assignment vs assignment by way of security

More Blog Popular
Who's Who Legal
Instruct Counsel
My newsfeed
Save & file
View original
Follow Please login to follow content.

add to folder:

My saved (default)

Register now for your free, tailored, daily legal newsfeed service.

Find out more about Lexology or get in touch by visiting our About page.

Security assignments - not always what they say they are?

The nature of security created under a security document does not always match its description in the document. Charlotte Drake explains how this recharacterisation risk can apply to security assignments.

Is an "absolute" security assignment legal or equitable?

Legal assignments – key requirements

Lenders commonly take security over "choses in action" (such as debts or rights under contracts) by way of assignment. An assignment involves the transfer of either legal ownership (legal assignment) or equitable ownership (equitable assignment).

Section 136 of the Law of Property Act 1925 dictates the formalities for taking a legal assignment. It requires that a legal assignment must (among other things):

be in writing;
be executed by the assignor;
be "absolute";
not be expressed to be "by way of charge" only; and
be notified in writing to the person against whom the assignor could enforce the assigned rights (the third party).

Legal assignments by way of security

There has been much case law on what "absolute" means. An assignment will not be absolute if it is conditional, or of part of a debt. However, a security assignment can qualify (provided it is not "by way of charge"): the fact the assignor has an equity of redemption under a security assignment does not of itself prevent the assignment from being "absolute". Security assignments sometimes use the term "absolute" to make clear they are intended to be legal assignments. However, the terminology used is not decisive. An assignment will not be "absolute" unless the third party can then deal with the assignee alone in respect of the assigned rights. The assignee owes an obligation to the assignor to reassign the rights on discharge of the secured liability. But the third party can continue to deal with the assignee until it receives notice of that reassignment.

In practice, this usually presents a considerable stumbling block to taking security by way of a legal assignment. Security assignments often allow the assignor to continue to deal with the third party, which commercially suits assignor, assignee and third party alike. However, such an assignment will not be "absolute" and so will take effect in equity only, even if the security document claims to effect a legal assignment.

The recent case of Ardila Investments NV v. ENRC NV and another 1 highlighted this. The judge accepted that the assignment clause in the document used "the words of a legal assignment". However, he pointed to other clauses in the assignment document which suggested the parties had intended it to take effect in equity rather than law. One of these clauses obliged the assignor to "pursue its rights" under the assigned contracts, which is clearly inconsistent with an absolute assignment.

Legal or equitable – does it matter?

Often not. A notified equitable assignment has as strong a priority against other interests in the assigned rights as a legal assignment.

One advantage of a legal assignment is that a legal assignee can sue the third party without the assignor's involvement. Received wisdom used to be that an equitable assignee could not sue alone and the assignor (as owner of the legal interest) must be joined in as party to proceedings (either as co-plaintiff if willing, or as co-defendant if not).

In Ardila the judge held that the assignment took effect in equity and that both assignor and assignee should join in the proceedings as co-claimants. As it happened, when the hearing took place, the assignor had been joined as co-claimant anyway. In other cases, an equitable assignee has been able to sue the third party alone. As a purely practical matter, even if the assignor does need to be joined into proceedings this is unlikely to be more than an inconvenience.

Could a security assignment be "floating" security?

Could there be another, more unpalatable, result of control remaining with the assignor following a security assignment? In Re Spectrum Plus 2 , the House of Lords of course held that a charge over a debt will be floating, not fixed, if the security holder fails to exercise control over the debt proceeds. Is a security assignment of a debt or similar contractual right also at risk of being recharacterised in this way? This is far from a settled point, but these obiter comments from Lord Scott in Re Spectrum Plus (at paragraph 107) suggest so:

" Suppose, for example, a case where an express assignment of a specific debt by way of security were accompanied by a provision that reserved to the assignor the right, terminable by written notice from the assignee, to collect the debt and to use the proceeds for its (the assignor's) business purposes, ie, a right, terminable on notice, for the assignor to withdraw the proceeds of the debt from the security. This security would, in my opinion, be a floating security notwithstanding the express assignment. "

There is some logic in this approach. If it were possible to "solve" Re Spectrum Plus by renaming all charges over debts as security assignments, the case would not have taken on the significance that it has. The risk of this type of recharacterisation is most obvious in a UK insolvency, where there is a clear distinction between the application of fixed and floating recoveries. In this context, at least, the "fixed/floating" distinction is likely to be more of a concern to a lender than whether its security assignment is "legal" rather than "equitable".

Across over 80 countries, Dentons helps you grow, protect, operate and finance your organization by providing uniquely global and deeply local legal solutions. Polycentric, purpose-driven and committed to inclusion, diversity, equity and sustainability, we focus on what matters most to you. To find out more about how we can help you, please visit www.dentons.com To view our latest thought leadership, please visit www.dentons.com/en/insights

Filed under

United Kingdom

Related practical resources PRO

Checklist Checklist: Key checks for firms to consider when approving financial promotions (UK) Recently updated
Checklist Checklist: Running an effective board meeting (UK)
How-to guide How-to guide: Corporate governance in financial services (UK)

Related research hubs

Search for:

Jump straight to:

Please enter a search term

What sectors are you interested in?

We can use your selection to show you more of the content that you’re interested in.

Sign-up and we’ll remember your preferences

Sign-up to follow topics, sectors, people and also have the option to receive a weekly update of lastest news across your areas of interest.

Got an account already? Sign in

Want to speak to an advisor from your closest office?

Out-law / your daily need-to-know.

Out-Law Guide 4 min. read

Assignment and novation

19 Aug 2011, 4:40 pm

Assignment involves the transfer of an interest or benefit from one person to another. However the 'burden', or obligations, under a contract cannot be transferred.

Assignment in construction contracts

As noted above only the benefits of a contract can be assigned - not the burden. In the context of a building contract:

the employer may assign its right to have the works constructed, and its right to sue the contractor in the event that the works are defective – but not its obligation to pay for the works;
the contractor may assign its right to payment of the contract sum - but not its obligation to construct the works in accordance with the building contract or its obligation to meet any valid claims, for example for defects.

After assignment, the assignee is entitled to the benefit of the contract and to bring proceedings against the other contracting party to enforce its rights. The assignor still owes obligations to the other contracting party, and will remain liable to perform any part of the contract that still has to be fulfilled since the burden cannot be assigned. In practice, what usually happens is that the assignee takes over the performance of the contract with effect from assignment and the assignor will generally ask to be indemnified against any breach or failure to perform by the assignee. The assignor will remain liable for any past liabilities incurred before the assignment.

In construction contracts, the issue of assignment often arises in looking at whether collateral warranties granted to parties outside of the main construction contract can be assigned.

Funders may require the developer to assign contractual rights against the contractor and the design team as security to the funder, as well as the benefit of performance bonds and parent company guarantees. The developer may assign such rights to the purchaser either during or after completion of the construction phase.

Contractual assignment provisions

Many contracts exclude or qualify the right to assignment, and the courts have confirmed that a clause which provides that a party to a contract may not assign the benefit of that contract without the consent of the other party is legally effective and will extend to all rights and benefits arising under the contract, including the right to any remedies. Other common qualifications on the right to assign include:

a restriction on assignment without the consent of the other party, whether or not such consent is not to be unreasonably withheld or delayed;
only one of the parties may assign;
only certain rights may be assigned – for example, warranties and indemnities may be excluded;
a limit on the number of assignments - as is almost always the case in respect of collateral warranties;
a right to assign only to a named assignee or class of assignee.

Note that in some agreements where there is a prohibition on assignment, it is sometimes possible to find the reservation of specific rights to create a trust or establish security over the subject matter of the agreement instead.

Legal and equitable assignment

The Law of Property Act creates the ability to legally assign a debt or any other chose in action where the debtor, trustee or other relevant person is notified in writing. If the assignment complied with the formalities in the Act it is a legal assignment, otherwise it will be an equitable assignment.

