what does equitable assignment mean

Equitable Assignment: Everything You Need to Know

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness. 3 min read updated on February 01, 2023

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness.

Equitable Assignment

An equitable assignment may not appear to be self-evident by the law's standard, but it presents the assignee with a title that is protected and recognized in equity. It's based on the essence of a declaration of trust; specifically, essential fairness and natural justice. As long as there is valuable consideration involved, it does not matter if a formal agreement is signed. There needs to be some sort of intent displayed from one party to assign and the other party to receive.

The evaluation of a righteous equitable assignment is completed by determining if a debtor would rationally pay the debt to another party alleging to be the assignee. Equitable assignments can be created by:

The assignor informing the assignee that they transferred a right to them
The assignor instructing the other party to release their obligation from the assignee and place it instead on the assignor

The only part of an agreement that can be assigned is the benefit. Generally speaking, there is no prerequisite for the written notice to be received or given. The significant characteristic that separates an equitable assignment from a legal assignment is that most of the time, an equitable assignee may not take action against a third party. Instead, it must rely on the guidelines governing equitable assignments. In other words, the equitable assignee must team up with the assignor to take action.

The Doctrine of Equitable Assignment in Wisconsin

In Dow Family LLC v. PHH Mortgage Corp ., the Wisconsin Supreme Court issued in favor of the doctrine of equitable assignment. The case was similar to many other foreclosure cases, except this one came with a twist. Essentially, Dow Family LLC purchased a property and the property owner insisted the mortgage on the property had been paid off. However, in actuality, it wasn't.

Prior to the sale, the mortgage on the property was with PHH Mortgage Corp. When PHH went to foreclose on the mortgage, Dow Family LLC contested it. There was one specific rebuttal that caught the attention of the Wisconsin Supreme Court. The official mortgage on record was with MERS, an appointee for the original lender, U.S. Bank.

Dow argued that PHH couldn't foreclose on the property because the true owner was MERS. Essentially, Dow was stating that the mortgage was never assigned to PHH. Based on this argument, PHH utilized the doctrine of equitable assignment.

Based on a case from 1859, Croft v. Bunster, the court determined that the security for a note is equitably assigned when the note is assigned without a need for an independent, written assignment. Additionally, Dow contended that the statute of frauds prohibits the utilization of the doctrine, mainly because it claimed every assignment on a property must be formally recorded.

During the case, Dow argued that the MERS system, which stored the data regarding the mortgage, was fundamentally flawed. According to the court, the statute of frauds was satisfied because the equitable assignment was in accordance with the operation of law. Most importantly, the court avoided all consideration regarding the MERS system, concluding it was not significant in their decision.

The outcome was a major win for lenders, as they were relying on the doctrine specifically for these types of circumstances.

Most experts agree that this outcome makes sense in the current mortgage-lending environment. This is due to the fact that it is still quite common for mortgages to be bundled up into mortgage-backed securities and sold on the secondary market.

Many economists claim that by not requiring mortgages to be recorded each time a transfer is completed, the loans are more easily marketed to investors. Additionally, debtors know who their current mortgage company is because the new lender must always notify the current borrower in order to receive payment. It was determined that recording and documenting the mortgage merely provides a signal to the rest of the world that the property owner secures a debt.

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An equitable lien is a legal remedy designed to prevent unjust enrichment. The court places a lien on the property belonging to the wrongdoer or the one who is unjustly enriched in attempt to achieve justice. The remedy is based in equity, and a plaintiff may seek it in a regular trial court or in a court of equity if one is available in the applicable jurisdiction. A plaintiff cannot file this type of lien using an administrative process. The plaintiff must win a court order allowing the lien in the property of the defendant , and the plaintiff will gain a security interest if the court rules in favor of the plaintiff.

To persuade a judge in a court of law to place an equitable lien on the defendant’s property, the plaintiff often has to prove that there was wrongdoing that resulted in harm. For example, if the defendant embezzles money from the plaintiff to buy property, then the plaintiff can seek an equitable lien in that property. The plaintiff also may have the choice of an alternative remedy to a lien called the constructive trust. When a court imposes a constructive trust, it gives complete title of the property to a plaintiff because it was obtained by fraud or in bad faith. It’s often a better remedy for the plaintiff, especially if the property will increase in value.

Buyers of real estate with an equitable lien are subject to it if they were given notice or had prior knowledge of it. If the recipient of real estate that has an equitable lien gives no compensation or value for the property, then the buyer is also subject to the lien. A bona fide purchaser is often not subject to the lien under any circumstances. To qualify as a bona fide purchaser, the buyer has to show that he or she purchased the property for value and was unaware of the facts related to the lien and had no reason to be aware of them. Plaintiffs who obtain an equitable lien should put the public on notice by recording it with the local agency in charge of keeping public records.

There is a way to remove an equitable lien, but it’s up to the court that imposed the lien in the first place. The lien does not grant rights to possession of the property, but it may be used as a means to collect payment. The court may permit the defendant to pay the plaintiff money to undo the harm caused and remedy the unjust enrichment. Once paid, the court may release the lien.

What is a Preliminary Lien Notice?

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Practical Law

Equitable assignment

Practical law uk glossary 2-107-6540 (approx. 3 pages).

The assignor can inform the assignee that he transfers a right or rights to him.
The assignor can instruct the other party or parties to the agreement to discharge their obligation to the assignee instead of the assignor.
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equitable assignment

A transfer of property or rights, particularly those in which the transferor has a future interest, that may not technically be legal, but would be considered fair and just by a court focusing on justice and fairness
Despite the lack of a written contract, the judge recognized the equitable assignment of the store's future profits to the plaintiff.
The attorney argued that even though there was no formal agreement, the bank's actions reflected an equitable assignment of the debts.
While there was no formal deed of transfer, the court acknowledged the equitable assignment of the property based on the circumstances.
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Transferring a loan by assignment

Published by a lexisnexis banking & finance expert.

This Practice Note explains one of the key ways a lender can transfer a loan under English law to another lender by assignment.

The other key ways are:

novation—see Practice Note: Transferring a loan by novation, and

sub-participation or risk–participation—see Practice Note: Selling a loan by sub-participation

A loan (which is a debt) is a chose in action . A chose in action is something which is recoverable by legal action (as opposed to something which is physically possessed). As a basic principle, choses in action cannot be assigned at common law.

