CESSION OF BOOK DEBTS AGREEMENT
Summary A contract for the Cession of Book Debts may be used where a debt is owed or may in the future be owed by a debtor, and additional security is required. By signing a cession contract, the debtor agrees to transfer to the creditor the right to claim money owed to the debtor by others.
Why do I need a Cession of Debts? A Cession of Book Debts contract can provide a creditor with additional security. If the debtor defaults in their payments, you may use the cession contract to claim money that is owing to the debtor, eg. by the debtor’s customers. A Cession of Debts agreement is often used as an additional security requirement when a customer applies for a credit facility, before any goods or services are delivered. It can also be used to obtain additional security before lending someone money or goods and equipment.
Also view: Cession and Pledge of Goods
What type of business should use a Cession of Debts Agreement? If your business has debtors that owe money, or there is a high likelihood that they will in the future owe money, then a Cession of Book Debts undertaking may be considered to reduce your risk in the debtor defaulting.
What does the Contract of Cession look like? The cession template can be printed onto two pages.
What do you need to do to use a Cession of Book Debts?
- Read the template cession agreement document to ensure that it suits your requirements. Make changes as required.
- Complete the relevant details, and get the debtor to sign.
- A Cession of Book Debts contract is usually obtained at the beginning of the business relationship, or during the application stage, and before any goods / services / loan is delivered. But it can also be used to obtain additional security from a debtor who owes money.
If the transaction is subject to the National Credit Act 34 of 2005 then we recommend that specialist advice be obtained.
Cession of Book Debts Agreement Template South Africa [Microsoft Word Doc]
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