract that contains it (Cass. com., 21 nov. 2000).

Form and transfer. The assignment must be concluded in writing between assignor and assignee, on pain of nullity (C. civ., Art. 1322), a nullity the parties cannot cure by confirmation: they must redo the act in writing even to give it effect between themselves. Between the parties, the claim is transferred at the date of the act by its sole effect; a future claim is transferred only on the day of its birth (C. civ., Art. 1323, para. 1). Against third parties, the assignment is effective from the date of the act, and the assignee proves that date by any means (C. civ., Art. 1323, para. 2).

Effectiveness against the debtor. The assignee becomes the debtor's creditor only after the assignment is notified to the debtor or after the debtor has taken note of it (C. civ., Art. 1324, para. 1). The taking of note, a prise d'acte (formal acknowledgment), is a mere record and is subject to no form: payment made directly into the assignee's hands after a formal demand shows the debtor took note (Cass. com., 9 juin 2022, n° 20-18.490). Until then the debtor is a third party: mere knowledge of the assignment is not enough (Cass. 3e civ., 12 juin 1985, n° 83-17.134; Cass. 1e civ., 22 mars 2012, n° 11-15.151), the debtor who pays the assignor is validly discharged, and the assignor may still demand performance. Once the assignment is effective against the debtor, the assignor has no further right against it, and the debtor who pays the assignor without the assignee's agreement exposes itself to paying the amount a second time (CA Bordeaux, 27 juin 1983). Timing has consequences in insolvency: a notification made only after the debtor entered collective proceedings deprives the assignee of statutory set-off between the assigned claim and the debtor's counterclaim (Cass. com., 23 oct. 2024, n° 23-17.704).

Accessories, defences and guarantee. The assignment extends to the accessories of the claim (C. civ., Art. 1321, para. 3): the sureties securing it, the attached actions, even the enforceable title obtained by the assignor against a surety (Cass. com., 5 févr. 2008, n° 06-17.029). The debtor may set up against the assignee the defences inherent in the debt, nullity, the defence of non-performance, release of the debt, set-off of connected debts, whatever the date they arose, even after the assignment (Cass. com., 12 janv. 2010, n° 08-22.000), and the defences born of its relations with the assignor before the assignment became effective against it, such as a grant of time, a release, or set-off of unconnected debts (C. civ., Art. 1324, para. 2). The assignor, unless otherwise agreed, warrants the existence of the claim and of its accessories at the time of the assignment, but not the debtor's solvency, which it warrants only by express clause, only up to the price it received, and only for solvency at the date of the assignment unless extended to maturity (C. civ., Art. 1326). Costs of the assignment fall on the assignee unless agreed otherwise (C. civ., Art. 1324, para. 3).

Litigious claims can be redeemed. Where the assigned claim is litigious, the debtor may exercise the retrait litigieux (litigious redemption): it frees itself from the claim by reimbursing the assignee the real price of the assignment with costs and interest from the day the assignee paid (C. civ., Art. 1699). The redemption is no longer available once the claim has ceased to be litigious at the date of the demand (Cass. com., 20 nov. 2024, n° 23-15.735), and it may also be exercised by the surety, the claim being assigned with its accessories (Cass. com., 14 févr. 2024, n° 22-19.801).

Assignment of debt: the creditor decides everything that matters

The cession de dette (assignment of debt), Articles 1327 to 1328-1, is a contract between the assigning debtor and the assignee debtor, and as a contract it must be recorded in writing on pain of nullity (C. civ., Art. 1327, para. 2). On the analysis retained here that nullity is absolute: the writing protects not only the ceded creditor against the risk that the new debtor is less solvent, but also the assignor's solidary co-debtors, who are more exposed to the creditor's pursuit for the same reason. That second protection matters because a solidary co-debtor may assign its share of the debt without its co-debtors' consent, Article 1328-1, paragraph 2, validating that assignment implicitly by providing that the co-debtors remain bound after deduction of the assignor's share.