Assignments of choses in action are therefore either:

statutory—often referred to as 'legal' assignments because they have an equivalent effect to legal assignments, or

Under English law, an assignment is a transfer of rights; it does not transfer obligations (in contrast to a novation—see Practice Note: Transferring a loan by novation).

This Practice Note discusses:

requirements for a legal assignment

how legal assignments differ from equitable assignments

the advantages and disadvantages of assignments as a method of transfer, and

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Key definition:

Equitable assignment definition, what does equitable assignment mean.

Assignments can occur in equity when any of the requirements of legal assignment are not satisfied.

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The Law Dictionary

Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

EQUITABLE ASSIGNMENT Definition & Legal Meaning

Definition & citations:.

A result that falls short of meeting the requirements of a legal assignment, yet, in the interest of fairness and justice, will be enforced by the courts, and documented as valid.

This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

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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.

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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.

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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.

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The Assignment of Commercial Contracts in Legal Practice

Contracts are a prime example of intangible property. Parties to commercial contracts, like other property owners, frequently want to transfer their property to a third party. The transfer of a contract refers to the assignment of some or all of a party’s rights or the delegation of some or all of a party’s performance, or both, to a non-party to the agreement.

Some common instances in which a contracting party in a commercial context may desire to assign contractual rights, performance responsibilities, or both are as follows:

In an asset sale, a corporation sells parts or all of its company.
A contractor who subcontracts its work under certain projects.
A business conglomerate that is going through an internal corporate reorganization.
The borrower who offers its lender a security interest in its assets.
A manufacturer who sells its receivables to a third party.

In any of these cases, the non-transferring party may object to assignment or delegation for a variety of grounds, including:

The desire to choose the party with whom it does business.
Concern that a different obligor or obligee may jeopardize the non-transferring party’s capacity to benefit from the contractual deal

To decide whether the transferring party (also known as the transferor) can execute the proposed transfer without gaining the non-transferring party’s approval, the transferring party must turn to relevant legislation and the plain text of the contract. If consent is necessary and not obtained, the transferring party faces the following risks:

Violation of the contract.
Making an ineffective and invalid transfer.

The Definitions of Assignment and Delegation

Each party to a contract is an:

Obligee in terms of its contractual rights; and
Obligor in terms of its contractual performance responsibilities.

Contract “assignability” is a term frequently used by contracting parties and practitioners. While they may expressly address the assignment of a party’s rights under the contract in some contexts, they frequently use the term “assignment” to refer to both:

The delegation of duty to perform.
The assignment of rights to obtain performance.

However, assignment and delegation are two distinct legal concepts that must be treated individually due to the fact that they might have different outcomes.

What is an Assignment?

Assignment is the transfer of some or all of an obligee’s (assignor’s) rights to receive performance under a contract, generally but not always to a non-party (assignee). A contract benefit is a right (a chose in action) that, in theory, may be delegated by the benefiting party to a non-party. For clarity purposes, this informative piece will assume that the assignee is a non-party, although the rights and responsibilities of the parties addressed apply equally to an assignee who is also a party to the agreement. When these rights are assigned, the assignor no longer has any claim to the advantages of the given rights, which are completely passed to the assignee.

Technically, a contract’s burden cannot be assigned under the law (see National Trust Co. v. Mead [i] and Irving Oil Ltd. v. Canada [ii] ). Transferring performance responsibilities under a contract requires the approval of all parties, making such a transfer a novation.

In practice, parties frequently refer to “assigning a contract” or “allowing the assignment of a contract,” which is actually an inaccurate representation of their intentions. For example, the parties may plan for some or all of the following:

The contract’s rights or benefits may be assigned.
The contract’s burdens or performance duties may be transferred.
Rights and burdens may be transferred.

The Effects of Assignment

The assignor is no longer entitled to any benefits from the assigned rights, which have all been passed to the assignee; nonetheless, even if the assignor is stripped of its contractual rights, assignment does not decrease or remove the assignor’s duties to the non-assigning party. As previously stated, a contract’s burden may only be assigned to a third party with the approval of all parties. As a result, the assignor is still obligated to fulfill its contractual commitments. The non-assigning party retains the following:

Its entitlement to get performance from the assignor; and
Its remedies against the assignor in the event of non-performance.

The ordinary rule is that a party can only assign its benefits without the consent of the other party to the contract and will remain liable to the other party for its performance obligations (see National Trust Co. v. Mead [iii] and Rodaro v. Royal Bank [iv] ). If the assignor intends to transfer its obligations and both the non-transferring party and the potential assignee agree, the parties should enter into a novation agreement, which results in a new contract between the assignee and the old contract’s remaining (non-transferring) party. In practice, the assignee often undertakes the contract’s performance responsibilities as of the date of assignment, and the assignor gets an indemnity from the assignee in the event of a breach or failure to perform.

A clear, present, purpose to transfer the assigned rights without needing any additional action by the assignee is required for an assignment to be effective, which means that a promise to assign in the future is ineffective as an actual transfer. Otherwise, no special terminology is necessary to draft an effective assignment.

What is Delegation?

Delegation is the transfer of some or all of an obligor’s (delegating party’s) performance responsibilities (or conditions demanding performance) under a contract to a non-party (delegatee). To be effective, a delegation requires the delegatee to agree to take on the delegated performance; however, unless the non-delegating party has consented to a novation, the delegating party remains accountable for the delegated performance, whether or not it has also transferred its contractual rights.

This is distinct from an assignment of rights, in which the assignor relinquishes its contractual claims upon assignment. As a result, even if the delegating party can effectively delegate its actual performance to the delegatee (such that the delegatee’s actual performance discharges the delegating party’s duty), the delegating party cannot be relieved of its obligation to perform and liability for non-performance unless the non-delegating party agrees to a novation.

There is no precise wording necessary to create an effective delegation, just as there is not for the assignment of rights. When performance is effectively delegated, the delegatee assumes liability for the delegating party’s performance obligations (under an assumption agreement), even if the delegating party retains liability to the non-delegating party for the delegatee’s failure to adequately perform the delegated obligations in the absence of a novation. Under an assumed agreement, the delegating party may have recourse against the delegatee, which is frequently addressed through a contractual indemnity right.

