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Dation in payment

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Jahara Trivino

on 28 July 2015

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Transcript of Dation in payment

Dation in payment
Dation in payment (adjudication or dacion en pago) is the conveyance of ownership of a thing as an accepted equivalent of performance.

DATION IN PAYMENT AND CESSION DISTINGUISHED
There is dation in payment when property is alienated to the creditor in satisfaction of a debt in money
Here, the debtor delivers and transmits to the creditor the former’s ownership over a thing as an accepted equivalent of the payment or performance of an outstanding debt.

Article 1245 provides that the law on sales shall apply, since the undertaking really partakes – in one sense – of the nature of sale; that is, the creditor is really buying the thing or property of the debtor, the payment for which is to be charged against the debtor’s obligation.
Dation in payment extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement – express or implied, or by their silence – consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished.
Governing law
(Article 1245 of the Civil Code)
Dation in Payment
It is a special form of payment because it is not the ordinary way of extinguishing an obligation.
An existing debt in money is satisfied, not by payment of money
but by the alienation of property

The law of sales governs because dation in payment may be considered a specie of sale in which the amount of the money debt becomes the price of the thing alienated.

The difference are:
The difference are:
The difference are:
The difference are:
The difference are:
In Dation (Art. 1245), there is usually one creditor

In Cession, there are several creditors.

Dation does not presuppose the insolvency of the debtor

In Cession, the debtor is insolvent at the time of assignment

Dation does not involve all the property of the debtor

Cession extends to all the property of the debtor subject to execution

In Dation, the creditor becomes the owner of the thing given by the debtor

In cession, the creditor while only acquire the right to sell the thing and apply the proceeds to their credits proportionately

Dation is really an act of novation (Art. 1219)

Cession is not an act of novation
Full transcript