Some transfers can only take effect as an equitable assignment, for example:

an oral assignment;
an assignment by way of charge;
an assignment of only part of the chosen in action;
an assignment of which notice has not been given to the debtor;
an agreement to assign.

If the assignment is equitable rather than legal, the assignor cannot enforce the assigned property in its own name and to do so must join the assignee in any action. This is designed to protect the debtor from later proceedings brought by the assignor or another assignee from enforcing the action without notice of the earlier assignment.

Security assignments

Using assignment as a way of taking security requires special care, as follows:

if the assignment is by way of charge, the assignor retains the right to sue for any loss it suffers caused by a breach of the other contract party;
if there is an outright assignment coupled with an entitlement to a re-assignment back once the secured obligation has been performed, it is an assignment by way of legal mortgage.

Please see our separate Out-Law guide for more information on types of security.

Restrictions on assignment

There are restrictions on the assignment of certain types of interest on public policy grounds, as follows:

certain personal contracts – for example, a contract for the employment of a personal servant or for the benefit of a motor insurance policy cannot be assigned;
a bare cause of action or 'right to sue' where the assignee has no commercial interest in the subject matter of the underlying transaction cannot be assigned;
certain rights conferred by statute – for example, a liquidator's powers to bring wrongful trading proceedings against a director – cannot be assigned;
an assignment of a contract may not necessarily transfer the benefit of an arbitration agreement contained in the contract;
the assignment of certain rights is regulated – for example, the assignment of company shares or copyright.

If you want to transfer the burden of a contract as well as the benefits under it, you have to novate. Like assignment, novation transfers the benefits under a contract but unlike assignment, novation transfers the burden under a contract as well.

In a novation the original contract is extinguished and is replaced by a new one in which a third party takes up rights and obligations which duplicate those of one of the original parties to the contract. Novation does not cancel past rights and obligations under the original contract, although the parties can agree to novate these as well.

Novation is only possible with the consent of the original contracting parties as well as the new party. Consideration (the 'price' paid, whether financial or otherwise, by the new party in return for the contract being novated to it) must be provided for this new contract unless the novation is documented in a deed signed by all three parties.

Construction Contracts
Construction
Government and public sector
Real Estate
Technology, Science & Industry
United Kingdom

Contact an adviser

Graham Alty

Latest News

Grenfell inquiry recommendations trail construction regulation reform, saudi arabia issues implementing rules on exporting personal data, dutch media authority issues first fine to influencer over recognisability of ads, welsh plans risk disputes and ‘waste tourism’, says expert, statutory tipping code published ahead of new law in force on 1 october, don't miss a thing.

Sign-up to receive the latest news, analysis and events direct to your e-mail inbox

Out-Law News

Surge in requests for workplace financial support

Chris Thomas tells HRNews about providing employee benefits in a more tax efficient way to help employees’ finances

CSDDD clears late hurdle but with watered down terms

Fewer businesses will be subject to EU laws prescribing tighter scrutiny of supply chains than was originally envisaged after late amendments to the proposed new Corporate Sustainability Due Diligence Directive (CSDDD) were endorsed by law makers.

Broad scope for building liability orders highlighted by ruling

A new ruling shows how construction contractors facing claims for defective building works in England or Wales might seek a ‘building liability order’ (BLO) against other defendants to reduce their financial exposure, an expert in building safety and construction dispute resolution has said.

UK government plans to revamp holiday pay calculation for part-year workers

Out-Law Analysis

Pensions disputes: managing member expectations paramount

UK subsidy control post-Brexit: access to effective judicial remedies

'Steps of court' settlement was not negligent, court rules

'Vast majority' of companies not seeking to avoid tax

'World first' industrial decarbonisation strategy developed in the UK

3D printing: UK product safety issues

5G potential for business highlighted in UK funding programme

Sectors and what we do

Sectors we work in.

Financial Services
Infrastructure
Your assets
Your company
Your finance
Your legal team and resource
Your people
Your risks and regulatory environment

Your privacy matters to us

We use cookies that are essential for our site to work. To improve our site, we would like to use additional cookies to help us understand how visitors use it, measure traffic to our site from social media platforms and to personalise your experience. Some of the cookies that we use are provided by third parties. To accept all cookies click ‘accept all’. To reject all optional cookies click ‘reject all’. To choose which optional cookies to allow click ‘cookie settings’. This tool uses a cookie to remember your choices. Please visit our cookie policy for more information.

Assignment (by way of security) definition

What does assignment (by way of security) mean, view the related checklists about assignment (by way of security), real estate finance—checklist.

Real estate finance—checklist This checklist sets out the key issues to consider when acting for the lender or the borrower on a real estate finance transaction. It assumes that the property being acquired and/or developed is situated in England or Wales. Principal issues include: • ensuring that the documents received from the seller of the property are sufficient to obtain good title to, and effect registration of, the property • confirming that the parties have the power and authority to enter into the transaction • considering whether the transaction involves any entities incorporated or formed overseas that want to buy, sell or otherwise transact with the property. See Practice Note: The register of overseas entities and its impact on loan transactions (Economic Crime (Transparency and Enforcement) Act 2022), and • considering whether the transaction involves the development of a property and whether, in particular, it involves a ‘higher-risk building’. See Practice Note: Building Safety Act 2022—implications for finance transactions involving real estate and real estate development • Ensure that the following...

Taking security—floating charge—checklist

Taking security—floating charge—checklist This checklist sets out the factors to consider when a company is proposing to grant a floating charge. It assumes that an English or Welsh company will be granting a floating charge to a lender situated in England or Wales. In this checklist: • the company granting the floating charge is called the 'chargor' • the entity to which the floating charge is granted is called the 'chargee', and • the document containing the floating charge is called the 'security document' For detailed information on the nature of floating charges and the differences between fixed and floating charges, see Practice NoteFixed and floating charges. For information on the advantages and disadvantages of taking a floating charge, see Practice Note: Floating charges—advantages and disadvantages. For detailed information on considerations when taking a floating charge, see Practice Note: Floating charges. A floating charge can form part of the security created by a debenture—see Practice Note: Key features of debentures. Debentures also typically contain other types...

View the related practice notes about Assignment (by way of security)

Priority between security interests—practical examples.

Priority between security interests—practical examples This Practice Note sets out examples of how the rules on priority could work in practice with reference to the relevant priority rules under English law. It complements and should be read in conjunction with our other Practice Notes on priority. Additional examples are added to this Practice Note on a regular basis. If you come across a priority situation in practice that you would like us to include, please use the LexisAsk function to let us know. Practice Note: Priority between security interests sets out the rules on priority from a more technical perspective and should be used for information about the black letter law which underpins the practical examples in this Practice Note. It is important to note that English law priority rules are complex and are generally accepted not to be clear in every respect. The rules can also be affected by the actions of the parties meaning that law firms will often not give an opinion on the...

Zambia—cross border banking and finance guide

Zambia—cross border banking and finance guide Loan market and developments Please provide a brief overview of the current state of the loan markets in your jurisdiction and any significant recent market developments There has been reform in Zambian law relating to commerce with the repeal and replacement of certain legislation and the enactment of legislation believed to increase economic activity and access to credit for small to medium enterprises as follows: • The Moveable Property (Security Interest) Act No 3 of 2016 (the Moveable Property Act) was enacted on 6 April 2016. The Moveable Property Act provides, as set out in the preamble, for the creation of security interests in movable property so as to contribute to economic development, harmonise secured transaction laws and to enhance the availability of low-cost secured credit to allow debtors to use the full value inherent in their assets to support credit. The Moveable Property Act establishes the Collateral Registry, an online platform on which security interests over movable property are...

Discover our 75 Practice Notes on Assignment (by way of security)

View the related precedents about Assignment (by way of security)

Assignment of intellectual property rights (asset purchase) (long form).

