UNIDROIT Principles of International Commercial Contracts

ARTICLE 8.1 (Conditions of set-off) (1) Where two parties owe each other money or other performances of the same kind, either of them (“the first party”) may set off its obligation against that of its obligee (“the other party”) if at the time of set-off, (a) the first party is entitled to perform its obligation; (b) the other party’s obligation is ascertained as to its existence and amount and performance is due. (2) If the obligations of both parties arise from the same contract, the first party may also set off its obligation against an obligation of the other party which is not ascertained as to its existence or to its amount.

ARTICLE 8.2 (Foreign currency set-off) Where the obligations are to pay money in different currencies, the right of set-off may be exercised, provided that both currencies are freely convertible and the parties have not agreed that the first party shall pay only in a specified currency.

ARTICLE 8.3 (Set-off by notice) The right of set-off is exercised by notice to the other party.

ARTICLE 8.4 (Content of notice) (1) The notice must specify the obligations to which it relates. (2) If the notice does not specify the obligation against which set-off is exercised, the other party may, within a reasonable time, declare to the first party the obligation to which set-off relates. If no such declaration is made, the set-off will relate to all the obligations proportionally.

ARTICLE 8.5 (Effect of set-off) (1) Set-off discharges the obligations. (2) If obligations differ in amount, set-off discharges the obligations up to the amount of the lesser obligation. (3) Set-off takes effect as from the time of notice.

ARTICLE 9.1.1 (Definitions) “Assignment of a right” means the transfer by agreement from one person (the “assignor”) to another person (the “assignee”), including transfer by way of security, of the assignor’s right to payment of a monetary sum or other performance from a third person (“the obligor”).

ARTICLE 9.1.2 (Exclusions) This Section does not apply to transfers made under the special rules governing the transfers: (a) of instruments such as negotiable instruments, documents of title or financial instruments, or (b) of rights in the course of transferring a business.

ARTICLE 9.1.3 (Assignability of non-monetary rights) A right to non-monetary performance may be assigned only if the assignment does not render the obligation significantly more burdensome.

ARTICLE 9.1.4 (Partial assignment) (1) A right to the payment of a monetary sum may be assigned partially. (2) A right to other performance may be assigned partially only if it is divisible, and the assignment does not render the obligation significantly more burdensome.

ARTICLE 9.1.5 (Future rights) A future right is deemed to be transferred at the time of the agreement, provided the right, when it comes into existence, can be identified as the right to which the assignment relates.

ARTICLE 9.1.6 (Rights assigned without individual specification) A number of rights may be assigned without individual specification, provided such rights can be identified as rights to which the assignment relates at the time of the assignment or when they come into existence.

ARTICLE 9.1.7 (Agreement between assignor and assignee sufficient) (1) A right is assigned by mere agreement between the assignor and the assignee, without notice to the obligor. (2) The consent of the obligor is not required unless the obligation in the circumstances is of an essentially personal character.

ARTICLE 9.1.8 (Obligor’s additional costs) The obligor has a right to be compensated by the assignor or the assignee for any additional costs caused by the assignment.

ARTICLE 9.1.9 (Non-assignment clauses) (1) The assignment of a right to the payment of a monetary sum is effective notwithstanding an agreement between the assignor and the obligor limiting or prohibiting such an assignment. However, the assignor may be liable to the obligor for breach of contract. (2) The assignment of a right to other performance is ineffective if it is contrary to an agreement between the assignor and the obligor limiting or prohibiting the assignment. Nevertheless, the assignment is effective if the assignee, at the time of the assignment, neither knew nor ought to have known of the agreement. The assignor may then be liable to the obligor for breach of contract.

ARTICLE 9.1.10 (Notice to the obligor) (1) Until the obligor receives a notice of the assignment from either the assignor or the assignee, it is discharged by paying the assignor. (2) After the obligor receives such a notice, it is discharged only by paying the assignee.

ARTICLE 9.1.11 (Successive assignments) If the same right has been assigned by the same assignor to two or more successive assignees, the obligor is discharged by paying according to the order in which the notices were received.

ARTICLE 9.1.12 (Adequate proof of assignment) (1) If notice of the assignment is given by the assignee, the obligor may request the assignee to provide within a reasonable time adequate proof that the assignment has been made. (2) Until adequate proof is provided, the obligor may withhold payment. (3) Unless adequate proof is provided, notice is not effective. (4) Adequate proof includes, but is not limited to, any writing emanating from the assignor and indicating that the assignment has taken place.

ARTICLE 9.1.13 (Defences and rights of set-off) (1) The obligor may assert against the assignee all defences that the obligor could assert against the assignor. (2) The obligor may exercise against the assignee any right of set-off available to the obligor against the assignor up to the time notice of assignment was received.

