Legalese: Cession

A common clause in an agreement, is one that stipulates that one party’s rights in terms of the agreement may not be ceded without the prior consent of the other party.

What is a cession?

A cession is the transfer of a personal right from one person to another. A common example of a cession is the transfer of a claim against a debtor for payment from one creditor to another.

What are the legal consequences?

1. As personal rights are intangible, the method of transfer and delivery of this right is by way of a cession agreement.

2. The parties to the cession agreement are:

• The Cedent (the original owner of the rights); and
• The Cessionary (the new owner of the rights).

3. If the underlying agreement which gives rise to the rights being ceded requires the original other contracting party’s prior consent to the cession, then the Cedent will need to obtain this first.

4. The validity of a cession depends not only on the cession agreement but also on the underlying claim being ceded.

Our tips

• If you are the Cedent and want to transfer your rights, make sure that the original contracting party is properly informed of the cession. to ensure that performance of their obligation (usually payment of a debt) is to the correct party.
• If you are the Cessionary wanting to take transfer of the rights, investigate the underlying rights/claim properly to ensure that the personal right being ceded is valid and capable of being ceded.
• If you are the other party to the underlying agreement, make sure you know enough about the Cessionary to determine whether you will be adversely affected by the cession. Take legal advice if in doubt.

For more information on this and other legal matters, please feel free to contact us today.