European Contract Law
presents
Contract or Property?
What is a debt?
Definition:
A “debt” is a sum due under contract or otherwise (Dawson v.
Great Northern & City Ry [1905])
Usually a sum of money
A contractual right
Various forms e.g. mortgages, rights to (not)perform,
usage rights and in this case the example of the
promissory note
What is a promissory note?
English Law: “A promissory note is an unconditional promise in
writing made by one person to another signed by the maker, engaging
to pay, on demand or at a fixed or determinable future time, a sum
certain in money, to, or to the order of, a specified person or to
bearer.” (Bills of Exchange Act 1882)
German Law: “Schuldschein” (§952 BGB)
French Law: “Reconaissance de dette” (Art. 1326 Code Civil)
Nature:
1) A debt owed by the debtor to the creditor/bearer
2) A debt owed in physical form
3) Needs to be signed by the debtor, not by creditor
What is property?
For a right to be proprietary, it needs to be:
To bind the purchaser and the debtor
automatically
Assignable (!)
[“Assignment” (English law) known as
“Abtretung/Zession” (German law) and “Cession”
(French law)]
What is the principle of assignment?
English law: “An assignment is a transaction whereby a right is
transferred by its owner, called the assignor, to another person, called
the assignee, as a result of which the assignee becomes entitled to
sue the person liable, called the debtor” (Ius commune casebook
“Contract Law”,p.935; Beale, Hartkamp, Kötz, Tallon [2002])
Law of Property Act 1925: No consideration or notice necessary
German law: “A claim or debt may, by agreement or between
the creditor and another, be transferred by the former to the latter
(assignment), Upon the conclusion of such an agreement, the new
creditor takes the place of the former creditor” (§398 BGB)
French law: 1)
The assignee is not treated as acquiring the
debt as against third parties until the debtor has been notified. 2)
However, acceptance of the assignment by the debtor in a notarial act
also vests the debt in the assignee. (Art. 1690 C.Civil)
Conlusion: Contract or
Property?
Debts can be in certain cases be considered
as property while simultaneously being
contractual rights.
Bibliography:
Property Law, Roger J. Smith [2009]; The law of Contract, Edwin Peel [2007]; Anson’s Law
of Contract, J. Beatson [2002]; Contract Law, Ewan McKendrick [2009]; Ius commune
casebook Contract Law, H.Beale, A.Hartkamp, H. Kötz, D. Tallon [2002];
www.legifrance.gouv.fr; BGB