If the delegating party wishes to entirely exclude itself from liability for non-performance, it must get the non-delegating party’s approval to the contract (novation). In the majority of novations, the delegating party, the delegatee, and the non-delegating party all agree on the following:

The delegatee replaces the delegating party as a party to the contract.
The delegating party is no longer liable for contract performance.
The delegatee is directly and solely liable for the delegating party’s contract fulfillment.

Types of Assignment – Legal (Statutory) Assignment vs. Equitable Assignment

Legal (Statutory) Assignment: An assignment that satisfies the provisions of the appropriate province or territory laws (for example, the Conveyancing and Law of Property Act [v] )
Equitable Assignment: An equitable assignment may be enforced even if it does not fulfill the statutory requirements for a legal assignment.

Requirements for a Legal (Statutory) Assignment

All of Canada’s common law provinces have enacted legislation allowing the transfer of contract rights. Notably, the legislation for Ontario is the Conveyancing and Law of Property Act .

These statutory assignments are enforceable if the parties comply with the following procedures:

The assignment is absolute.
The assignment is in writing, signed by the assignor
the non-assigning obligor is given express written notice.

A statutory assignment does not need consideration, and no precise words or form are necessary. They can be made as gifts and be valid.

Requirements for an Equitable Assignment

An assignment may be enforceable as an equitable assignment even if it does not fulfill the formality criteria of a statutory assignment. An equitable assignment does not necessitate the use of any specific terms or form. However, in order to comply with any provincial statutes of frauds regulations, the assignment must be in writing. The phrasing must clearly indicate that the assignee is to benefit from the rights being assigned. In contrast to a statutory assignment, consideration is required until there is a full transfer, such as a gift. It is not necessary to provide the non-assigning obligor with express written notification (except in the case of a transfer of land). However, notification is often given largely to assure that:

The obligor ceases to pay the assignor.
The assignee has priority over subsequent encumbrances.

Contractual Anti-Assignment & Anti-Delegation Clauses

Rather than relying on relatively uncertain legal rules, most commercial contract parties handle transferability issues in the written agreement. As a result, most commercial contracts include a negative covenant that restricts one or both parties’ rights to assign.

These clauses frequently include specific exceptions that allow one or more of the parties to assign and delegate rights and duties, often to designated non-parties such as affiliates and successors-in-interest to the transferring party’s business.

Courts frequently uphold provisions that prevent assignment because they favor the rights of parties to freely contract. However, subject to specific limitations, there is a broad assumption that contractual rights are assignable. As a result, the case law on anti-assignment provisions is a little erratic. Some courts have upheld anti-assignment clauses and declared the agreement unenforceable. Others have argued that an anti-assignment provision cannot preclude assignment.

Overall, contractual anti-assignment and anti-delegation provisions are commonly included in many types of business contracts. If not, transferability is determined by the contract’s subject matter and the nature of the rights and obligations to be transferred. It is important to stay knowledgeable the existence of such contractual terms when dealing with various commercial contracts…such as contracts for the sale of goods, personal service contracts, commercial real estate leases and various other types of contracts.

If you have any questions about your business’s contractual assignment or delegation needs, contact Cactus Law today to speak with a lawyer specializing in commercial law.

Disclaimer:

The information presented above is solely for general educational and informational purposes. It is not intended to be, and should not be taken as, legal advice. The information given above may not be applicable in all cases and may not even reflect the most recent authority after the date of its publication. As a result, please refer to all updated legislation, statutes, and amendments. Nothing in this article should be relied on or acted upon without the benefit of legal advice based on the specific facts and circumstances described, and nothing in this article should be interpreted otherwise.

About the Author:

Kanwar Gujral is entering his third year at Osgoode Hall Law School in Toronto, Ontario. He has a dedicated interest in real estate, business, and corporate law.

[i] National Trust Co. v. Mead , 1990 CarswellSask 165 (S.C.C.).

[ii] Irving Oil Ltd. v. Canada , 1984 CarswellNat 137 (Fed. C.A.).

[iii] Supra note 1.

[iv] Rodaro v. Royal Bank , 2002 CarswellOnt 1047 (Ont. C.A.).

[v] Conveyancing and Law of Property Act , R.S.O. 1990, c. C.34.

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What are equitable assessment practices?

Inclusive assessment is about more than evaluating students. It is the on-going activities that allow students and instructors to understand student progress on meeting the course learning objectives.

General Principles

Student learning is prompted by early, low-stakes, frequent assessment and feedback for learning.
Students will rise to high expectations if they have appropriate support.
Assessments should utilize multiple and varied methods of student performance.
Student learning is enhanced by exercises or assignments that promote self-assessment and self-awareness. An example of this may be the use of exam wrappers.
“Grading on a curve does not allow all students to see how close they are coming to high standards of performance. If all students reach the standard, it is okay for all to reach the highest grade” (Ginsberg & Wlodkowski, Diversity & Motivation, 2009).
Assessment occurs before, during, and after learning.
Assessments need to be transparent in their design . This includes clearly articulating step-by-step instructions as well as the criteria for success.

Read through the Inclusive Assessment Chart (PDF) . Included in the second column are some of the things that most of us do. As you read through, check off in front of it the ones you already do. In the fourth column are ideas for how you might enhance what you already do by using more inclusive, student-centered language, and some new ideas that you might like to try. As you read through this list, check off a few you might like to adopt or adapt.

Grading, Equity and Ungrading

There has been increased attention and scrutiny over grading practices and equity. One of the reasons for this is that evidence has pointed to the ways grading negatively impacts learning (Kohn, 2011). Prominent grading approaches have often privileged individuals with the greatest resources, preparation, and desired behaviors (Blum, 2020). As a result many faculty have considered the practice of ungrading. Ungrading is not as simple as just removing grades. The word “ungrading” (an active present participle) suggests that we need to do intentional, critical work to dismantle traditional and standardized approaches to assessment ( Stommel, 2020 ). If you are interesting in learning more about ungrading and how to get started, below are a few resources:

Blum, Susan (2020). Ungrading: Why rating students undermines learning (and what to do instead)
Davidson, Cathy (2015). “Contract Grading and Peer Review”
Schinske, Jeffrey & Tanner, Kimberly (2014). “Teaching More by Grading Less”
Sorens, Clarissa (2020). “Ungrading: What it is and Why Should We Use It?”
Stommel, Jesse (2017). “Why I Don’t Grade”
Stomel, Jesse (2020). “Ungrading: An FAQ”

Equitable assignment

Practical law uk glossary 2-107-6540 (approx. 3 pages).

