6. Assignment Flashcards
Novation
1) a –> x
2) b –> x
A-X contract replaced with new contract
NOT A TRANSFER - A’s right is not handed to B (it is a NEW MATCHING RIGHT created but effect is like a transfer)
- consent of everyone required
- B must provide consideration
- B gets new rights directly against X
- new contract might impose duties on B to X
Contract (Rights of Third Parties) Act 1999
1) a –> x
2) a –> x, b–> x
X makes contractual promise to A that payment will be made to B
B gets direct statutory claim against X
NO duties imposed on B
B does not need to provide consideration
Acknowledgement
1) a –> x
2) b –> x
If X holds specific fund from which X’s debt to A must be satisfied, A can instruct X to pay debt due from found to B
If X agrees, B can bring direct claim against X
B GAINS NEW RIGHTS DIRECTLY AGAINST X
B doesn’t need to provide consideration
X must be involved so it is hard to do this globally
Shamia v Joory
acknowledgement applied even though X didn’t hold a specific fund
BUT VERY hard to justify
Declaration of Trust
A declares he holds contractual right to payment against X on trust for B
- consent of X not required
- b doesn’t need to provide consideration
- B doesn’t gain new right against X
- but B can force A to sue X by joining A as defendant
NOT A TRANSFER
common law assignment
basic rule: choses in action cannot be transfered
exception:
- debt owed to the crown
- debts physically embodied by negotiable instruments
- registered company shares and debentures
why no CL assignment
1) worry about 3P interfering with causes in action
2) fundamental nature of contractual rights (Chi Ho Tham)
Re McArdle
B does not need to provide consideration for equitable assignment
Brandt’s Son v Dulop Rubber (general)
A does not need to use the word “assignment”
Easy to express intention to make immediate transfer of benefit of right to B
Gorringe v Irwell
no need for notice for valid equitable assignment
Brandt’s Son v Dulop Rubber (acquiring rights)
B DOES NOT acquire a direct claim against X
B must join A to bring an action
but it was fine here (EXCEPTIONAL CASE) because no one raised this until it got to HL
Roberts v Gill
Lord Collins - unless it is an exceptional case (like Brandt’s) B must join A to sue X
- requirement is NOT merely a procedural one
- it is substantive (A is a bare trustee)
MH Smith v DL Mainwaring
subrogation case
- asserting A’s right so B must join A
- if A doesn’t exist anymore = no claim (A must be brought back to life)
- requirement not just procedural
Effect of EA
1) B does not acquire direct claim against X
2) if X has not received notice of assignment, X will be discharged from X’s debt if X pays A
3) if A goes insolvent, A’s right against X is not available to A’s unsecured creditors (Holt v Heatherfield)
valid SA:
one - assignment
two - absolute (whole of A’s right)
three - in writing signed by A
four - express notice in writing to X
result of SA
from date of notice:
- B gets a claim directly against X
- A loses A’s rights against X
B is subject to prior equities affecting B’s right
Torkington v Mcgee
s.136 is “merely machinery”
being able to sue = procedural benefit
Durham Bros v Robertsom
assignment must be absolute for SA
ASSIGNMENT BY WAY OF MORTGAGE = fine
- entire interest of A
- when A redeems, transfer back to A from B under s.136 requires notice
ASSIGNMENT BY WAY OF CHARGE = not fine
- when B terminates right when A’s secured duty is performed, X might be unaware
ASSIGNMENT OF PART OF DEBT = NOT FINE
- X exposed to multiple actions with risk of conflicting decisions
Curran v Newark Cinemas
same document can be written notice of X and writing signed by A
Dearle v Hall
first in time = priority provided equities are equal
- if notice is given, equities are not equal (equity favours the vigilant)
- SA subject to this too so first in line can have priority over SA (unless SA gives notice)
CRUCIAL FACTOR = NOTICE (not whether statutory or equitable assignment)
compaq computer
confirmed dearie v hall
even if 2nd assignment is SA
helps confirm SA is just EA plus mechanism
Dawson v GN & City Railway
NO ADDITIONAL LIABILITY ON X
- B cannot recover for additional loss suffered as a result of trade carried out by B (but not by A)
- assignment does not increase burden on X
Linden Gardens (HL case)
Staughton LJ (CA);
B cannot recover more than A could have if assignment didn’t happen and transfer didn’t happen
X cannot be in a worse position
Offer-Hoar v Larkstone
X cannot rely on assignment to escape liability for breach
X taking advantage of Dawson (said A not suffering because B sold land to B)
X’s liability =measured to A on assumption of no assignment (not just A now)
Young v Kitchen
if X’s claim against A arises out of the same contract as assigned debt, X can rely on that claim
Business Computers v Anglo-African
if X’s claim arose out of different circumstances, X can rely on it against B if claim arose before notice of assignment given to X
Noakes v Doncaster
can’t assign employment contracts (inherently non-assignable)
Don King v Warren (inherently non-assignable)
can’t assign contracts involving personal confidence (e.g. managing contracts/licensing) it is inherently non-assignable
Tohurst v Associated Portland
personal contract cannot be assigned
X must supply A chalk for 50 years
- could be assigned
- can be read to be made to A or anyone (not important)
Kemp v Baeselman
personal contract cannot be assigned
X must supply eggs to A, A cannot buy from any other merchant
- cannot be assigned
- personal obligation on A
Don King v Warren (first instance)
lighten J - if obligation involves personal elements, must consider if assignment is possible
1) if agreeing to do a particular thing, there is good reason to doubt A can change nature of obligation (without X’s consent)
2) if personal contract it is clear this obligation cannot be discharged by someone else
Trendex v Credit Suisse
roskill: “the old saying that you cannot assign a bare right to litigate is gone”
MERE RIGHTS OF ACTION CAN BE ASSIGNED
- genuine commercial interest
- onus is on X to show it is champertous
(X could show that in this case, it was assigned so that enforcement of claim could be profitable)
Glegg v Bromley
assigning proceeds of action is no problem
Liden Gardens
NAC are valid
- yes, you can’t limit property rights (e.g. freehold owner has inherent power to assign)
- but choses in action are not property rights
St Martin’s Dispute
if NAC is valid, this affects B
- B = no right to sue because of NAC
- even if no NAC, only A’s right is assigned so B cannot recover damages X wouldn’t have been liable to A for (Offer-Haul)
prohibition on assignment can protect X from claims that might be brought on B’s behalf BUT it can change X’s liability to A (A can recover damages for b)
McAlpine v Panatown
If A enters contract with 3P, damages available to A is not restricted to those that reflect financial loss suffered by A as a result of 3P’s breach
- but if X confers some direct rights to B (duty of care deed) this analysis cannot apply
NAC can increase liability to A (allow A to sue on B’s behalf but if X confers some rights to B, that limits X’s liability to A)
Don King v Warren
no actual DOT but courts can find a DOT from the arrangements
NAC doesn’t prevent DOT arising
