Confession of judgment

Confession of judgment is a legal term that refers to a type of contract (or a clause with such a provision) in which a party agrees to let the other party enter a judgment against him or her. Such contracts are highly controversial and may be invalidated as a violation of due process by courts, since the obligor is essentially contracting away his right to raise any legitimate defenses.[1]

Confessions of judgment are permitted in many states. New Jersey[2] and Pennsylvania[3] permit them, among others. Some states, including Michigan,[4] require they be specially labelled or have other procedural requirements. However, according to testimony before an Alaska State Legislature committee, "Confession of Judgment is illegal in Alaska, it's illegal in Pennsylvania in consumer transactions, but not in commercial transactions."[5] A Law Review article distinguishes three groups of state laws, one group comprising seventeen states that make void any agreement to confess judgment entered into before commencement of a suit.[6]

A typical confession of judgment reads, "The undersigned irrevocably authorizes any attorney to appear in any court of competent jurisdiction and confess a judgment without process in favor of the creditor for such amount as may then appear unpaid hereon, and to consent to immediate execution upon such judgment."

Such clauses should be distinguished from liquidated damages clauses, which do not result in binding judgments against the obligor.

A confession of judgment may also be called a cognovit note.[7]

See also

References

  1. ↑ Isbell v. County of Sonoma, 21 Cal. 3d 61, 65 (1978). California courts will not enforce judgments from other states entered on confessions of judgment to the extent that such judgments fail to comply with the strict due process requirements outlined in Isbell. Commercial Nat. Bank of Peoria v. Kermeen, 225 Cal. App. 3d 396 (1990).
  2. ↑ RULE 4:45. JUDGMENT BY CONFESSION
  3. ↑ Pa.R.C.P. 2950, et seq.
  4. ↑ M.C.L. 600.2906
  5. ↑ Committee Minutes, HB 97 – Purchase of Structured Settlements, Number 2364, testimony after 1998 by Randy Dyer, Executive Vice President, National Structured Settlement Association.
  6. ↑ "Confession of Judgment". University of Pennsylvania Law Review. 102 (4): 524–538. February 1954.
  7. ↑ Gilbert Pocket Size Law Dictionary, "confession of judgment", 57.

External links

This article is issued from Wikipedia - version of the 9/25/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.