The assignor can inform the assignee that he transfers a right or rights to him.
The assignor can instruct the other party or parties to the agreement to discharge their obligation to the assignee instead of the assignor.
General Contract and Boilerplate

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.

Construction notes

Legal terms explained: assignment.

This post is part of the following categories:

Construction Law (Journal) , Legal Terms Explained

What is assignment?

An assignment is the transfer of an interest from one party (“ assignor ”) to another (“ assignee ”). Assignment allows the assignor to transfer the benefit of a contract to the assignee. For example, the tenant of recently built office premises may transfer the benefit of a collateral warranty originally granted in its favour to a subsequent tenant.

Without express words, assignment usually involves an assignment of accrued and future rights. Clear words are required to assign only future rights under a contract ( Energy Works (Hull) Ltd v MW High Tech Projects UK and others [2020] EWHC 2537 (TCC)).

Assignment in a construction context typically refers to a legal or equitable assignment (although assignment can also occur by other means, e.g. operation of law). A key difference between legal and equitable assignments is that, in the case of a legal assignment, the assignee may enforce any assigned rights in its own name. In contrast, following an equitable assignment, the assignee would need to join the assignor in any action brought to enforce its rights.

To take effect as a legal assignment under English law, an assignment must comply with section 136(1) of the Law of Property Act 1925 (“ LPA 1925 “). This requires the assignment to be: (i) in writing; (ii) absolute; and (iii) expressly notified in writing to the other party to the contract (“ debtor “). In practice, parties tend to effect a legal assignment by way of an assignment agreement or deed of assignment to ensure that these requirements are satisfied.

However, if the parties fail to meet any of the requirements set out in LPA 1925 the assignment will usually have equitable effect. Equitable assignments may arise orally or in writing, and whilst recommended, there is no need to notify the debtor, provided a clear intention to assign can be established. Neither legal nor equitable assignments generally require the debtor’s consent.

Assignment v novation

Although both terms are sometimes used interchangeably, assignment should be distinguished from novation. The most notable difference is that assignment only transfers the benefit of a contract (e.g. a warranty that works have been carried out to the required standard), whereas a novation transfers both the benefit and the burden (e.g. an obligation to pay for a service). As novation also requires the consent of all parties, it will typically be effected by a tripartite agreement between the novating party, the party to whom the contract is to be novated, and the counterparty to the relevant contract.

Some issues concerning assignment

Restrictions on assignment – Unless there is an express prohibition in the contract, the parties will usually be free to assign the benefit of a contract. However, many standard form building contracts, including the JCT Design and Build Contract, prohibit assignment, or allow it only subject to certain conditions. In this regard, a developer may seek to amend the contract to reduce any restrictions on their ability to assign. In contrast, a contractor may seek to limit any rights to assign, for example by specifying the number of permitted assignments. This is often linked to the contractor’s professional indemnity insurance terms which may provide for restricted cover in respect of successive assignments.
Ineffective assignment where prohibited – If a party purports to assign a right in contravention of an assignment clause, the assignment will only be effective as between the assignee and the assignor, and will not be enforceable against the debtor.
Means of assignment – A clause in a contract permitting assignment is not sufficient to effect an assignment. There must be a separate document or oral agreement to show the assignor’s intention to assign ( Allied Carpets Group Plc v Macfarlane (t/a Whicheloe Macfarlane Partnership) [2002] EWHC 1155 (TCC)).

* This is an updated version of an article originally published as part of the ‘Legal Terms Explained’ series of Construction Law .

For further information, please contact James Doe, David Nitek, Noe Minamikata or your usual Herbert Smith Freehills contact.

What Is Equitable Title?

(This may not be the same place you live)

What Is Equitable Title?

Equitable title, often referred to as equitable estate, represents an equitable interest in property or right in a property, which is distinct from legal title. While legal title signifies actual ownership and the right to sell or transfer the property, equitable title implies a right to obtain full ownership in the future or to benefit from the property.

It embodies the idea that while someone else might have legal rights (like the name on a deed), the person with equitable title has the right to use, possess, or benefit from the property in some meaningful way.

What Are Some Common Situations Where Legal and Equitable Title Interact?

What if i have a dispute over title, do i need a lawyer for help with equitable title.

The distinction between equitable title vs legal title is a cornerstone of property law, especially when it comes to transactions and the management of assets. At its core, legal title represents the formal ownership and the right to transfer or sell property. On the other hand, equitable title speaks to the right to use, benefit from, or eventually obtain full ownership of the property. Let’s dive deeper into some common situations where these concepts come into play.

Land Contracts: The Balance of Ownership and Possession

In a land contract, both the buyer and seller enter into an agreement that uniquely divides the aspects of ownership. While the buyer gets possession and the benefits of the property, this doesn’t immediately translate into outright ownership. With equitable title, the buyer is granted rights to use, possess, and benefit from the property. However, the seller retains the legal title, maintaining the authority to transfer or sell the property.

This arrangement continues until the buyer fulfills specific conditions set out in the contract, usually culminating in the full payment of the purchase price. Once all conditions are met, the legal title transfers to the buyer, thereby consolidating both legal and equitable titles in their name.

Trusts are instruments of asset protection and management where properties are held by a trustee for the benefit of another party, the beneficiary. Here, the trustee is the holder of the legal title, meaning they have the duty and authority to manage, maintain, and make decisions concerning the property. This management must always align with the trust’s terms and the best interests of the beneficiary.

Conversely, the beneficiary possesses the equitable title. While they might not have direct control over the property, they are the ones who benefit from it, either through its use, its income, or its eventual transfer upon certain conditions being met.

When a person borrows money to buy a home, they typically enter into a mortgage agreement with a lender . This arrangement sees the homeowner holding the equitable title, giving them the right to use, enjoy, and even make modifications to the property. They effectively live in and use the house as their own.

However, until the mortgage is fully paid off, the legal title is held by the lender or bank. This serves as their security; should the borrower default on their loan, the bank has the right to seize and sell the property to recover their funds. Only once the loan has been satisfied does the homeowner receive the legal title, unifying their complete ownership over the property.

Joint Tenancy and Tenancy in Common

When multiple individuals co-own a property, the distinctions between legal and equitable title can become even more intricate. Two common forms of co-ownership are joint tenancy and tenancy in common.

