Legal News [January 2023]: The question of the notification obligation of the assignor under the new Civil Code

The Supreme Court has examined the notification obligation in the context of the assignment of a claim. Although the Civil Code does not contain an express order for the assignor to notify the debtor of the assignment of the claim, the notification obligation exists in practice. The Supreme Court concluded that it follows from the principle of protection of the debtor. The rationale and further details of this judgment, along with other recent judgments, can be found in our January Legal News.

  • The Supreme Court dealt with the assignor’s notification obligation in its recent judgment, Case No. 20 Cdo 1911/2022. Specifically, the issue was whether this obligation was still required under the new Civil Code. The Supreme Court concluded that although Section 1882(1) of the Civil Code does not contain an express order for the assignor to notify the debtor of the assignment of the claim, this obligation arises from the principle of protecting the debtor, whose consent to the assignment is not required. According to the existing rulings related to Section 526(1) of the former Civil Code, the debtor was not obliged to pay the assignee until the notification of the assignment of the claim and the assignee was not entitled to claim or enforce the assigned claim against the debtor by legal proceedings during that period. The relevant provision of the new Civil Code has not changed fundamentally in its wording, and its meaning has remained unaffected. The Supreme Court thus concluded that the existing case law was applicable even if the new legislation was in force. The notification obligation is, therefore, still valid.
  • The Supreme Court addressed the right of a shareholder to information, or the possibility for a shareholder to seek judicial review in the event of a refusal to provide information, in its judgment in Case No. 27 Cdo 1385/2022. Specifically, the Supreme Court addressed whether the one-month limitation period set out in Section 156(2) of the Business Corporations Act applies to refusals for any reason or only to refusals for the reasons set out in paragraph 1 of this provision (i.e., because the information is classified or publicly available). In the present case, the refusal was based on the reasoning that the requested information was not available to the statutory executive of the defendant company. The applicant thus disputed the termination of the right to seek a court settlement of the information dispute on the ground of extinction of the right. However, in view of the meaning and purpose of the limitation period, in particular for the stability of the company’s internal relations, the Supreme Court concluded that the limitation period applies not only to the cases referred to in section 156(1) of the Business Corporations Act but also to all cases in which the company refused to provide the requested information (documents) to a shareholder for any reason (or without giving any reason).
  • The invalidity of a settlement agreement in a situation where it has not been concluded by a party that is entitled or obliged to conclude such an agreement is dealt with by the Supreme Court in its judgment in Case No. 27 Cdo 305/2022. According to the established ruling practice, a settlement is an agreement of the parties to a contractual relationship by which they eliminate the disputability or doubt of mutual rights and obligations by cancelling them and replacing them with new ones. The existence of an original (settled) legal relationship between the parties to the agreement is not a condition for the validity of the latter agreement. Therefore, the settlement does not necessarily result in an actual change in the scope of the parties’ mutual rights and obligations. The Supreme Court, therefore, concluded that the validity of a settlement agreement is not affected by the fact that the parties merely believe that they are entitled or obliged to the disputed or doubtful rights, when in fact, this is not the case because one or both of the parties are not parties to the settled legal relationship.
  • Finally, we would like to draw your attention to the judgment in Case No. 23 Cdo 1311/2022, in which the Supreme Court examined the question of whether the seller is entitled to compensation for the use of the item by the buyer after the buyer has withdrawn from the purchase contract due to defects, in the event that the performance of the parties took place at approximately the same time. The key to resolving this question was, first of all, whether Section 3002(2) of the Civil Code should also apply to cancelled contracts or only to expressly stated void contracts. The Supreme Court concluded that this provision should also be applied to cases of contracts which have been cancelled on the basis of a statutory provision (e.g., as in the present case, the cancellation of a contract following the withdrawal of one of the parties for a statutory reason), although the provision itself does not expressly provide for such cases. That conclusion is based on the fulfilment of the prerequisites for analogia legis. However, in order for the seller to be entitled to compensation for use, one further condition must be fulfilled, namely that there was no simultaneous performance of the parties under the (cancelled) contract in question (i.e., payment of the purchase price and delivery of goods did not occur at least approximately simultaneously). Since this condition was not met in the present case (the parties performed simultaneously), Section 3002(2) of the Civil Code is not applicable to the present case.
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