ARTICLE 9.1.14 (Rights related to the right assigned) The assignment of a right transfers to the assignee: (a) all the assignor’s rights to payment or other performance under the contract in respect of the right assigned, and (b) all rights securing performance of the right assigned.

ARTICLE 9.1.15 (Undertakings of the assignor) The assignor undertakes towards the assignee, except as otherwise disclosed to the assignee, that: (a) the assigned right exists at the time of the assignment, unless the right is a future right; (b) the assignor is entitled to assign the right; (c) the right has not been previously assigned to another assignee, and it is free from any right or claim from a third party; (d) the obligor does not have any defences; (e) neither the obligor nor the assignor has given notice of set-off concerning the assigned right and will not give any such notice; (f) the assignor will reimburse the assignee for any payment received from the obligor before notice of the assignment was given.

ARTICLE 9.2.1 (Modes of transfer) An obligation to pay money or render other performance may be transferred from one person (the “original obligor”) to another person (the “new obligor”) either (a) by an agreement between the original obligor and the new obligor subject to Article 9.2.3, or (b) by an agreement between the obligee and the new obligor, by which the new obligor assumes the obligation.

ARTICLE 9.2.2 (Exclusion) This Section does not apply to transfers of obligations made under the special rules governing transfers of obligations in the course of transferring a business.

ARTICLE 9.2.3 (Requirement of obligee’s consent to transfer) The transfer of an obligation by an agreement between the original obligor and the new obligor requires the consent of the obligee.

ARTICLE 9.2.4 (Advance consent of obligee) (1) The obligee may give its consent in advance. (2) If the obligee has given its consent in advance, the transfer of the obligation becomes effective when a notice of the transfer is given to the obligee or when the obligee acknowledges it.

ARTICLE 9.2.5 (Discharge of original obligor) The obligee may discharge the original obligor. (2) The obligee may also retain the original obligor as an obligor in case the new obligor does not perform properly. (3) Otherwise the original obligor and the new obligor are jointly and severally liable.

ARTICLE 9.2.6 (Third party performance) (1) Without the obligee’s consent, the obligor may contract with another person that this person will perform the obligation in place of the obligor, unless the obligation in the circumstances has an essentially personal character. (2) The obligee retains its claim against the obligor.

ARTICLE 9.2.7 (Defences and rights of set-off) (1) The new obligor may assert against the obligee all defences which the original obligor could assert against the obligee. (2) The new obligor may not exercise against the obligee any right of set-off available to the original obligor against the obligee.

ARTICLE 9.2.8 (Rights related to the obligation transferred) (1) The obligee may assert against the new obligor all its rights to payment or other performance under the contract in respect of the obligation transferred. (2) If the original obligor is discharged under Article 9.2.5(1), a security granted by any person other than the new obligor for the performance of the obligation is discharged, unless that other person agrees that it should continue to be available to the obligee. (3) Discharge of the original obligor also extends to any security of the original obligor given to the obligee for the performance of the obligation, unless the security is over an asset which is transferred as part of a transaction between the original obligor and the new obligor.

ARTICLE 9.3.1 (Definitions) “Assignment of a contract” means the transfer by agreement from one person (the “assignor”) to another person (the “assignee”) of the assignor’s rights and obligations arising out of a contract with another person (the “other party”).

ARTICLE 9.3.2 (Exclusion) This Section does not apply to the assignment of contracts made under the special rules governing transfers of contracts in the course of transferring a business.

ARTICLE 9.3.3 (Requirement of consent of the other party) The assignment of a contract requires the consent of the other party.

ARTICLE 9.3.4 (Advance consent of the other party) The other party may give its consent in advance. (2) If the other party has given its consent in advance, the assignment of the contract becomes effective when a notice of the assignment is given to the other party or when the other party acknowledges it.

ARTICLE 9.3.5 (Discharge of the assignor) (1) The other party may discharge the assignor. (2) The other party may also retain the assignor as an obligor in case the assignee does not perform properly. (3) Otherwise the assignor and the assignee are jointly and severally liable.

ARTICLE 9.3.6 (Defences and rights of set-off) (1) To the extent that the assignment of a contract involves an assignment of rights, Article 9.1.13 applies accordingly. (2) To the extent that the assignment of a contract involves a transfer of obligations, Article 9.2.7 applies accordingly.

ARTICLE 9.3.7 (Rights transferred with the contract) (1) To the extent that the assignment of a contract involves an assignment of rights, Article 9.1.14 applies accordingly. (2) To the extent that the assignment of a contract involves a transfer of obligations, Article 9.2.8 applies accordingly.

ARTICLE 11.1.1 (Definitions) When several obligors are bound by the same obligation towards an obligee: (a) the obligations are joint and several when each obligor is bound for the whole obligation; (b) the obligations are separate when each obligor is bound only for its share.