Assignment of intellectual property rights (asset purchase) (long form) This Agreement is made on [insert date] (Commencement Date) between the following parties (each a ‘party’ and together the ‘parties’): Parties 1 [insert Assignor name] a company incorporated in [England and Wales] whose registered number is [insert company number] and whose registered office is at [insert registered office] (Assignor); and 2 [insert Assignee name] a company incorporated in [England and Wales] whose registered number is [insert company number] and whose registered office is at [insert registered office] (Assignee) Background (A) [Assignor has entered into an agreement with Assignee [dated [insert date]] for the sale of [the [insert name] business and/or certain business Assets] by Assignor as seller to Assignee as buyer OR [insert other description of relevant transaction (referencing any relevant related agreements)]] (Transaction). (B) Assignor has agreed to assign, and Assignee has agreed to take an assignment of, the Assigned IPR on the terms and conditions of this Agreement. (C) [This Agreement and the assignment under it is...

Ireland—Debenture: single company chargor—bilateral—all monies

Bilateral debenture for a chargor incorporated as a limited company in Ireland to secure the chargor’s obligations to the lender on an all monies basis Using this Precedent Debenture This is a precedent bilateral Debenture which can be used to take security over all of the assets of a company. This drafting note explains the context in which this precedent Debenture might be used as well as the features of this precedent Debenture and the assumptions on which it is based. Negotiating a security package—general principles A lender's primary concern is that it is repaid. If a borrower fails to repay a loan the lender may have to go to court to obtain a judgment for payment of the sum owed to it. Even if it obtains such judgment this does not mean that the lender will be repaid in full or even in part. For example, if the borrower is insolvent, the lender may have to share the borrower's available assets with other creditors and will only receive part...

Dive into our 17 Precedents related to Assignment (by way of security)

View the related q&as about Assignment (by way of security)

How could the funder of a ‘first purchaser’ of a construction development obtain rights against the construction/design team.

How could the funder of a ‘first purchaser’ of a construction development obtain rights against the construction/design team? It is standard market practice for warranties to be provided by the construction/design team to the following beneficiaries: • funder of the development • any first purchaser of the whole or a substantial part • any first tenant of the whole or a substantial part • employer (if the warrantor is a consultant or sub-contractor) • freeholder Where a purchaser is the 'first' purchaser from the employer/developer, a typical construction contract will provide, therefore, that the first purchaser will be entitled to receive a collateral warranty equivalent (ie on the same terms) to that given to the employer/developer, from the same contractor/consultant/sub-contractor. Any other beneficiaries not listed above, ie the funder of a first purchaser, would be considered unusual and the warrantor would be likely to resist providing any such additional warranty (although the funder could always request one, the warrantor may agree). See: Collateral warranties—checklist. This differs to the...

Subject to post-Brexit potential changes in enforcing foreign judgments, is it possible to state with certainty that: A) an EU judgment will be enforced against an English company in English courts B) an EU debenture affecting an English company would be enforceable in English courts.

Subject to post-Brexit potential changes in enforcing foreign judgments, is it possible to state with certainty that: A) an EU judgment will be enforced against an English company in English courts B) an EU debenture affecting an English company would be enforceable in English courts. EU judgment In this Q&A we have limited our research to cover the current position under English law; we have not considered the possible position after the UK has left the EU. Current position The rules on jurisdiction and the enforcement of judgments within the EU (including the UK) are currently set out in Regulation (EU) No 1215/2012 (Brussels I Recast) of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I Recast). Brussels I Recast applies only to claims commenced after 10 January 2015 (see art 81). In relation to claims commenced prior to that date, the rules set out in Brussels I continue...

See the 7 Q&As about Assignment (by way of security)

View the related News about Assignment (by way of security)

Insurance & reinsurance monthly highlights—august 2019.

This month’s edition of Insurance & Reinsurance monthly highlights includes analysis of the decision of the High Court to refuse Prudential Assurance Company’s Part VII FSMA 2000 transfer of a portfolio of annuity business. It also includes other news highlights reported over the past month, including items on Brexit; cladding risks; cyber insurance and motor insurance. There is also news on the latest regulatory developments, together with dates for your diary and case trackers.

Corporate weekly highlights—2 August 2018

This week’s edition of Corporate highlights includes LSE guidance for AIM companies on new corporate governance requirements that apply from 28 September 2018, revised FRC guidance for companies preparing strategic reports, and FCA amendments to the Listing Rules and Disclosure Guidance and Transparency Rules.

Read the latest 4 News articles on Assignment (by way of security)

Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.

Access this content for free with a 7 day trial of LexisNexis and benefit from:

Instant clarification on points of law
Smart search
Workflow tools
41 practice areas

** Trials are provided to all LexisNexis content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisNexis services please email customer service via our online form. Free trials are only available to individuals based in the UK, Ireland and selected UK overseas territories and Caribbean countries. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.

"We couldn't do as good a job as we do without it. LexisNexis gives us the security and confidence that we are best serving our clients because the information we are working on is the most accurate we can get"

assignment vs assignment by way of security

Access all documents on Assignment (by way of security)

0330 161 1234

International Sales(Includes Middle East)
Latin America and the Caribbean
Netherlands
New Zealand
Philippines
South Africa
Switzerland
United States

HELP & SUPPORT

Legal Help and Support
Tolley Tax Help and Support

LEGAL SOLUTIONS

Compliance and Risk
Forms and Documents
Legal Drafting
Legal Research
Magazines and Journals
News and Media Analysis
Practice Management
Privacy Policy
Cookie Settings
Terms & Conditions
Data Protection Inquiry
Protecting Human Rights: Our Modern Slavery Agreement

Client Login

Bulletins | January 30, 2018

Assignment by way of security – beware of giving away more than you bargained for.

Construction

Assignment by way of security is a concept that comes up on many construction projects; typically as a condition of providing finance a funder will require an assignment by way of security of key construction documents, including building contracts and appointments, with the intention that if the borrower defaults on the loan, the assignment will be perfected and the funder will be entitled to enforce its rights under the constructions documents. How and when exactly such assignment takes place and the interplay with an employer’s rights under its contracts on a project was brought into focus in last year’s case of Mailbox (Birmingham) Limited v Galliford Try Construction Limited ([2017] EWHC 67 (TCC)).

Mailbox (Birmingham) Limited (“Mailbox”), the claimant special purpose vehicle set up to develop the Mailbox in Birmingham (“the Property”), a high-end mixed used development, boasting a Harvey Nichols and the base for BBC Birmingham, engaged Galliford Try Construction Limited (“Galliford”) for refurbishment works at the Property under a building contract dated 23 December 2013. A dispute arose between the parties regarding responsibility for delay, the final account, liquidated damages and Mailbox’s termination which was referred to adjudication, where Galliford were ordered to pay Mailbox £2,477,152.86 plus 75% of the adjudicator’s costs. Galliford did not pay the sums ordered, so Mailbox sought enforcement of the adjudicator’s decision in the High Court.

Did Mailbox have a right to bring an adjudication?

Galliford’s primary defence to the enforcement was that Mailbox had no right to bring the claim, as it had assigned the benefit of the building contract with Galliford to Aareal Bank AG Wiesbaden (“Aareal”) in accordance with the requirements of a debenture dated 10 May 2011. Mailbox raised three defences:

The building contract was not in existence at the time of the assignment referred to in the debenture. Therefore there could be no assignment;
Alternatively, any assignment was by way of charge rather than a legal assignment; or
The contract had been re-assigned from Aareal to Mailbox before Mailbox commenced adjudication proceedings.

Mailbox failed on the first two defences, but won on the third so was able to enforce the adjudicator’s award. However, it was the analysis of the first and second defences and Mrs Justice O’Farrell’s review of the requirements for legal assignment under Section 138 of the Law of Property Act 1925 that are of particular note.

