16. Assignment

Question 1

What is required for assignment?

Answer 1

1) Assignable right

2) Complete + Immediate intent to assign (objective)
- Oral
- Written (wages/land interest/security interest)

3) Adequate description of assignment

4) NO consideration
- Gratuitous assignment effective

Question 2

What is an assignable right?

Answer 2

Clause prohibiting assignment of ‘the contract’
- Only bars delegation

Clause prohibiting assignment of ‘contractual right’

• Assignor only has power to assign (not right to assign)
• Obligor can sue for breach (assignment)

Clause prohibiting assignment of right to receive payment

Question 3

What is not an assignable right?

Answer 3

Unique personal services (substantially change Obligor’s duty)

• Lawyers/doctors/physicians/architects/author
• NOT construction/repair (assignable)

Requirements/Outputs contract (substantially change Obligor’s duty)
- Disproportionate to contemplated quantity

Future right of future contract
- NOT future right of existing contract (assignable)

Law prohibiting assignment (public policy)

• Government pensions
• Alimony

Clause prohibiting assignment as ‘void’
- Voidable (by Obligor)

Notice of non-assignment clause given to Assignee

Question 4

What is the disadvantage of an oral and gratuitous assignment (no consideration)?

Answer 4

Revocable

Question 5

What is the procedure for assignment?

Answer 5

1) Assignment revokes privity between Obligor + Assignor
2) Assignment creates privity between Obligor + Assignee
3) Assignee notifies Obligor of assignment
4) Obligor must tender performance for Assignee

Question 6

What is required for a revocable assignment?

Answer 6

1) Gratuitous assignment

2) Either;
- Assignor’s death
- Assignor’s bankruptcy
- Assignor notifies Obligor/Assignee
- Obligor performs for Assignor (Assignee can sue Assignor for remaining performances)
- Assignor assigns to another Assignee

Question 7

What is required for an irrevocable assignment?

Answer 7

Assignment for value

• Consideration
• Payment of preexisting debt

Gratuitous assignment, but;

• Obligor performed for Assignee
• Token chose delivered (tangible claim)
• Simple chose assigned in writing (intangible claim)
• Assignee’s detrimental reliance on assignment

Question 8

What are Assignee’s rights against Obligor?

Answer 8

Sue for Obligor’s performance to Assignee

Question 9

What are Obligor’s rights if Assignee sues Obligor?

Answer 9

Obligor can use defences inherent in contract vs Assignee

Promisor can use same defence vs Assignee/Assignor

Defences

• Illegality
• Impossibility
• Lack of assent
• Lack of consideration
• Failure of condition

Question 10

What is required for Assignee to sue Assignor?

Answer 10

1) Assignment for value (irrevocable)

2) Breach of implied warranties
- Assignor has not made same previous assigments
- Assigned right is not subject to undisclosed defences
- Assignor will not interfere with assignment

3) Obligor capable of performing (solvent)

Question 11

What is required for a subsequent assignment to revoke the original assignment?

Answer 11

If original assignment was revocable => Subsequent assignment revokes original assignment

If original assignment was irrevocable => Subsequent assignment revokes original assignment if;

1) Subsequent assignee paid value/not notified of original assignment
2) Either;
- Subsequent assignee gets first judgment/payment claim/token chose delivery vs Obligor
- Subsequent assignee is party to novation releasing Assignor
- Subsequent assignee can use promissory estoppel vs Original assignee

Question 12

What is the difference between Assignee and TP beneficiary?

Answer 12

Assignee
- Exists after contract is made

TP Beneficiary
- Exists at the time contract is made