In a joint tenancy, each co-owner has an undivided, equal interest in the property. If one joint tenant dies, their interest automatically passes to the surviving joint tenants, a concept known as the right of survivorship. From a legal title perspective, all joint tenants collectively hold the title. Equitably, however, each tenant has a claim to the use and benefit of the entire property, even if they’re only one of several co-owners.

On the other hand, tenancy in common allows co-owners to hold different ownership percentages. Unlike joint tenancy, there’s no right of survivorship; when one tenant in common dies, their share doesn’t automatically go to the other co-owners but instead passes to their heirs or as directed by their will. The legal title, again, is held collectively by all the co-owners. Yet, each co-owner’s equitable title corresponds to their specific ownership percentage, determining their share of any rental income or sale proceeds.

Leasehold Estates

Another area where the interplay between legal and equitable title is evident is in the realm of leases. In a leasehold estate, a property owner (the lessor or landlord) grants possession and use of their property to another party (the lessee or tenant) for a specific period.

Here, the landlord retains the legal title to the property, signifying their overarching ownership. However, the tenant gains an equitable interest during the lease term. This means that while the landlord owns the property, the tenant has the right to use and enjoy it (within the lease’s terms) for the duration of the lease. Once the lease ends, the full rights of both legal and equitable title revert entirely to the landlord unless the lease is renewed or another arrangement is made.

An easement is a legal right to use a portion of someone else’s land for a specific purpose, like a driveway or a pathway. The person or entity that benefits from the easement does not own the land they’re using (they don’t have the legal title). However, they have an equitable interest in that they can use it in a particular way.

For instance, a homeowner might grant an easement across their property to a neighbor so the neighbor can access a public road. If so, the homeowner still holds the legal title to the entire property. However, the neighbor has an equitable title regarding their right to traverse that specific portion.

Title disputes can arise from various circumstances, such as unclear boundaries, fraudulent conveyances, errors in deeds, or inheritance issues. If you suspect a discrepancy or find yourself in a disagreement over title:

1. Gather Documentation

Before taking any action, ensure you have all the relevant paperwork in place. This includes:

Deeds : These are legal documents that signify ownership and can clearly determine who holds the legal title to a property.
Land Contracts: The property might have been obtained through a land contract. In that case, this document will outline the terms and conditions of the sale, including the rights and responsibilities of both the buyer and seller.
Previous Records: This can range from past sales documents, agreements, wills, or any paperwork that can shed light on the property’s ownership history.

Having a comprehensive collection of these documents not only strengthens your position but also helps clarify any ambiguities surrounding the title.

2. Title Search

Conducting a title search is akin to tracing the genealogy of a property. It provides a detailed account of the property’s history, highlighting:

Past owners of the property;
Any existing liens, encumbrances, or claims on the property;
Easements or other usage rights associated with the property.

By identifying potential issues or discrepancies, a title search can be instrumental in both fortifying your claim and preempting arguments from the opposing party.

3. Alternative Dispute Resolution (ADR)

Litigation can be lengthy, expensive, and emotionally taxing. Before resorting to the courts, consider the benefits of Alternative Dispute Resolution methods, such as:

Mediation : Mediation involves a neutral third party, the mediator, who facilitates a dialogue between the disputing parties. The mediator doesn’t impose a solution but helps both sides understand each other’s perspectives and work towards a mutually agreeable resolution.
Arbitration : More formal than mediation, arbitration involves an arbitrator (or panel of arbitrators) who listens to both parties and then makes a binding decision. It’s like a private court proceeding, often quicker and less formal than traditional litigation.

Both methods prioritize collaboration over confrontation and can be more cost-effective and time-saving than pursuing a legal battle in court.

If you are dealing with issues surrounding equitable title, it’s wise to consult with a property lawyer. They can guide you through the complexities of property law, help interpret contracts and deeds, and represent you in any disputes or litigation.

You may need assistance finding a reliable property lawyer. If so, LegalMatch can connect you with a qualified property lawyer in your area.

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Must-Know Information About Quitclaim Deeds
California Community Property with Right of Survivorship
What Is a Housing Attorney?
Restrictive Covenants on Real Property
Enforcement of a Security Interest
Disputes over Home Properties
Co-Ownership: Legal Issues with Jointly Owned Property
Home Ownership as Joint Tenants
Tenancy in Common California
Requesting Use of Abandoned Public Streets or Easement Vacation
Public Nuisance Abatement
Property Deed Lawyers
When Does Conveyance Occur?
Conveyance of Property
Intentional Interference with Property Rights
Real Estate Litigation Issues
What is a Real Estate Lawsuit?
Real Estate License Disputes
Real Estate Claim
Legal Definition of Personal Property
Legal Definition of Real Property
Deeds of Title
Deed Restriction Laws
Life Estate Deed Laws
Understanding Real Estate Deeds
Life Estate Law
Residential Real Estate Conflicts
Important Real Estate Terminology
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Assignments: why you need to serve a notice of assignment

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork - not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice of assignment.

What issues are there with serving notice of assignment?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment.

The case concerned the assignment of a trade mark licence to GNIC . The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist.

At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC , as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Best practice for serving notice of assignment

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

For further advice on serving notice of assignment please contact Kirsty Barnes or Catherine Phillips from our Banking & Finance team.

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Legal Dictionary

The Law Dictionary for Everyone

Equitable Estoppel

Equitable estoppel is a legal principle that stops someone from taking a legal action that conflicts with his previous claims or behaviors. Essentially, equitable estoppel is a method of preventing someone from going back on his word in a court of law. For example, equitable estoppel would be granted to a defendant if the plaintiff previously gave his permission for the defendant to do something, and then sued the defendant once he did. To explore this concept, consider the following equitable estoppel definition.

Definition of Equitable Estoppel

A legal principle that prevents someone from taking legal action that conflicts with his previous claims or behaviors.

Origin of Estoppel

1575-1585 Middle French estoupail

What is Estoppel

Estoppel is a term that is notoriously difficult to define in legal terminology. In its simplest form, “estoppel” translates to mean “stopped” in French, as in someone is being stopped from doing or saying something. Because the term is so vague, it has been attached to numerous areas of law. The late Lord Denning (1899-1999), an English judge who has been described as “the greatest judge of the century,” attempted to explain the difficulty of defining estoppel by saying that:

“[With estoppel], someone is stopped from saying something or other, or doing something or other, or contesting something or other.”

