Practice question
A transaction falls within a proved successor-liability exception protecting a creditor. Buyer and seller privately allocate the debt to another contracting party through a hold-harmless clause. The creditor never consents to release its rights. Under Y-I Leisure, which treatment is correct?
- Private allocation automatically binds every nonparty creditor.
- The creditor's rights vanish when parties sign an indemnity.
- The clause necessarily releases every original debtor.
- The clause may allocate recourse between contracting parties but cannot by itself defeat the protected nonconsenting creditor's claim.
- Every indemnity clause is void for all purposes.
Legal references
- Y-I Leisure v. Yu, GR207161, September8 2015, main decision: https://lawphil.net/judjuris/juri2015/sep2015/gr_207161_2015.html
- RA11232, RCC, Sections39 and73–74: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/86463
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