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Case 7 - Assignment of a Receiveable and Set-Off

Published online by Cambridge University Press:  24 September 2025

Edited by
Jan Biemans  and
Lorna Richardson
Jan Biemans
Affiliation:
Utrecht University, Netherlands
Lorna Richardson
Affiliation:
University of Edinburgh, Scotland
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Summary

CASE

Cloud Investments Ltd delivers IT services. On 1 January 2016, Cloud Investments enter into a loan agreement with Santa Bank for the amount of €10 million. The loan is due to be repaid to Santa Bank by 1 January 2020, with an interest rate of 2 per cent per annum.

The contract contains a clause which allows Santa Bank to raise the interest rate to 5 per cent. In security of repayment of the loan, Cloud Investments has granted a mortgage on its real property in favour of Santa Bank. The contract also allows Santa Bank to terminate the loan agreement and immediately demand payment of all outstanding amounts of principal and interest, if Cloud Investments default on the loan.

By 1 January 2017, Cloud Investments have provided several IT services to Santa Bank, worth €2 million, which have not yet been paid for.

On 31 January 2017, Santa Bank, as assignor, assigns the right to be repaid under the loan agreement to Rangifer Tarandus Bank (‘RT Bank’), as assignee. The assignment is intimated to Cloud Investments.

Questions

  • 1. Which rights remain with Santa Bank as assignor, and which rights pass to RT Bank as assignee?

  • 2. Can Cloud Investments set off their claim of €2 million against the claim of €10 million assigned to RT Bank?

Information

Type
Chapter
Information
Legal Aspects of Contracts and Third Parties
On Third-Party Rights, Transfer of Rights, Agency and Contracts
 , pp. 297 - 328
Publisher: Intersentia
Print publication year: 2024

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