Types of Estoppel

The purpose of estoppel is to hopefully prevent the wasting of court resources by stopping people from abusing the legal system by filing frivolous lawsuits. However, estoppel can also be considered controversial. This is because some see it as a way of preventing people from exercising what would have been considered their legal rights if they were involved in different circumstances.

Anyone who wishes to assert an estoppel case must come to the court with “ clean hands .” This means that the person bringing the suit must not do so unethically or as an act of bad faith . This clean hands doctrine is typically stated as “those who seek equity must do equity.”

What follows are the three main types of estoppel that can be exercised in a court of law. Because estoppel is a broad term that can be defined in many ways, these are arguably the three most important types of estoppel to consider.

Equitable estoppel, simply put, is a way of stopping someone from going back on his word. It is a way of stopping someone from taking legal action that conflicts with his previous claims or behavior, or for testifying to something early on, then changing that testimony later.

Example of equitable estoppel:

Jessica takes her car to the mechanic to have some work done. During the process, the mechanic accidentally slips with one of his tools and puts a small dent in Jessica’s car. He brings Jessica’s attention to the dent and offers to fix it, but she says that it’s only cosmetic and not to worry about it.

Jessica cannot, then, file a lawsuit against the mechanic for damaging her car. If she were to do so, she would be estopped by the courts, since her claim would run counter to her earlier forgiveness of the damages that she had incurred because of the mechanic’s mistake.

Promissory Estoppel

Promissory estoppel deals with contract law . In a case concerning promissory estoppel, one person cannot promise the other party to a contract that part or all of the contract will not be enforced, only to later try to enforce that provision anyway. For instance, if an employer tells an employee that mandatory overtime will not be enforced, despite being part of the employee’s contract, the employer cannot then attempt to enforce it later. The employee is not then obligated to abide by that part of the contract, and promissory estoppel would be granted in his favor.

Collateral Estoppel

Collateral estoppel stops a person from bringing the same issue before the court once a court has ruled on it. For instance, collateral estoppel stops a party from bringing the same lawsuit against the same person, but in a different court, simply because he did not like the decision he was given in the first court. Although double jeopardy applies only to criminal trials, this is a similar concept – that once a matter has been settled by a court, it cannot be brought again.

It is important to note the distinctions between collateral estoppel and appeals. Collateral estoppel does not prevent someone from filing an appeal to have a different court reconsider the issues at hand. Instead, collateral estoppel stops someone from bringing a frivolous lawsuit by “trying to get in through the back door what he couldn’t get in through the front.” In other words, it prevents people from filing the same lawsuit in the hopes of obtaining a different result.

Doctrine of Equitable Estoppel

The doctrine of equitable estoppel prevents one person from taking advantage of another. This occurs when party A has influenced party B to act in a way that resulted in party B being injured, or incurring damages of some sort. The doctrine of equitable estoppel is founded on the principles found in fraud cases. Essentially, the doctrine of equitable estoppel prevents one party from taking a different position at trial than he took previously – especially if the other party would incur harm as a result of the change.

Legal Estoppel

There is also the concept of legal estoppel, which can be divided into two categories: estoppel by deed , and estoppel by record. Insofar as the doctrine of estoppel by deed, those who are parties to the deed for a property are prohibited from denying any of the material facts declared in the deed. Further, parties to a deed are prohibited from asserting a right or title that would be issued against the laws and rules associated with that transaction.

For example:

Betsy transfers the title of a plot of land to her daughter by deed. However, her daughter is unaware of the fact that Betsy does not actually own the land at the time of the transfer. Betsy acquires the title to the property after the transfer.

Technically, this means that Betsy’s daughter does not legally own the property because Betsy did not own the property when she transferred it to her. Betsy did not have the legal right to transfer the property to her daughter at the time of the transfer. However, under the doctrine of estoppel by deed, it is up to the court’s discretion to decide to “fix” this imperfection by finding the daughter to be the rightful owner of the property anyway.

Equitable Estoppel Example Involving Eyeglass Manufacturers

An example of equitable estoppel can be found in the case of Aspex Eyewear Inc. against Clariti Eyewear Inc. In March of 2007, Aspex Eyewear Inc. sued Clariti Eyewear Inc. alleging that Clariti violated Aspex’s patents by selling AirMag, a particular brand of eyeglass frames. Once Aspex became aware of this product, Aspex sent Clariti two letters (one for each patent) asking that they cease and desist selling the product immediately.

Clariti responded to the letters, noting that they had never intended to infringe upon Aspex’s patents. Clariti requested information from Aspex to review and responded back to Aspex that it did not believe Clariti’s products infringed upon Aspex’s patents.

After this incident, Clariti did not hear anything from Aspex for over three years. At this point, Aspex sent Clariti another letter claiming that the AirMag product infringed upon one of the patents referred to three years prior. Clariti refused to stop selling the AirMag brand, and so Aspex filed a civil lawsuit . The district court dismissed one of the infringement claims, but left the other one active – the ‘747 patent.

Clariti then moved to dismiss the remaining infringement suit, arguing that Aspex was barred by equitable estoppel, due to their remaining silent for three years on the subject. The district court granted Clariti’s motion for dismissal .

On appeal, the Court found that Aspex was misleading when convincing Clariti that Aspex did not intend to enforce the ‘747 patent against Clariti. The Court explained that the misleading conduct came in when Aspex was expected to follow up with statements or action, but failed to do so in a situation where they had an obligation to act or speak. In other words, Aspex should have followed up after receiving Clariti’s response letter. Further, the Court found that Clariti relied on Aspex’s misleading conduct to expand its business, doing so after not hearing anything else from Aspex after the initial incident.

This is where equitable estoppel came in. The evidence in the record suggested that, had Aspex filed suit against Clariti like they had originally threatened, then in all likelihood Clariti would have discontinued their AirMag line and went on to other business ventures. This was enough proof for the Court that Clariti relied on Aspex’s silence as permission to go forward, and that Aspex did not have a leg to stand on in that regard.

Expanding further on the equitable estoppel issue, the Court found that because Clariti relied on Aspex’s misleading conduct to build its business, Clariti’s business would suffer a significant economic downturn if it stopped production of the brand. Therefore, the Court ruled that the district court was correct in ruling that Clariti would suffer damages if Aspex were permitted to go forward with its charge of infringement.