ARTICLE 11.1.2 (Presumption of joint and several obligations) When several obligors are bound by the same obligation towards an obligee, they are presumed to be jointly and severally bound, unless the circumstances indicate otherwise.

ARTICLE 11.1.3 (Obligee’s rights against joint and several obligors) When obligors are jointly and severally bound, the obligee may require performance from any one of them, until full performance has been received.

ARTICLE 11.1.4 (Availability of defences and rights of set-off) A joint and several obligor against whom a claim is made by the obligee may assert all the defences and rights of set-off that are personal to it or that are common to all the co-obligors, but may not assert defences or rights of set-off that are personal to one or several of the other co-obligors.

ARTICLE 11.1.5 (Effect of performance or set-off) Performance or set-off by a joint and several obligor or set-off by the obligee against one joint and several obligor discharges the other obligors in relation to the obligee to the extent of the performance or set-off.

ARTICLE 11.1.6 (Effect of release or settlement) (1) Release of one joint and several obligor, or settlement with one joint and several obligor, discharges all the other obligors for the share of the released or settling obligor, unless the circumstances indicate otherwise. (2) When the other obligors are discharged for the share of the released obligor, they no longer have a contributory claim against the released obligor under Article 11.1.10.

ARTICLE 11.1.7 (Effect of expiration or suspension of limitation period) (1) Expiration of the limitation period of the obligee’s rights against one joint and several obligor does not affect: (a) the obligations to the obligee of the other joint and several obligors; or (b) the rights of recourse between the joint and several obligors under Article 11.1.10. (2) If the obligee initiates proceedings under Articles 10.5, 10.6 or 10.7 against one joint and several obligor, the running of the limitation period is also suspended against the other joint and several obligors.

ARTICLE 11.1.8 (Effect of judgment) (1) A decision by a court as to the liability to the obligee of one joint and several obligor does not affect: (a) the obligations to the obligee of the other joint and several obligors; or (b) the rights of recourse between the joint and several obligors under Article 11.1.10. (2) However, the other joint and several obligors may rely on such a decision, except if it was based on grounds personal to the obligor concerned. In such a case, the rights of recourse between the joint and several obligors under Article 11.1.10 are affected accordingly.

ARTICLE 11.1.9 (Apportionment among joint and several obligors) As among themselves, joint and several obligors are bound in equal shares, unless the circumstances indicate otherwise.

ARTICLE 11.1.10 (Extent of contributory claim) A joint and several obligor who has performed more than its share may claim the excess from any of the other obligors to the extent of each obligor’s unperformed share.

ARTICLE 11.1.11 (Rights of the obligee) (1) A joint and several obligor to whom Article 11.1.10 applies may also exercise the rights of the obligee, including all rights securing their performance, to recover the excess from all or any of the other obligors to the extent of each obligor’s unperformed share. (2) An obligee who has not received full performance retains its rights against the co-obligors to the extent of the unperformed part, with precedence over co-obligors exercising contributory claims.

ARTICLE 11.1.12 (Defences in contributory claims) A joint and several obligor against whom a claim is made by the co-obligor who has performed the obligation: (a) may raise any common defences and rights of set-off that were available to be asserted by the co-obligor against the obligee ; (b) may assert defences which are personal to itself ; (c) may not assert defences and rights of set-off which are personal to one or several of the other co-obligors.

ARTICLE 11.1.13 (Inability to recover) If a joint and several obligor who has performed more than that obligor’s share is unable, despite all reasonable efforts, to recover contribution from another joint and several obligor, the share of the others, including the one who has performed, is increased proportionally.

ARTICLE 11.2.1 (Definitions) When several obligees can claim performance of the same obligation from an obligor: (a) the claims are separate when each obligee can only claim its share; (b) the claims are joint and several when each obligee can claim the whole performance; (c) the claims are joint when all obligees have to claim performance together.

ARTICLE 11.2.2 (Effects of joint and several claims) Full performance of an obligation in favour of one of the joint and several obligees discharges the obligor towards the other obligees.

ARTICLE 11.2.3 (Availability of defences against joint and several obligees) (1) The obligor may assert against any of the joint and several obligees all the defences and rights of set-off that are personal to its relationship to that obligee or that it can assert against all the co-obligees, but may not assert defences and rights of set-off that are personal to its relationship to one or several of the other co-obligees. (2) The provisions of Articles 11.1.5, 11.1.6, 11.1.7 and 11.1.8 apply, with appropriate adaptations, to joint and several claims.

ARTICLE 11.2.4 (Allocation between joint and several obligees) (1) As among themselves, joint and several obligees are entitled to equal shares, unless the circumstances indicate otherwise. (2) An obligee who has received more than its share must transfer the excess to the other obligees to the extent of their respective shares.