20. listopada, 2021

CROATIA: Clearing payments

In today’s unpredictable market, entrepreneurs are trying to reduce their payables and receivables as quickly as possible. An important segment is clearing payments, which represent the end of a pecuniary obligation by a set-off, exchange on the part of debtors and creditors, or mutual settlement of payables and receivables. Clearing payments include compensation, cession, assignment, debt assumption, which are all explained below.


Compensation or set-off is the end of the obligation to settle a counterclaim with a claim. The debtor’s obligation will end by a set-off only if the debtor’s counterclaim is equal in amount to the creditor’s claim. If the mutual claims are not equal, the set-off settles the claim with the lower amount, while the creditor has the right to demand the difference, and the debtor has the obligation to settle it. Therefore, the debtor can offset the receivables they have against the creditor with what the creditor claims from them if the conditions provided by law are met. These conditions are reciprocity, maturity, equivalence, and enforceability of the claim. A set-off does not occur as soon as the conditions for it are met, but one party must state to the other that it is implementing a set-off via a set-off statement. Following the set-off statement, it is considered that a set-off has occurred at the moment when the previously stated conditions for it have been met. The consent of the other party is not required for a set-off. Namely, a set-off is a unilateral act carried out on the basis of a set-off statement if there are no obstacles in accordance with the Civil Obligations Act.


Cession is ceding a claim from the previous creditor (cedent) to the new creditor (cessionary), while the debtor and the claim remain the same. In the cession, the creditor (cedent) cedes his receivables from his debtor to the new creditor (cessionary). In cession, there are three basic relationships and three subjects, although cession is a bilateral legal business, in the following way:

  1. The cedent-debtor relationship, in which the old and the new creditor enter into a cession agreement. The transfer of the claim does not require the debtor’s consent – the cedent is only  obliged to inform the debtor about the cession. This notice has not only practical but also legal effects; the payment is only valid if made to the old creditor before the notice is received, and if made to the new creditor after the notice is received.
  2. The cessionary-debtor relationship, in which the new creditor has the same rights towards the debtor as the cedent until the cession and, in addition to the main claim, all secondary rights pass to the creditor. The debtor may raise against the cessionary not only complaints they have against them as such but also any complaints they could have raised against the cedent before they learned of the cession.
  3. The cedent-cessionary relationship depends on whether the cession is recoverable or unrecoverable – which in turn determines whether the cedent is liable only for the truthfulness of the claim, i.e. liable whether the ceded claim really exists, or whether they are responsible for the creditworthiness (recoverability) of the claim. In the case of a recoverable cession, the cedent is always liable for the truthfulness of the existence of a claim and for its creditworthiness only when it is agreed. In the case of unrecoverable cession, they are not liable for either the truthfulness or the creditworthiness.

When concluding a cession contract for receivables, the Civil Obligations Act distinguishes between two legal situations with regard to whether the cession is made instead of fulfilling an obligation or for the purpose of fulfilling an obligation. The purpose of the cession of receivables must be clearly defined by the contract because it will determine whether the cedent’s obligation to the new creditor, the cessionary of the ceded receivables, has ended. When the creditor, who is a debtor to the new creditor, the cessionary, cedes the receivable instead of fulfilling their obligation by concluding the cession agreement, the obligation of the old creditor ends for up to the amount of the ceded receivable. If the creditor, who is a debtor to the new creditor, cedes their receivable to the new creditor only for the purpose of fulfilment, their obligation ends only when the new creditor collects the cession. In that case, the debtor of the ceded receivable may also fulfil their obligation to the cedent of the receivable, even when they have been notified of the cession.


By an instruction, i.e. an assignment, one party who is the assignor authorises another party who is the obligor to fulfil an obligation for their account to a third party who is the assignee and authorises the latter to receive this fulfilment on their own behalf.

The assignee acquires the right to demand fulfilment from the obligor only when the latter states that they accept the instruction. Acceptance of the instruction cannot be revoked. The right of the assignee to demand fulfilment from the obligor expires after one year. When the creditor has agreed to an instruction made by their debtor to fulfil an obligation, that obligation does not end, unless otherwise agreed, neither by their consent to the instruction nor by the acceptance by the obligor, but only through the obligor’s fulfilment of the obligation.


A debt is assumed via a contract between the original debtor and the new debtor, the assumer, but only if the creditor has agreed to it. When assuming a debt, there is a change of legal entity as the debtor, but the creditor stays the same. Each of the debtors may notify the creditor about the concluded debt assumption contract and the creditor may notify each of them of their consent to the debt assumption. A creditor is considered to have given their consent if they have received without restraint any repayment from the new debtor, which the latter has done in their own name. The contractors together, or separately, can invite the creditor to respond within a certain period on whether they agree to the debt assumption. If the creditor does not respond within a certain period, it is considered that they did not give their consent. A debt assumption contract has the effect of a debt repayment contract until the creditor gives their consent to the debt assumption contract or refuses to give consent. By assuming the debt, the assumer takes the place of the original debtor, and the latter is released from their obligation.

Finally, it is important to note that a business entity cannot make any of the above payments if their account is frozen, i.e. it has a ban on the disposing of funds.