The case was then escalated to the United States Court of Appeals for the Federal Circuit. The Court of Appeals affirmed the decisions of the lower courts. Clariti argued that the district court erred in not fully developing the case and finding all of the facts necessary to declare the case exceptional. Here, however, the Court noted that the district court did not hold a full trial on the issues at hand because the summary judgment involving equitable estoppel effectively ended the litigation .

Related Legal Terms and Issues

Appeal – An application that is made to a higher court requesting a reversal of a lower court’s decision.
Civil Lawsuit – A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person.
Contract – An agreement between two or more parties in which a promise is made to do or provide something in return for a valuable benefit.
Double Jeopardy – The Fifth Amendment protection from being tried for the same crime twice, and from being compelled to testify against oneself.

She left the CIA in frustration. Now her spy novel is racking up awards.

I.S. Berry scored rave reviews and awards for her literary debut, “The Peacock and the Sparrow,” a novel mined from her time at the CIA.

She felt each boom like an electric jolt as she was trying to sleep in her Alexandria, Va., apartment.

It was August 2006, and Ilana Berry was then a 30-year-old Central Intelligence Agency case officer. Outside, construction crews were beginning work on the Woodrow Wilson Bridge, knocking down the old expanse to make way for a new six-lane roadway.

But each rumble threw Berry off the steady anchors of time and place, hurling her back to her last year stationed in war-rocked Baghdad. There, she had spent sleepless nights alone in a trailer as insurgent mortars and rockets screamed into the Green Zone, the central area of the Iraqi capital where the American military, diplomatic and intelligence staffs were housed.

“I remember waking up and having the worst panic attack of my life,” she recalled. “I called my parents to say that we are all under attack.”

To cope, Berry began tracking when the crews would do demolitions and set an alarm for herself to stay awake. She began writing, caging the emotional fallout of her time in Iraq into the tidy frames of sentences. That writing would kick off a sequence of events that would pit her against the agency’s bureaucracy and end in her resignation.

But it would also start her second act as a celebrated, award-winning novelist — one that would be eventually be invited back to the CIA.

Berry applied to join the CIA while attending law school at the University of Virginia, believing it would combine her interests in international relations and intelligence work with her sense of patriotic mission.

Raised outside D.C., she was a 1994 graduate of Thomas Jefferson High School for Science and Technology. She spent time in the Balkans after graduating from Haverford College, an experience that led to a position as an intelligence analyst with the Defense Department. “I loved the work of intel, and I wanted to make it my career,” Berry said. “So the CIA is the place to go, right?”

After being accepted, she trained at Camp Peary near Williamsburg, Va., known as “The Farm.” Much of that training was about logistics — how to conduct surveillance, how to know if you are being surveilled. But the more in-depth psychological elements made Berry wonder if she was in the right place.

“Your whole training is basically how to find people’s vulnerabilities,” Berry said. “What are their motivations? Is it flattery or vanity or revenge, or do they hate their boss? That was never an easy fit for me.”

But Berry graduated with high marks and volunteered to be stationed in Iraq for a year-long assignment. She arrived in 2004 as doubts were beginning to stain America’s initial reasoning for toppling Saddam Hussein’s regime. Among the CIA team, there was a growing realization that there were no weapons of mass destruction in the country — the main justification for the U.S.-led coalition’s invasion.

Berry found that the CIA trailers didn’t have the armored protections or safety protocols in place like their military counterparts. But when she advised CIA headquarters about the danger, she was ignored, she said.

“We weren’t taking the precautions that we should have been,” Berry said. “And it was clear we knew we weren’t.”

One specific incident left Berry with doubts about the CIA’s mission. She got a tip from an Iraqi informant about a possible suspect involved in the 2003 truck bombing of the U.N. Baghdad headquarters that left 22 people dead, including the commissioner for human rights at the time. Berry’s tip led to the suspect being taken into custody, but he claimed he was not involved. Still, he was carted off to a detention facility. Berry later heard from other officers that they were unsure of his guilt, and she worries he may have been wrongfully pulled into the maze of America’s post-9/11 detention system.

In response to Berry’s allegations about her time in Iraq, a CIA agency spokesperson did not address specific complaints or allegations but said the agency “is absolutely committed to fostering a safe, respectful, and equitable workplace environment for all our employees, and we have taken significant steps to ensure that, including strengthening the Agency’s handling of issues when they arise.”

The living conditions. The murky mission. All that seemed to Berry to fuel rampant alcoholism at the CIA station. “Baghdad really screwed me up,” she said.

Her tour done but still living with the emotional aftershocks in Virginia, Berry kept writing. “My goal was never to publish my account of Baghdad,” she said. “It was to make sense of what happened.”

She had volunteered to go next to Afghanistan and was enrolled in Farsi-language classes. During that time, Berry volunteered to the agency that she had been writing about her experience.

According to agency regulation, all current and former CIA employees must submit any writing they plan on releasing to the CIA’s Publication Classification Review Board, which determines whether a potential book or screenplay or writing contains classified information. After the agency learned Berry was working on a memoir, she submitted the manuscript.

When her writing came back, it was covered in redactions that Berry felt made little sense. “They redacted my height and weight,” she said. “They redacted the color of the sky. These are clearly things that are not classified.”

Berry felt the pushback was all due to the unflattering light the account showed the agency. Her complaints in Iraq had already begun to hurt her prospects at the CIA. Her follow-up assignment in Afghanistan was pulled. She channeled her frustration into an appeal over her manuscript.

“I fought every single redaction, if for no other reason than to stick it to them that this was wrong,” she said.

Mark Zaid, a D.C. attorney who regularly represents CIA officers and helped Berry with her appeal, said he believes the board’s difficult responses were tied to the protective stance the agency assumed at the time. “There is a deep-seated paranoia and ignorance among security officers,” he said. “Their internal processes are geared for damage control, no matter whether there is damage or not.” Zaid later hired Berry into his law firm as an of counsel attorney.

In response to questions about Berry’s past conflicts with the review board, an agency spokesperson said the “CIA does not comment on details regarding specific prepublication reviews.” The spokesperson added that “the Board is open to authors’ requests to reconsider content they believe is unclassified.”

Eventually, the review board agreed with most of Berry’s appeal and removed most of the redactions from her manuscript.

By then, she had already resigned from agency, frustrated with the fight and her experiences in Iraq. She was married and a new mother. Though she had won the right to publish her account, she no longer wanted her own story — and the trauma and personal doubt she had put in writing — out there.

