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The [[guarantor]]'s right, having performed its guarantee obligation to a beneficiary with respect to a guaranteed debtor, to step into the beneficiary’s shoes and sue the arse off that debtor, seeing as the beneficiary will be disinclined to do so having, thanks to the guarantee, suffered no loss.
{{a|security|}}{{dpn|sʌb rɪˈɡeɪʃᵊn|n|}}


A debtor cannot [[set off]] a subrogated claim against liabilities the guarantor has to that debtor<ref>{{Cite|A. E. Goodwin Ltd|A. G. Healing Ltd|1999|1AC|1}}.</ref>. Would the converse situation apply? Could a debtor set off a subrogated claim against another liability owned by the beneficiary of the guarantee? On one hand the set-off should have been applied before the guarantee has been called upon. On the other hand, what if the guarantee is expressed to be payable regardless of any set-off (as usually it would be).
The process whereby one person “steps in” to the legal shoes of another to exercise that other’s legal rights against a third party, by way of satisfying a legal claim between the first two. Three places you might expect to see this: when an insurer, having paid out on an insurance claim, prosecutes the insured’s rights against a third party; where a secured creditor exercises the contractual rights under a debt which has been assigned to it by way of security, or where a guarantor assumes a creditor’s rights to take action to recover a debt from a debtor.


{{seealso}}
{{subrogation setoff}}
 
{{sa}}
*[[pjc:Interpretation - ISDA Provision|Netting and set-off under an ISDA]] (''{{premium}}'')
*[[Guarantee]]
*[[Guarantee]]
*[[Set off]]
*[[Set off]]
{{ref}}
{{ref}}

Latest revision as of 14:20, 12 September 2023

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Subrogation
sʌb rɪˈɡeɪʃᵊn (n.)

The process whereby one person “steps in” to the legal shoes of another to exercise that other’s legal rights against a third party, by way of satisfying a legal claim between the first two. Three places you might expect to see this: when an insurer, having paid out on an insurance claim, prosecutes the insured’s rights against a third party; where a secured creditor exercises the contractual rights under a debt which has been assigned to it by way of security, or where a guarantor assumes a creditor’s rights to take action to recover a debt from a debtor.

A debtor cannot set off a subrogated claim against liabilities the guarantor has to that debtor[1]. Would the converse situation apply? Could a debtor set off a subrogated claim by the guarantor against another liability owed to the debtor by the beneficiary of the guarantee? On one hand the set-off should have been applied before the guarantee has been called upon. On the other hand, what if the guarantee is expressed to be payable regardless of any set-off (as usually it would be).

See also

References

  1. ↑ A. E. Goodwin Ltd v A. G. Healing Ltd [1999] 1AC 1.
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