Contractual Retention Right As A Security In Commercial And Financial Transactions

Under art. 90, par. 1 of the Bulgarian Contracts and Obligations Act, a party may refuse to perform its obligations if there is non-performance by the counterparty under the same transaction ("Statutory Retention Right"). In cases with multiple mutual transactions (e.g. where a bank has obligations under deposits and receivables under credits with a same counterparty) a contractual arrangement is needed so that the creditor under one transaction, e.g. under the bank deposit above, retains payment in case its counterparty is in default under another transaction, e.g. under the bank credit above. Such arrangements effectively extend the Statutory Retention Right (limited to retention under the same transaction) to the whole spectrum of the parties' mutual dealings ("Contractual Retention Right").