It was held that the wording of the debenture covered future contracts, including the building contract in question. The wording “each chargor with full title guarantee assigns absolutely by way of security in favour of the security trustee” amounted to a full legal assignment rather than an assignment by way of charge and/or a conditional assignment. Further, there was a requirement for notice of the assignment to be served and specific reference to rights being re-assigned, both of which were more akin to an absolute assignment. Express notice was given to Galliford, again consistent with an absolute assignment. Thankfully for Mailbox, on the day it commenced the adjudication, Aareal had re-assigned the rights under the building contract to Mailbox. If it had not done so, or done so after the adjudication had been commenced, Mailbox would not have been entitled to commence the adjudication.

Practical Tips

When obtaining finance for a project it is crucial to understand what the funder really requires in relation to security over construction documents. If all rights are assigned, the employer no longer has the ability to enforce such rights and may have given away more than he bargained for.

It may be that the use of collateral warranties or third party rights together with a charge will suffice but if not (which is unfortunately still the common position), it is important that any such rights are re-assigned before the employer commences an adjudication or any other proceedings.

assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

Founded in 1939, our law firm combines the ability to represent clients in domestic or international matters with the personal interaction with clients that is traditional to a long established law firm.

Assignment by way of security

: • • •

: • • | |
: | | |
: |
: | |
: | |

: Click to expand:

— or just get in touch: for ½ a weekly 🍺 you get to JC. .

Not hitherto commonly known as an ABWOS even though it jolly well ought to be.

There’s quite a bit more over at set-off and even more than that at netting , and some stuff at equitable set-off , too. Unless that’s just a redirect to set-off .

Unless it is “by way of security” in name only — don’t ask, but if you must, see the footnote [1] — an assignment by way of security , usually, does not meet all the formal requirements for a legal assignment set out in the Law of Property Act . So it’s not as good. Being, therefore, an equitable assignment and not a legal assignment , there differences relating to how an assignee enforces its claim against contracting party: a legal assignee can sue in its own name; and equitable assignee only by joining the assignor to the action (I know: shoot me, right?).

Do I need an assignment by way of security if I have a charge ?

Not unless you’re the sort of person who wears two pairs of underpants in case the first fails. [2] Both are equitable interests , but a fixed charge is more formal. The problem with a fixed charge is that it requires control over the asset (an actual thing) being charged: that is easy enough if you can take possession of it (prime brokers: hooray!), but if you can’t - if it is some vague right the debtor has to be paid money at a later date - then your fixed charge might wind up looking a bit like a floating charge, which means you may wind up behind other people in the queue.

=== Assignment and its effect on Netting and Set-off === Could a right to assign by way of security upset close-out netting such that one should forbid parties making assignments by way of security of their rights under a master netting agreement (such as an ISDA Master Agreement or a 2010 GMSLA ), for fear of undermining your carefully organised netting opinions?

Generally : No .

An assignment by way of security is a preferred claim in the assignor’s insolvency over the realised value of certain rights the assignor holds against its counterparty. It is not a direct transfer of those rights to an assignee: the counterparty is still obliged to the assignor, not the assignee, and any claim the assignee would have against the counterparty would only be by way of subrogation of the assignor’s claim, should the assignor have imploded in the meantime or something.
“ Nemo dat quod non habet ”: [3] the unaffected counterparty’s rights cannot be improved (or worsened) by assignment and, it being a single agreement , on termination of the agreement the assignee’s claim is to the termination amount determined under the Agreement, which involves terminating all transactions and determining the aggregate mark-to-market and applying close-out netting . No one can give what they do not have. [4]
The assignee can be in no better position than the assignor and this takes subject to any set-off . The conduct of the debtor vis a vis the assignee is irrelevant, unless it gives rise to an estoppel. See Bibby Factors Northwest Ltd v HFD Ltd (paragraphs 38 and 48). [5]

At the point of closeout, the assignee’s right is to any termination payment payable to the Counterparty. Therefore any assignment of rights is logically subject to the netting, as opposed to potentially destructive of it.

But : This is only true insofar as your netting agreement does not actively do something crazy, like disapplying netting of receivables which have been subject to an assignment and dividing these amounts off as "excluded termination amounts not subject to netting".

I know what you are thinking. "But why on God’s green earth would anyone do that?" This is a question you might pose to the FIA ’s crack drafting squad ™, who confabulated the FIA ’s Professional Client Agreement , which does exactly that.

Lex situs for a chose in action like an assignment by way of security

Where the thing you are taking security over is a disembodied legal right — a “ chose in action ” and not a “ chose in possession ” — then what is the lex situs, seeing as this thing floats free of the ghastly, rusting mortal world of territorial boundaries? It is a Platonic right, and ethereal, idealised, utopian thing and as such as stateless, existing as it does on another plane, in another geometry, that that of tawdry earthly things like regulatory perimeters.

Here the lex situs is — in the absence of any other worldly place for it — the governing law of the right being assigned.

Close-out netting
Law of Property Act 1925
↑ An assignment by way of security could be a legal assignment, if it meets the formal criteria, but one of those is that the assignment is absolute and not by way of security only, so — yeah. And there is authority about this, by the way: Mailbox (Birmingham) Limited v Galliford Try Construction Limited [2017] EWHC 67.
↑ “That old man, despite all the hardships, still manages to put on a clean pair of underpants every day. And, you know? By the end of the week, he can’t get his trousers on.”—From There’s no land like Poland , by the Not The Nine O’Clock News team.
↑ “A chap cannot give away what he doesn’t own in the first place.” Of course, try telling that to a prime brokerage lawyer, or a counterparty to a 1994 NY CSA .
↑ Except under New York law — isn’t that right, rehypothecation freaks?
↑ Bibby Factors Northwest Ltd v HFD Ltd [2015] EWCACiv 1908
Taking security

Assignment, novation or sub-participation of loans

Transfers of loan portfolios between lending institutions have always been commonplace in the financial market. A number of factors may come into play – some lenders may wish to lower their risks and proportion of bad debts in their balance sheets; some may undergo restructuring or divest their investment portfolios elsewhere, to name a few. The real estate market in particular has been affected by the announcement of the “three red lines” policy by the People’s Bank of China in 2020 which led to a surge of transfers, or attempted transfers, of non-performing loans. Other contributing factors include the continuous effects of the Sino-US trade war and the Covid-19 pandemic.

Partner: Hong Kong

T +852 2905 5760 E [email protected]

Transferability of Loans

The legal analysis regarding the transferability of loans can be complex. The loan agreement should be examined with a view to identifying any restrictions on transferability of the loan between lenders, such as prior consent of the debtor and, in some cases, whether such consent may be withheld. Other general restrictions may apply given that most banks have internal confidentiality rules and data protection requirements, the latter of which may also be subject to governmental regulations. Certain jurisdictions may restrict the transfer of loans relating to specific types of receivables – mortgage or consumer loans being prime examples. It is imperative to conduct proper due diligence on the documentation and underlying assets in order to be satisfied with the transferability of the relevant loans. This may be complicated further if there are multiple projects, facility lines or debtors. It is indeed common to see a partial transfer of loans to an incoming lender or groups of lenders.

Methods of Transfer

The transfer of loans may be carried out in different ways and often involves assignment, novation or sub-participation.

A typical assignment amounts to the transfer of the rights of the lender (assignor) under the loan documentation to another lender (assignee), whereby the assignee takes on the assignor’s rights, such as the right to receive payment of principal and interest on the loan. The assignor is still required to perform any obligations under the loan documentation. Therefore, there is no need to terminate the loan documentation and, unless the loan documentation stipulates otherwise, there is no need to obtain the debtor’s consent, but notice of the assignment must be served on the debtor. However, many debtors are in fact involved in the negotiation stage, where the parties would also take the opportunity to vary the terms of the facility and security arrangement.

Novation of a loan requires that the debtor, the existing lender (transferor) and the incoming lender (transferee) enter into new documentation which provides that the rights and obligations of the transferor will be novated to the transferee. The transferee replaces the transferor in the loan facility and the transferor is completely discharged from all of its rights and obligations. This method of transfer does require the prior consent of the relevant debtor.

