Assignment CASES
In English law, assignment refers to transferring rights or benefits under a contract from one party (the assignor) to another (the assignee).
Definition and Principles
Assignment allows contractual rights, such as payment or benefits, to be transferred without altering original contractual obligations. Generally, obligations (duties) themselves cannot be assigned without the other party’s consent.
Prohibition on Assignment
Contracts may expressly prohibit or restrict assignment. A valid prohibition on assignment clause prevents parties from assigning rights to third parties, maintaining contractual control and certainty.
Common Examples
- Assigning debts to a debt-collection agency.
- Transferring rights to receive payment under commercial agreements.
- Clauses prohibiting assignment in commercial leases, insurance contracts, or personal services contracts.
Legal Implications
- An assignment generally requires notice to the debtor to become effective.
- Breach of a prohibition on assignment clause may invalidate the transfer or give rise to claims for damages.
Practical Importance
Understanding assignment ensures clarity on rights transfers, helps manage contractual risks, and highlights the significance of explicitly addressing assignment within contracts.
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A building contract prohibited assigning rights without consent. The property was sold to a third party. The House of Lords held the prohibition was valid, but allowed the original owner to sue the builder for defects on behalf of the new owner, creating an exception to prevent a legal 'black hole'. Facts This case involved two conjoined appeals concerning building contracts and the assignment of rights. Both contracts contained a clause prohibiting the employer from assigning the benefit of the contract without the contractor’s written consent. Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd Stock Conversions plc contracted with
A council arranged for a finance company to commission a building on its land. When defects arose, the builder argued the council couldn't sue for substantial damages. The court permitted the claim, extending an exception to privity of contract for a known third party. Facts Darlington Borough Council (‘the Council’) wished to construct a recreational centre on its own land. To navigate public sector borrowing controls, it entered into a complex arrangement. A finance company, Morgan Grenfell (Local Authority Finance) Limited (‘MG’), contracted with Wiltshier Northern Ltd (‘WNL’) to carry out the construction work. The Council was not a party