Effectiveness against the creditor requires its agreement. The assignment of debt is effective against the ceded creditor only if the creditor has agreed to it (C. civ., Art. 1327, para. 1; Cass. 1e civ., 2 juin 1992, n° 90-17.499; Cass. 1e civ., 30 avr. 2009, n° 08-11.093). The agreement may be given in advance; if the creditor was not involved in the assignment, it takes effect against the creditor when notified to it or when the creditor takes note of it (C. civ., Art. 1327-1). Once effective, the creditor must accept payment from the assignee debtor and may demand payment from it; the assignee may resist by raising the defences inherent in the debt and those personal to its own relations with the creditor (C. civ., Art. 1328).

The original debtor stays bound unless the creditor releases it. The assigning debtor remains solidarily liable with the assignee unless the creditor releases it (C. civ., Art. 1327-2); while it remains bound, it too may raise the defences inherent in the debt and those personal to its relations with the creditor (C. civ., Art. 1328). If the creditor consents expressly, the assignor may be released in full for the future, both from the debt and from its solidary obligation, leaving the assignee as sole debtor, or released from the solidarity alone, in which case it remains liable for its debt but no longer answers for the defaulting assignee.

Guarantees and co-debtors. Article 1328-1 settles the fate of the security. Guarantees given by the original debtor subsist if the creditor has not discharged it. If the creditor has discharged the original debtor, the guarantees given by that debtor or by third persons subsist only with their consent, and where the discharged assignor was a solidary co-debtor, the other co-debtors remain liable only after deduction of its share of the debt. The pattern mirrors Article 1216-3 on the assignment of contract: release of the transferring party is always bought at the price of the guarantors' renewed consent.

Substitution of parties: a change of party that is not an assignment

Contracts, promises above all, often allow a party to substitute a third person for itself. In the silence of the legislation, the courts treat the substitution (substitution of parties) as an autonomous notion: it exists where one or more parties bound by a contract are replaced by others, a replacement the trial judges identify sovereignly (Cass. 3e civ., 11 juill. 2019, n° 18-14.511). It is not an assignment of claim or of contract requiring the service formality of Article 1690, as held repeatedly for the substitution of the beneficiary of a unilateral promise (Cass. 3e civ., 19 mars 1997, n° 95-12.473; Cass. com., 27 mars 2001, n° 98-13.637) and of a synallagmatic promise (Cass. 3e civ., 12 avr. 2012, n° 11-14.279), and the codification of the assignment of contract has not converted it into one (Cass. 3e civ., 8 févr. 2023, n° 21-24.443). The replacement of a tenant by substitution did not generate a new lease (Cass. 3e civ., 6 juin 2019, n° 18-13.665).

The regime is what the parties write. The parties freely determine the substitution they allow, subject to public policy. They may require a notarial deed or service in the terms of Article 1690 on pain of ineffectiveness: a substitution operated without the stipulated formality is ineffective against the counterparty, even one otherwise informed of it, unless an unequivocal acceptance is proved (Cass. 3e civ., 30 nov. 2011, n° 10-16.843). They may provide that a company in formation will be substituted for the founder who signed a lease without further formality (Cass. com., 15 janv. 2020, n° 17-28.127), or that a simple express demand identifying the substitute suffices (Cass. 3e civ., 16 mars 2023, n° 21-26.012). Where a court overrides a landlord's refusal to approve the assignment of a commercial lease, its authorisation benefits only the person it designates, not the company that person substitutes for itself (Cass. 3e civ., 16 nov. 2023, n° 22-17.567).

The substituting party is not released by default. Failing a clause releasing it, the party who substituted another remains bound to perform the engagements of the defaulting substitute (Cass. com., 14 nov. 2019, n° 18-18.833), all the more where it stood as solidary guarantor (Cass. com., 8 juin 2017, n° 15-28.438) or undertook to retake the contract on first demand (Cass. com., 13 févr. 2019, n° 17-27.116). Where the substitution is pure and simple, the substitute becomes party to the contract and may, notably, seek its nullity (CA Paris, 12 oct. 2018, n° 17/00745). The administrative courts have read a substitution as a novation by change of debtor creating a new contract (CE, 16 mai 2022, n° 459408), with the procurement consequences that follow for public contracts.

Frequently Asked Questions

This article is for general information only and reflects French law as published at the date shown above. It does not constitute legal advice. Always seek qualified advice before acting.