Sub-participation is often used where a lender, whilst wishing to share the risks of certain loans, nonetheless prefers to maintain the status quo. There is no change to the loan documentation – the lender simply sells all or part of the loan portfolio to another lender or lenders. From the debtor’s perspective, nothing has changed and, in principle, there is no need to obtain the debtor’s consent or serve notice on the debtor. This method of transfer is sometimes preferred if the existing lender is keen to maintain a business relationship with the debtor, or where seeking consent from the debtor or notifying the debtor of any transfer is not feasible or desirable. In any case, there would be no change to the balance sheet treatment of the existing lender.

Offshore Security Arrangements

The transfer of a loan in a cross-border transaction often involves an offshore security package. A potential purchaser will need to conduct due diligence on the risks relating to such security. From a legal perspective, the security documents require close scrutiny to confirm their legality, validity and enforceability, including the nature and status of the assets involved. Apart from transferability generally, the documents would reveal whether any consent is required. A lender should seek full analysis on the risks relating to enforcement of security, which may well be complicated by the involvement of various jurisdictions for potential enforcement actions.

A key aspect to the enforcement consideration is whether a particular jurisdiction requires that any particular steps be taken to perfect a security interest relating to the loan portfolio (if the concept of perfection applies at all) and, if so, whether any applicable filing or registration has been made to perfect the security interest and, more importantly, whether there exists any prior or subsequent competing security interest over all or part of the same assets. For example, security interests may be registered in public records of the security provider maintained by the companies registry in Bermuda or the British Virgin Islands for the purpose of obtaining priority over competing interests under the applicable law. The internal register of charges of the security provider registered in the Cayman Islands, Bermuda or the British Virgin Islands should also be examined as part of the due diligence process. Particular care should be taken where the relevant assets require additional filings under the laws of the relevant jurisdictions, notable examples of such assets being real property, vessels and aircraft. Suites of documents held in escrow pending a potential default under the loan documentation should also be checked as they would be used by the lender or security agent to facilitate enforcement of security when the debtor defaults on the loan.

Due Diligence and Beyond

Legal due diligence on the loan documentation and security package is an integral part of the assessment undertaken by a lender of the risks of purchasing certain loan portfolios, regardless of whether the transfer is to be made by way of an assignment, novation or sub-participation. Whilst the choice of method of transfer is often a commercial decision, enforceability of security interests over underlying assets is the primary consideration in reviewing sufficiency of the security package in any proposed loan transfer.

Hong Kong , Shanghai , British Virgin Islands , Cayman Islands , Bermuda

Banking & Asset Finance , Corporate

Banking & Financial Services

A Bird’s-eye View of Some Key Restructuring Options and Processes in Bermuda, the British Virgin Islands and the Cayman Islands

This article focuses on restructuring options and processes only, and will merely touch on formal in...

Similar but Different

While the basic features of the trust remain, there are some notable differences in how trusts can b...

Material adverse change clauses in light of the Covid-19 pandemic

Experts from each of our key global offices provide jurisdiction specific advice and answer question...

Managing the court process

Economic Substance update Q4 2020

The facilitation of cross border restructurings in Bermuda, the British Virgin Islands and the Cayman Islands

In this update, we consider the powers and discretion of the domestic courts in Bermuda, the BVI and...

Economic Substance update Q1 2020

On 18 February 2020, the Economic and Financial Affairs Council (ECOFIN) announced that Bermuda and ...

Offshore listing Vehicles to benefit from the Shanghai - London stock connect

Offshore deal value through June 2018 nearly matches 2017 total

Snapshot Petitions Report 2017

Security Assignments – Not Always What They Say They Are?

Contributor.

Is an "absolute" security assignment legal or equitable?

Legal assignments – key requirements.

Section 136 of the Law of Property Act 1925 dictates the formalities for taking a legal assignment. It requires that a legal assignment must (among other things):

be in writing;
be executed by the assignor;
be "absolute";
not be expressed to be "by way of charge" only; and
be notified in writing to the person against whom the assignor could enforce the assigned rights (the third party).

Legal assignments by way of security

Legal or equitable – does it matter?

Often not. A notified equitable assignment has as strong a priority against other interests in the assigned rights as a legal assignment.

Could a security assignment be "floating" security?

1. [2015] EWHC 1667 (Comm) (11 June 2015)

2. [2005] UKHL 41.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Finance and Banking

United kingdom.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Switch language:

Legal and equitable assignments

Share on Linkedin
Share on Facebook

Legal Framework of Equitable Assignments in Finance

Financiers and lessors often take an assignment over debts or certain rights under contracts as part of their security package. Depending on how this is done, an assignment can either be characterised as a legal or equitable assignment under English law. Stephenson Harwood’s Dipesh Bharania explains

A key difference between a legal and equitable assignment is the ability of the assignee, be it a financier or lessor, to bring proceedings in its own name against the debtor for payment of the debt owed, or to enforce rights in the contract.

Go deeper with GlobalData

Alternative Payment Solution: iDEAL

Competitor profile: neat, data insights.

The gold standard of business intelligence.

Find out more

A legal assignee has this right, but there is a question over whether an equitable assignee has this right or not.

In the case of General Nutrition Investment Company v Holland and Barrett International Ltd and another [2017] EWHC 746 Ch, the High Court held that the beneficiary of an equitable assignment did not have the right to bring proceedings in its own name, and had to do so jointly with the assignor which had assigned rights in the underlying contract.

This raises questions about the equitable assignment, as it appears to contradict other judgments which permit an equitable assignee to take proceedings in its own name. The predecessor company of General Nutrition Investment Company (GNIC) entered into a trade mark licence agreement in March 2003 with Holland and Barrett (H&B) allowing H&B to use certain trademarks in the UK.

After complex internal restructuring, the original contracting party had been dissolved and GNIC was the successor company, which as assignee had been assigned both the rights under the original trademark licence agreement, and the rights to the trademarks themselves. GNIC alleged that H&B was in breach of the licence agreement and served a number of notices of termination on H&B purporting to terminate the agreement.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

The court had to decide whether any of these notices of termination were effective, and whether GNIC had the right to serve such notices, and bring and maintain proceedings against H&B in its own name.

The formalities for a legal assignment are set out in Section 136 of the Law of Property Act 1925, including that the assignment must be:

In writing and executed by the assignor “Absolute” and unconditional, Not be expressed to be “by way of charge”, and Notified in writing to the person against whom the assignor could enforce the assigned rights – usually the other contracting party.

It can often suit the assignor, the assignee and the third party to allow the assignor to deal with the third party, for notice not to be given (certainly initially) and the assignee to remain a silent party. This method is frequently used in financing documents, with notice only being given at a later date (rather than at the time of assignment) when there is a possibility of enforcement on the horizon.

An equitable assignment tends to be created when an assignment does not meet one or more of the requirements for a legal assignment. The main differences between a legal and an equitable assignment are priority (and the established principle that the assignee who serves notice first takes priority over any other assignee (where notice is not given)) and an equitable assignee needing to join the assignor as a party in any legal proceedings it brings against the third-party debtor.

However, two recent cases have lessened the distinction in practice between the two. In the Bexhill case the Court of Appeal recognised that an equitable assignee could take action in its own name without joining in the assignor. In the Ardila case, where notice had been given to the contracting party, the High Court looked at the terms of the notice and decided that what had seemed to be a legal assignment was in fact an equitable assignment because the wording of the notice seemed to retain rights for the assignor. The court used this reasoning to declare it an equitable assignment, despite the notice having been given as required.

Returning to the case in point, after the internal reorganisation and subsequent assignment of the trade mark licence agreement to GNIC, no notices of such assignment were served on H&B by the assignor prior to the purported termination of the agreement or the issue of proceedings. GNIC maintained that as it took the place of its predecessor as the “Licensor”, it became the body entitled to exercise rights of termination under the agreement. H&B’s contention was that, as an equitable assignee, GNIC did not have the right to terminate the agreement or bring proceedings in its own name.

