Simple English definitions for legal terms
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Conventional subrogation is when one party pays the debt of another party and is then entitled to the rights and remedies that the debtor would have had. For example, if a surety pays a debt, they can use any remedy against the debtor that the creditor could have used. This type of subrogation arises by contract or an express act of the parties.
Conventional subrogation is a legal term that refers to subrogation that arises by contract or by an express act of the parties. Subrogation is the substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor.
For example, if a person borrows money from a bank and a friend agrees to pay off the debt, the friend becomes the new creditor and has the right to collect the debt from the borrower. This is an example of conventional subrogation because the friend became the new creditor by agreement with the bank.
Another example of conventional subrogation is when an insurance company pays a claim on behalf of its insured and then seeks reimbursement from a third party who caused the loss. This is often the case in car accidents where the insurance company pays for damages and then seeks reimbursement from the at-fault driver.
Conventional subrogation is different from legal subrogation, which arises by operation of law or by implication in equity to prevent fraud or injustice. Legal subrogation usually arises when the paying party has a liability, claim, or fiduciary relationship with the debtor, pays to fulfill a legal duty or because of public policy, is a secondary debtor, is a surety, or pays to protect its own rights or property.