Obligations And Contracts (Oblicon) Practice Exam

Conventional subrogation happens when a third person voluntarily pays or satisfies the creditor’s claim with the agreement of the original parties—the creditor and the debtor—and that third person is substituted in the creditor’s rights. The essence is a negotiated transfer of rights brought about by the consent of all involved: the debtor, the creditor, and the paying third party. Once the third party pays, they step into the creditor’s shoes and can pursue the debtor for reimbursement or enforcement of the original claim. This is why the statement that best fits conventional subrogation is that it involves the consent of the original parties and a third person. It reflects the contractual, voluntary nature of conventional subrogation, as opposed to subrogation by operation of law (which can occur without the debtor’s knowledge) or schemes that involve no third party or only partial consent.