Novation and Paulienne Action in Civil Law: A Legal Analysis
Novation in Civil Law
Novation is a mode of extinguishing voluntary obligations. An obligation is extinguished by creating a new one, effectively transforming the original obligation.
Characteristics of Novation
- Essentially extinguishes an earlier obligation.
- Requires a substantial change, such as a change in the parties involved (creditor or debtor) or the object of the obligation.
Classes of Novation
Subjective Novation
Involves a change in the subjects of the obligation, either the creditor or the debtor.
Objective Novation
Occurs when the debtor agrees with the lender to provide something different from what was originally owed, and the creditor agrees to terminate the previous obligation.
Novation According to Our Civil Code
Objective Novation
The debtor contracts a new obligation with the creditor, replacing and extinguishing the former. Example: A owes B 20 million as the price of a house. The lender agrees to extinguish this obligation for a loan due with interest of 20 million.
Subjective Novation
When a new debtor substitutes the original debtor, releasing the latter from their obligation (Art. 1314). Example: A is indebted to B for 10 million. Both agree with person C, who will become the new debtor to B for ten thousand Bolivars, extinguishing A’s obligation. Subjective novation can occur through subrogation or delegation.
Paulienne Action
The Paulienne action is a legal recourse for a creditor when a debtor, to avoid payment, liquidates assets or hides them. This action seeks to revoke the fraudulent acts of the debtor.
Characteristics of the Paulienne Action
- Primarily intended to preserve the debtor’s assets for the creditor.
- The creditor acts on their own behalf and exercises their own right.
- Requires proof of fraud, i.e., the debtor’s intent to become insolvent or diminish their estate.
- The contested act must be real, effective, and actually carried out.
- Exercised directly against the third party who concluded the act with the debtor.
Acts Challenged by Paulienne Action
All legal instruments made by the debtor in fraud of creditor rights, especially those causing depletion of the debtor’s assets.
Conditions of the Paulienne Action
Requirements for the Parties
- The existence of a creditor.
- The creditor must have suffered an injury due to the debtor’s actions.
- The debtor must be insolvent.
Injury Test for the Creditor
The creditor must demonstrate harm caused by the debtor’s actions.
Requirements Relating to the Act
- Evidence of fraud by the borrower.
- A systematic legal approach to proving fraud.
Requirements for Credit
- The credit must be true, fixed in amount, and due.
- The credit must precede the act of fraud.
Differences Between Paulienne Action and Oblique Action
- Basis/Motivation: Oblique action is based on the debtor’s inaction; Paulienne action is based on the debtor’s fraudulent actions.
- Legal Standing: In oblique action, the creditor acts in their own name but on behalf of the debtor. In Paulienne action, the creditor acts in their own name and exercises a personal right.
- Beneficiaries: In oblique action, all creditors benefit. In Paulienne action, only the creditor initiating the action benefits.
- Intent: Paulienne action requires proof of intentional fraud. Oblique action may only require debtor negligence.
- Timing of Credit: In oblique action, the timing of the credit is immaterial. In Paulienne action, the credit must predate the fraudulent act.
- Objective: Oblique action seeks to exercise the debtor’s rights. Paulienne action seeks to revoke fraudulent acts.