It is widely accepted that, until a notice of assignment is given, and (i) the third party can validly discharge its obligations under the contract to the assignor, and (ii) the third party may raise against the assignee any defence or set-off which he could have raised against the assignor (provided that the matter on which the defence is based arose before notice was received) and the contracting party and assignor can amend the terms of the contract without the assignee’s consent.

The High Court considered that previous case law on this issue was binding as it had not been overruled or materially distinguished in any subsequent cases heard, and held that notice to the contracting third party is necessary to perfect the right of the assignee. Additional weight was given to the fact that a substantive contractual right (in this case, the right to terminate the licence agreement) had been assigned rather than just the assignment of a debt. Consequently, the contractual relationship between the parties was seeking to be amended and therefore the third party was entitled to see that such change was being effected by a party which had the right to do so and whom it knew to have such rights. The Court maintained that H&B cannot be expected to accept a notice of termination from an entity which turns out to be an assignee when it had never been given notice of that assignment.

While the High Court accepted that this decision may be appealed, this has raised a question about equitable assignments and the rights of the equitable assignee under English law. In the meantime, in practice, parties will have to scrutinise what type of right they are seeking, whether in security or as a full legal assignment and opt for the method which provides the clearest outcome possible as the law stands when they take the assignment. Anyone taking an assignment of the benefit of a contract should clearly ensure that notice is served on the other contracting party if it wants to be sure it can act in its own name under that contract against the other contracting party if need be.

Otherwise, there is a risk that an equitable assignee will be unable to enforce substantive contractual rights without having to join in the assignor in proceedings. That said, it may still be commercially preferable to have an equitable assignment for particular financing and leasing structures where it is not thought difficult to join the assignor at a later date if need be. In this case it was not possible, as the assignor had been dissolved. Advice should be sought about the type of assignment to be taken in each transaction pending further clarification from the courts.

Related Company Profiles

More relevant.

Top M&A legal advisers in financial services in 2023

Davis polk & wardwell, kirkland & ellis lead financial services-sector m&a legal advisers in q1-q3 2023, auxillias expands team with two legal, governance and compliance specialists, jo davis and daksha mistry launch specialist legal firm, sign up for our daily news round-up.

Give your business an edge with our leading industry insights.

Sign up to the newsletter: In Brief

Your corporate email address, i would also like to subscribe to:.

Leasing Life In Brief

Leasing Life : Focus (monthly)

I consent to Verdict Media Limited collecting my details provided via this form in accordance with Privacy Policy

Thank you for subscribing

View all newsletters from across the GlobalData Media network.

The Government restricts bans on assignment

United Kingdom | Publication | November 2018

Legislation now in force preventing parties from prohibiting the assignment of receivables under certain contracts.

At the moment, a contract can prohibit or restrict the parties’ ability to assign or transfer rights created under the contract. The extent of the restriction is a matter of interpretation of the clause concerned. If one of the parties to the contract attempts to assign the benefit of the contract in breach of the restriction, the purported assignment is ineffective.

One of the key assets of any business is its receivables, and restrictions on assignment can prevent the parties from factoring receivables or otherwise raising finance on them. The Government has decided that it should be easier for businesses to raise finance on their receivables. Accordingly the Small Business, Enterprise and Employment Act 2015 allows regulations to be made to invalidate restrictions on the assignment of receivables in particular types of contract. The regulations have now been made. They are contained in The Business Contract Terms (Assignment of Receivables) Regulations 2018. Draft regulations published in July, have been approved by both Houses of Parliament and are now in force.

What types of contracts do the Regulations apply to?

The Regulations apply to contracts for the supply of goods, services or intangible assets under which the supplier is entitled to be paid money. But there are a number of important exclusions from their application, including the following:

They only apply to contracts entered into on or after 31 December 2018.
They only apply where the person who supplies the goods, services or intangible assets concerned, and is therefore entitled to the receivable, is a small or medium-sized enterprise which is not a special purpose vehicle. Whether or not an entity qualifies in any particular case requires a detailed examination of the precise wording of the
Regulations. Counter-intuitively, the test is not applied at the time the contract is entered into, but at the time the assignment takes place.
There is a specific exemption for contracts “for, or entered into in connection with, prescribed financial services”: These are widely defined to include “any service of a financial nature”.
There are specific exclusions for particular types of contract, including certain commodities, project finance, energy, land, share purchase and business purchase contracts and operating leases.
As a general rule, it would seem that the Regulations only apply to contracts governed by English law or the law of Northern Ireland, but they prevent the parties from choosing a foreign law if it can be established that the purpose of doing so was to evade the Regulations.
The Regulations do not apply if none of the parties to the contract has entered into it in the course of carrying on a business in the United Kingdom.

What is the effect of the Regulations?

The Regulations provide that “a term in a contract has no effect to the extent that it prohibits or imposes a condition, or other restriction , on the assignment of a receivable arising under that contract or any other contract between the same parties.”

A receivable is the right to be paid any amount under a contract for the supply of goods, services, or intangible assets. The Regulations do not prevent the parties from restricting the assignment of other contract rights.

More difficult is to establish what is meant by assignment. Receivables are transferred in various ways in practice. Sometimes the transfer is outright (for instance by way of sale); and sometimes it is by way of security (for instance to secure a loan). The transfer may be effected by a statutory assignment, an equitable assignment, a charge or a trust. “Assignment” is not defined in the Regulations, and so there is some doubt as to which of these transactions are covered.

Although charges are not expressly referred to, they might be covered by the expression “assignment” if it is given a broad interpretation. But because of the uncertainty, the best course is to take an assignment by way of security over a receivable where there is, or might be, a restriction. That way, it is clear that the Regulations do apply.

Non-assignment clauses come in a variety of forms. They will be covered by the Regulations if they prohibit or impose a condition , or other restriction on the assignment of a receivable. The Regulations expressly invalidate terms which prevent the assignee from determining the validity or value of the receivable or their ability to enforce it. Whether or not the Regulations apply in any particular case will require an analysis of the precise terms of the restriction.

The Regulations will be of particular importance to businesses involved in the financing of receivables. And they will also be of concern to buyers because they will override their contractual protections.

Financial institutions

Practice area:

Banking and finance

Recent publications

Corporate-people-crowd-walk-walker-office-business-center

Publication

Keeping your dawn raid guidance current

Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.

Global | August 29, 2024

On 31 October 2023, the Screening of Third Country Transactions Act 2023 (the “Act”), which establishes a new foreign direct investment ("FDI") screening regime in Ireland, was enacted.

Global | August 21, 2024

EU Commission expands foreign subsidies guidance

The EU Foreign Subsidies Regulation, or FSR, is intended to prevent or remedy distortions of the EU internal market caused by “foreign” – meaning non-EU – subsidies benefitting companies active in the EU.

Global | August 19, 2024

Subscribe and stay up to date with the latest legal news, information and events . . .

Canada (English)
Canada (Français)
United States
Deutschland (Deutsch)
Germany (English)
The Netherlands
Türkiye
United Kingdom
South Africa
Hong Kong SAR
Marshall Islands
Nordic region

Essay Editor

College Assignment Heading: A Simple Guide for Formatting

Crafting an effective college assignment heading is key to making a strong first impression on professors. The title serves as the face of your paper and reflects your focus on precision and adherence to academic standards. Curious about how to create a proper title? This guide provides clear instructions on creating an impressive college paper heading, guiding you to comprehend what a header in writing is, and the appropriate way to format it. By applying these tips and guidelines, be confident your prep aligns with the required scholarly standards.

