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Gage

The concept of Gage is established under Articles 2233 to 2354 of the French Civil Code (amended by Order 2006-346 March 23, 2006), meaning an agreement by which the creditor receives from the debtor a preferential right to payment on an asset to secure the performance of his or her obligations, e.g. repayment of a loan. The asset used as guarantee may be on chattels or on a set of chattels , either current or future.

The gage contract is enforceable against third parties from the moment it is duly entered in a special registry. Under the law on collective proceedings, once the liquidation of a company has been ruled in respect of the debtor, the creditor may claim a transfer of ownership of the secured asset (gagé); the assignment of the gage by the Court shall discharge the debt to the extent of the asset’s value.

Gage is typically translated into English as Pledge. However, note that under English law a pledge implies the delivery of the asset’s possession to the creditor or a third party, by way of security, until the payment of the debt or the performance of an obligation has been satisfied; on the other hand, a gage does not require dispossession of the debtor, who may remain free to operate the secured asset (gagé).

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