What is a cedent?

A cedent is a person or company that transfers an existing claim to another party. In other words, the cedent was originally the lawful creditor and assigns their right to demand payment to a third party. This process is called an assignment or cession.

The new owner of the claim is called the cessionary. After the assignment, the cessionary has the right to collect the outstanding debt from the debtor. The cedent, on the other hand, loses this right from the moment of the transfer.

A simple example: A company has an unpaid invoice from a customer who hasn’t settled their bill. Instead of waiting any longer for the money, the company transfers the claim to a debt collection agency. The agency then becomes the new creditor, and the company becomes the cedent.

The term is not only used in debt collection but also wherever claims are transferred — for example, in factoring or collateral assignments in banking.

Who can be a cedent?

A cedent can be any person or business that holds a valid claim. This applies to both natural persons (private individuals) and legal entities such as limited liability companies, corporations, or associations.

Typical examples include:

A craftsman’s business that sells an unpaid invoice to a debt collection agency.
A bank that transfers claims from a loan agreement to another institution.
A private individual who has lent money to a friend and assigns the claim to someone else.

The key point is: only those who are the rightful owner of a claim can assign it. The cedent must therefore be the original creditor. They are free to transfer their claim as long as there is no legal or contractual prohibition against assignment.

To whom does the cedent assign a claim?

The cedent transfers their claim to the cessionary. The cessionary becomes the new creditor who, after the assignment, has the right to collect or otherwise manage the claim.

The cessionary can take many forms. In practice, these are often:

Debt collection agencies that collect claims on behalf of or by purchasing them,
Factoring service providers that take over outstanding invoices,
Banks or financial institutions that receive claims as collateral,
Or even private individuals, when claims are transferred within a contractual relationship.

With the assignment, the full right to payment passes to the cessionary. The debtor must then make payment to the new creditor. From that point on, the original creditor — the cedent — no longer has any right to the payment.

What does the cedent assign?

The cedent usually assigns a specific monetary claim. This means it concerns the right to receive a certain amount of money from another person or company.

The claim often includes so-called ancillary rights, such as:

Default interest,
Contractual penalties,
Costs associated with the claim, such as reminder or collection fees.

However, the underlying contract itself is not assigned — only the right to payment is.

For example: A customer has received goods but has not paid for them. The seller assigns the unpaid invoice to a debt collection agency. The agency can then demand payment but does not become the customer’s new contractual partner. It simply becomes the new creditor of the claim.

When does someone qualify as a cedent?

A person qualifies as a cedent from the moment the assignment becomes legally effective. This occurs once the original creditor (cedent) and the new creditor (cessionary) have agreed on the transfer of the claim.

This is usually documented in an assignment agreement. From that point onward, the right to the claim legally passes to the cessionary. The original creditor therefore loses all rights against the debtor and becomes the cedent.

It’s important to note that not every claim can be assigned freely. Some contracts explicitly contain a prohibition of assignment, and certain personal claims — for example, those involving personal services — cannot be transferred at all.

Once an assignment is legally permissible and properly agreed upon, the cedent’s role is clearly defined.

How does the cedent carry out the assignment?

In practice, an assignment usually takes place through a contract between the cedent and the cessionary. This contract is called an assignment agreement or cession agreement.

The agreement specifies:

Which claim is being transferred,
Who the parties are,
And when the assignment takes effect.

The law does not prescribe a specific form. An assignment can therefore be oral, written, or even implied. However, in practice, it is almost always documented in writing to avoid disputes later on.

Typical steps in an assignment

The cedent concludes an assignment agreement with the cessionary.
The claim is transferred to the cessionary.
The debtor is informed that they must now pay the new creditor.

From this point, the assignment is complete. The cedent has relinquished their rights to the claim, and the cessionary is now entitled to demand payment or initiate legal action.

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