Basic Rules for an Assignment Header

A well-organized college assignment heading is crucial for clearly identifying your assignment and presenting it professionally. Adhering to the basic rules will help you craft a carefully designed title:

Include Crucial Information: A typical heading generally features the student and teacher’s name and surname, the due date, and the current course name. Clearly display and align the project’s title to the document’s left margin.
Use the Correct Font and Size: Standard academic papers require a legible font like Times New Roman or sometimes Arial and 12-point size. Avoid choosing decorative fonts that may undermine the professional quality of your composition.
Follow Proper Spacing Guidelines: Your prep’s heading needs to be double-spaced, and coherent with the remainder of the writing. This maintains uniformity and readability within the document.
Add Page Numbers (if indicated): Some teachers might ask for page numbers to be positioned in the header section. So, format them as per the given instructions.

A well-crafted essay title guarantees your assignment recognition for clarity and compliance with academic standards, paving the way for successful submission.

How to Head an Assignment?

Understanding what is a heading in an essay and grasping how to head a paper correctly are foundational skills in scholarly writing. A proper essay header normally contains the instructor’s and student’s details, the course code or title, the current date, and the prep’s title. Most colleges follow APA, MLA, or Chicago-style guidelines, so familiarize yourself with these standards. Your header needs to be aligned correctly and placed where it doesn’t interfere with your work’s content. Adhering to these guidelines ensures your college paper heading is both succinct and polished.

Formatting Rules for a Heading

Following these guidelines guarantees your heading format meets academic expectations:

Ensure Consistent Alignment: Align all components of your header close to the left margin, maintaining uniformity in the paper.
Use Double-Spacing: Keep double-spacing between the lines of your prep’s heading.
Avoid Unnecessary Information: Keep the college heading concise, avoiding any extra text or embellishments.
Capitalization and Punctuation: Properly capitalize and punctuate your essay heading consistent with style guidelines, ensuring consistency across the prep.
Consistency: Use identical size, font, and style for all components in your header.

Adhering to these rules will give your composition a polished look. This simplifies it for the lecturer to move through your composition.

Why Is a Good College Assignment Heading Important?

A skillfully designed paper heading gives your assignment a sophisticated look and helps to clearly organize the essentials for your readers. It signals to your lecturer that you have carefully followed educational standards and put thought into every aspect of your project. In addition, a proper heading for an essay guarantees that all relevant data is easily accessible. That’s specifically useful in larger classes where preps are handled by multiple lecturers or TAs. By concentrating on a succinct and accurate essay heading, you set a strong foundation for the rest of your home tasks.

Tips for Refining Your College Paper Heading

Refining your college paper heading is vital to guarantee it meets academic criteria and effectively represents your paper. By carefully focusing on the particulars, you can elevate the expertise and coherence of your home assignment. See some practical tips to consider:

Review institutional guidelines: Always verify your institution's detailed formatting instructions or templates to ensure adherence.
Keep it simple: Steer clear of irrelevant information in your heading; a clean, straightforward format is best.
Maintain consistency: Make sure that the font, size, and alignment are uniform across your header.
Double-check accuracy: Verify that all components in your title, comprising your name and surname, course name, and submission date, are correct.
Align with your prep's style: Confirm the header complements the overall tone and style of your written work.

By applying these suggestions, you can develop an assignment title that fulfills academic standards and improves the overall appearance of your prep.

Recap

A well-formatted college paper heading is a minor but vital part of academic composition. From understanding what a title is to mastering how to head a text, focusing on these details can make a notable difference in the overall presentation of your composition. Always stick to the fundamental formatting standards and each time confirm that you follow the heading format specified by your educational institution's guidelines. To further enhance your writing, consider utilizing our tools at AI Essay Detector and College Essay Generator to help you create outstanding essays with ease.

Paraphrasing vs plagiarism: do they really differ.

Academic assignments require much knowledge and skill. One of the most important points is rendering and interpreting material one has ever studied. A person should avoid presenting word-for-word plagiarism but express his or her thoughts and ideas as much as possible. However, every fine research is certain to be based on the previous issues, data given, or concepts suggested. And here it's high time to differentiate plagiarism and paraphrasing, to realize its peculiarities and cases of usage. ...

Top 10 Use Cases for AI Writers

Writing is changing a lot because of AI. But don't worry — AI won't take human writers' jobs. It's a tool that can make our work easier and help us write better. When we use AI along with our own skills, we can create good content faster and better. AI can help with many parts of writing, from coming up with ideas to fixing the final version. Let's look at the top 10 ways how to use AI for content creation and how it can make your writing better. What Is AI Content Writing? AI content writin ...

What Is Self-Plagiarism & How To Avoid It

Have you ever thought about whether using your own work again could be seen as copying? It might seem strange, but self-plagiarism is a real issue in school and work writing. Let's look at what this means and learn how to avoid self-plagiarism so your work stays original and ethical. What is self-plagiarism? Self-plagiarism, also called auto-plagiarism or duplicate plagiarism, happens when a writer uses parts of their old work without saying where it came from. This isn't just about copying w ...

How to Write a Dialogue in an Essay: Useful Tips

A correct usage of dialogues in essays may seem quite difficult at first sight. Still there are special issues, for instance, narrative or descriptive papers, where this literary technique will be a good helper in depicting anyone's character. How to add dialogues to the work? How to format them correctly? Let's discuss all relevant matters to master putting conversation episodes into academic essays. Essay Dialogue: Definition & Purpose A dialogue is a literary technique for presenting a con ...

What is Citation and Why Should You Cite the Sources When Writing Content

When we write something for school, work, or just for fun, we often use ideas and facts from other places. This makes us ask: what is a citation in writing? Let's find out what this means and why it's really important when we write. What is Citation? Citation in research refers to the practice of telling your readers where you got your information, ideas, or exact words from. It's like showing them the path to the original information you used in your writing. When you cite something, you us ...

Plagiarism: 7 Types in Detail

Your professor says that it is necessary to avoid plagiarism when writing a research paper, essay, or any project based on the works of other people, so to say, any reference source. But what does plagiarism mean? What types of it exist? And how to formulate the material to get rid of potential bad consequences while rendering original texts? Today we try to answer these very questions. Plagiarism: Aspect in Brief Plagiarism is considered to be a serious breach, able to spoil your successful ...

How To Write Essays Faster Using AI?

Creating various topical texts is an obligatory assignment during studies. For a majority of students, it seems like a real headache. It is quite difficult to write a smooth and complex work, meeting all the professors' requirements. However, thanks to modern technologies there appeared a good way of getting a decent project – using AI to write essays. We'd like to acquaint you with Aithor, an effective tool of this kind, able to perform fine and elaborated texts, and, of course, inspiration, i ...

Can Plagiarism Be Detected on PDF?

Plagiarism has been a challenge for a long time in writing. It's easy to find information online, which might make some people use it without saying where it came from. But plagiarism isn't just taking someone else's words. Sometimes, we might do it by accident or even use our own old work without mentioning it. When people plagiarize, they can get into serious trouble. They might lose others' trust or even face legal problems. Luckily, we now have tools to detect plagiarism. But what about PDF ...

Practical Law

Security assignment of contractual rights

Practical law uk standard document 9-508-0695 (approx. 96 pages), get full access to this document with a free trial.

Try free and see for yourself how Practical Law resources can improve productivity, efficiency and response times.

About Practical Law

This document is from Thomson Reuters Practical Law, the legal know-how that goes beyond primary law and traditional legal research to give lawyers a better starting point. We provide standard documents, checklists, legal updates, how-to guides, and more.

650+ full-time experienced lawyer editors globally create and maintain timely, reliable and accurate resources across all major practice areas.

83% of customers are highly satisfied with Practical Law and would recommend to a colleague.

81% of customers agree that Practical Law saves them time.

