Page 42 - Obligations & Contracts Module 1-2

*Effect of Assignment of Credit to 3rd Person; Can There Still Be Compensation?

a. if made after compensation took place – no effect; compensation already perfected

b. if made before compensation took place – depends:

1. with consent of debtor – debtor is estopped unless he reserves his right & gave

notice to assignee

2. with knowledge but w/o consent of debtor – compensation may be set up as to

debts maturing prior to assignment

3. w/o knowledge – compensation may be set-up on all debts prior to his knowledge

7. NOVATION – extinguishment of obligation by creating/ substituting a new one in its place

a. changing object or principal conditions

b. substituting person of debtor

c. subrogating 3rd person in right of creditor

*REQUISITES:

a. valid obligation

b. intent to extinguish old obligation – expressed or implied: completely/

substantially incompatible old and new obligation on every point

c. capacity & consent of parties to the new obligation

d. valid new obligation