The Legal Implications Of The Renwal Effect On The Current Account

Abstract

This study addresses the legal implications of the cyclical effect on current accounts. This effect occurs when a debt entered into a current account loses its characteristics and elements upon entry, thus eliminating the debt and its legal basis. A new debt then appears after the final accounting process at the closing or termination of the current account, and this new debt is subject to the legal provisions governing current accounts.

Therefore, this study aims to clarify the concept of the cyclical effect of payments in a current account by explaining the legal classification of the idea of ​​transferring a payment in a current account, which has resulted in a different form from the original entry. It also examines the positions of legal scholars, jurisprudence, and laws regarding the cyclical effect of payments entered into a current account. Furthermore, it explores the consequences of these payments being included in the current account by outlining the legal implications of the principle of the cyclical effect of payments in a current account. Finally, it identifies the exceptions to this principle.

This study also examines the legal implications of the cyclical effect of payments in a current account. This study concluded that the novation effect on a current account is a legal effect resulting from the mutual agreement of two parties, creating a new obligation in place of a previous debt. This new obligation differs from the previous one in any of its various elements, such as its nature, subject matter, or source. Therefore, any change in the identity of the creditor or debtor constitutes novation. This is supported by the legal framework for the transfer of payments in a current account, which has been the subject of several theories. Some attribute it to the theory or practice of set-off, while others base it on the classical theory that adopted the concept of novation, a concept widely accepted in legal scholarship and jurisprudence.