Security and Quasi Security
Trade Finance
Asset finance and trade finance
Corporate lending
Insurance in commercial transactions

COMMENTS

Client Briefing
What is an assignment? There are two types of assignment: legal and equitable. Legal assignments by way of security involve a transfer of legal ownership, with a proviso for re-assignment on satisfaction of the secured liabilities. A legal assignment is only possible in relation to assets which already exist (this excludes future assets).
Security in finance transactions
Assignment by way of security A borrower's rights against third parties, such as the right to receive payment for debts on its own books, can be assigned to a third party as a way of selling those rights - this is an absolute, or direct, assignment.
Assignments by way of security
Assignments by way of security can take different forms and it is important to understand how they are created and their effect. Security over choses in action such as debts and other contractual rights is often taken by way of an equitable or statutory assignment by way of security.
Security assignments
Lenders commonly take security over "choses in action" (such as debts or rights under contracts) by way of assignment. An assignment involves the transfer of either legal ownership (legal ...
What is an assignment by way of security?
Please explain the key differences between an outright assignment and an assignemnt by way of security?
FAQs on assignments in finance transactions
In our view, provided a security assignment and notice are drafted on this basis, the assignment would not prevent the assignor from enforcing any rights under the contract before the security holder has given notice to the counterparty that the security has become enforceable.
Assignment and novation
Security assignments Using assignment as a way of taking security requires special care, as follows: if the assignment is by way of charge, the assignor retains the right to sue for any loss it suffers caused by a breach of the other contract party; if there is an outright assignment coupled with an entitlement to a re-assignment back once the secured obligation has been performed, it is an ...
Introduction to Security
An assignment by way of security transfers certain rights from the assignor to the assignee as security for the discharge of the obligations of the assignor or a third party.
Assignment (by way of security) definition
What does Assignment (by way of security) mean? An assignment by way of security is a type of mortgage. It involves an assignment (ie transfer) of rights by the assignor to the assignee subject to an obligation to reassign those rights back to the assignor upon the discharge of the obligations which have been secured.
Assignment
In finance transactions, assignments may be used as a way to take security over, for example, choses in action. For more information on security assignments, see Practice note, Taking security over choses in action: Assignment.
Assignment by way of security
Background Assignment by way of security is a concept that comes up on many construction projects; typically as a condition of providing finance a funder will require an assignment by way of security of key construction documents, including building contracts and appointments, with the intention that if the borrower defaults on the loan, the assignment
PDF MBitesize
An assignment by way of security can be characterised as legal or equitable, but in most cases the assignment will relate to present and future receivables and an assignment over future receivables will result in the assignment being equitable.
Assignments: The Basic Law
The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.
PDF Article Title
2. ASSIGNMENT - LEGAL AND EQUITABLE - BY WAY OF CHARGE AND BY WAY OF SECURITY "Assignment" is a term used to identify the transfer of rights held by one party (Assignor) to another party (Assignee). Assignment is a transfer of rights only; no obligations are transferred by way of assignment.
PDF What Is a Ban on Assignment? the Business Contract Terms (Assignment of
A ban on assignment is a prohibition contained in a contract of sale or supply (Contract) between a customer and its debtor restricting one or both parties from assigning (whether by way of outright disposal or by way of security) certain or all of their rights (including any rights to receivables) under that Contract.
What is the difference between an assignment and an assignment by way
I am unclear as to the difference (s) between an assignment and assignment by way of security. Could you offer any guidance?
Assignment by way of security
An assignment by way of security is a preferred claim in the assignor's insolvency over the realised value of certain rights the assignor holds against its counterparty. It is not a direct transfer of those rights to an assignee: the counterparty is still obliged to the assignor, not the assignee, and any claim the assignee would have against ...
Assignment, novation or sub-participation of loans
Due Diligence and Beyond Legal due diligence on the loan documentation and security package is an integral part of the assessment undertaken by a lender of the risks of purchasing certain loan portfolios, regardless of whether the transfer is to be made by way of an assignment, novation or sub-participation.
Security Assignments
Legal assignments - key requirements Lenders commonly take security over "choses in action" (such as debts or rights under contracts) by way of assignment. An assignment involves the transfer of either legal ownership (legal assignment) or equitable ownership (equitable assignment).
Exploring the Legal Aspects of Equitable Assignments in Finance
Legal Framework of Equitable Assignments in Finance Financiers and lessors often take an assignment over debts or certain rights under contracts as part of their security package. Depending on how this is done, an assignment can either be characterised as a legal or equitable assignment under English law.
The Government restricts bans on assignment
Sometimes the transfer is outright (for instance by way of sale); and sometimes it is by way of security (for instance to secure a loan). The transfer may be effected by a statutory assignment, an equitable assignment, a charge or a trust.
Priorities: Equitable versus Legal Assignments of Book Debts
assignment was by way of security thereby leaving the assignor equity of redemption. Where the legal assignment is absolute (as merely a security) in reduction or discharge of a pre-existing or ness, no question of legal or equitable assignments can arise.
College Assignment Heading: A Simple Guide for Formatting
Crafting an effective college assignment heading is key to making a strong first impression on professors. The title serves as the face of your paper and reflects your focus on precision and adherence to academic standards. ... However, thanks to modern technologies there appeared a good way of getting a decent project - using AI to write ...
Security assignment of contractual rights
A standard form security assignment of contractual rights, created by a company incorporated in England and Wales in favour of a single corporate lender. This standard document creates a mortgage by way of assignment over the benefit of specified contracts entered into by the company and over the benefit of specified insurance policies taken ...

Register now for your free, tailored, daily legal newsfeed service.

Security assignments - not always what they say they are?

Filed under

Popular articles from this firm

Related practical resources PRO

Related research hubs

What sectors are you interested in?

Sign-up and we’ll remember your preferences

Want to speak to an advisor from your closest office?

Assignment and novation

Assignment in construction contracts

Contractual assignment provisions

Legal and equitable assignment

Security assignments

Restrictions on assignment

Latest News

You might also like

Surge in requests for workplace financial support

CSDDD clears late hurdle but with watered down terms

Broad scope for building liability orders highlighted by ruling

Sectors and what we do

Your privacy matters to us

Related Content

Assignment (by way of security) definition

Taking security—floating charge—checklist

View the related practice notes about Assignment (by way of security)

Zambia—cross border banking and finance guide

View the related precedents about Assignment (by way of security)

Ireland—Debenture: single company chargor—bilateral—all monies

View the related q&as about Assignment (by way of security)

Subject to post-Brexit potential changes in enforcing foreign judgments, is it possible to state with certainty that: A) an EU judgment will be enforced against an English company in English courts B) an EU debenture affecting an English company would be enforceable in English courts.

View the related News about Assignment (by way of security)

Corporate weekly highlights—2 August 2018

Access this content for free with a 7 day trial of LexisNexis and benefit from:

Popular Links

HELP & SUPPORT

LEGAL SOLUTIONS

Bulletins | January 30, 2018

Construction

Did Mailbox have a right to bring an adjudication?

Practical Tips

Assignments: The Basic Law

Assignment by way of security

Do I need an assignment by way of security if I have a charge ?

Lex situs for a chose in action like an assignment by way of security

Navigation menu

Assignment, novation or sub-participation of loans

Transferability of Loans

Methods of Transfer

Offshore Security Arrangements

Due Diligence and Beyond

Security Assignments – Not Always What They Say They Are?

Is an "absolute" security assignment legal or equitable?

Legal assignments by way of security

Legal or equitable – does it matter?

Could a security assignment be "floating" security?

Finance and Banking

Legal and equitable assignments

Legal Framework of Equitable Assignments in Finance

Go deeper with GlobalData

Alternative Payment Solution: iDEAL

How well do you really know your competitors?

Not ready to buy yet? Download a free sample

Related Company Profiles

Top M&A legal advisers in financial services in 2023

Sign up to the newsletter: In Brief

Thank you for subscribing

The Government restricts bans on assignment

Legislation now in force preventing parties from prohibiting the assignment of receivables under certain contracts.

What types of contracts do the Regulations apply to?

What is the effect of the Regulations?

Recent publications

Keeping your dawn raid guidance current

EU Commission expands foreign subsidies guidance

College Assignment Heading: A Simple Guide for Formatting

Basic Rules for an Assignment Header

How to Head an Assignment?

Formatting Rules for a Heading

Why Is a Good College Assignment Heading Important?

Tips for Refining Your College Paper Heading