Write what you know

Despite her clash with agency, piling the mixed feelings about her time as a spy into a memoir reminded Berry how much she enjoyed writing. As she launched herself into a new career as an attorney and later followed her husband to Bahrain in 2012, Berry kept at it. Now it was fiction, but Berry found all her sentences echoed back to her time in Iraq.

The pages that would eventually become “The Peacock and the Sparrow,” a novel featuring a weary CIA officer caught in the turbines of Middle Eastern political change, include themes mined straight from Berry’s time at the agency. Its first lines plunge a reader into the morally ambiguous head space Berry learned in her training. “It was the ability to please that you learned as a spy: smoking a cigarette, offering compliments you didn’t mean, falling down drunk from having accepted too many vodkas,” Berry writes.

The novel’s CIA protagonist, Shane Collins, faces the same indifference from higher-ups that Berry said she saw in Iraq. She funneled the same problematic behavior she witnessed — the drinking, the war-zone infidelities — into her main character. The gnawing doubts about the guilt of the bombing suspect also popped up as a plot point.

Perhaps the most surprising element in her new work as a novelist was how easy it was to submit the manuscript to the review board. They demanded no significant redactions.

“Time had passed, and I had built up a good relationship with the board,” Berry said.

Berry’s debut novel, “The Peacock and the Sparrow,” was released by Atria Books in May 2023 under the pen name I.S. Berry. The book was feted by both the New Yorker and NPR on their annual lists of the best books of the year. This month, the novel also won the Mystery Writers of America’s Edgar Allan Poe Award for best first novel by an American novelist, a significant industry award whose past recipients include Viet Thanh Nguyen and Tana French.

Even with that acclaim, Berry was still surprised when the CIA invited her to speak with Invisible Ink, a group of agency employees who are also writers.

“I was not exactly a poster child for the place,” Berry said. “But they assured me they valued authenticity over filtered plaudits, which were words I never thought I’d hear.”

Last September, Berry was sitting in her car in the ocean of parking spaces sprawling outside CIA headquarters in Langley, Va. Even with her invitation, she felt “nervous as hell,” she said. “I did feel like it was a family reunion where I was estranged from my family.”

But Berry then met her agency contact, a member of Invisible Ink, who had asked her to come and speak. She was taken into a conference room where she spoke to about a dozen current agency staff members to discuss writing, publishing and working with the agency’s review board.

As she was leaving, Berry was asked to film a video about the career paths of officers after the agency. She agreed.

“This was such a formative part of my life,” she said. “They are people who have had that same singular experience as me.” Going back to the CIA, Berry said, “felt like I had rebuilt this broken bridge.”

In the meantime, she’s working away on a new novel. It’s another spy tale.

A previous version of this article incorrectly stated that Berry visited Invisible Ink last February. It was last September. The article has been corrected.

Should you give job applicants an assignment during the interview process? Be thoughtful about the ask

Employers have to ask themselves whether they are willing to turn off a strong candidate by asking them to do additional work.

Hiring is a time-consuming and expensive endeavor. Companies need candidates who offer the right skills and experience for a given role, and who align with their organization’s vision and mission.

To find the best fit, many companies still lean on a strategy that continues to generate debate : the assignment. Some candidates believe their experience and interviews should give prospective employers enough information to determine whether they will fit the role. Employers have to ask themselves whether they are willing to turn off a strong candidate by asking them to do additional work.

Is the assignment valuable enough to the evaluation process that they cannot move someone forward without it? Sometimes it is—sometimes they help an employer decide between two strong candidates. And if they are necessary, how can employers make assignments fair and equitable for the candidate or candidates?

When done right, assignments help assess practical skills and problem-solving abilities, giving a clearer picture of a candidate beyond what their resume or interview reveals. But employers should be thoughtful about the ask. While it may make sense for roles that require specific technical expertise or creative thinking, it isn’t appropriate for all roles—so assignments should always be given with a clear reason for why they are needed.

Plus, they don’t just benefit the employer. For job seekers, an assignment during the interview process might also help them stand out from the competition. It can also offer a window into what their day-to-day in the new role might entail. Remember that the candidate should be interviewing the company, too. Having a test run of the work they’d be asked to do is a great way to see whether they believe the role is a fit.

However, there is a rift in how people perceive the assignment as part of the interview process. Workers today span many generations, each with unique values and expectations. Whereas older workers often prioritize stability and loyalty, younger millennials and Gen Zers are more focused on flexibility and work well-being, Indeed data shows .

This mindset impacts the amount of time and energy a candidate is willing to devote to each application. After multiple rounds of interviews and prep, taking on an in-depth assignment may feel like a bridge too far—especially if the expectations for the assignment are not clearly communicated ahead of time.

Some candidates are wary of providing free labor to a company that may use their work and not hire them. Hiring managers should be clear about how the work will be used. They may also consider offering compensation if the assignment requires more than a couple hours of someone’s time, or if they plan to use the work without hiring the candidate.

The key for early career candidates in particular is to ensure their time and efforts are respected. This is a win-win for employers: By providing clarity and transparency, they not only elicit the additional information they want from candidates, but they demonstrate that the organization is transparent and fair.

Equity is also imperative: Which candidates are being asked to complete assignments? Is the hiring team consistent in giving out assignments across ages, experience levels, and roles? There should always be a process and clear evaluation criteria in place to ensure fairness.

As we adapt to the rapidly evolving world of work, we must continue to think critically about each step in the hiring process. Candidate assignments can be a valuable tool, but only with appropriate respect for job seekers’ time and contributions.

With the right strategy, we can bridge the gap between generations in the workplace and build a hiring culture that values efficiency, talent, and integrity.

Eoin Driver is the global vice president of talent at Indeed.

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IMAGES

Equitable Assignment
Equitable Definition
Statutory Assignment vs Equitable Assignment
Deed of Assignment. What is it and why is it important to get proof. Equitable and Legal difference
Law of Assignments and Dispositions Prof Cameron Stewart
Equitable Assignment

COMMENTS

Equitable Assignment: Everything You Need to Know
Equitable assignments can be created by: The assignor informing the assignee that they transferred a right to them. The assignor instructing the other party to release their obligation from the assignee and place it instead on the assignor. The only part of an agreement that can be assigned is the benefit.
What Is an Equitable Assignment? (with picture)
An equitable assignment is a transfer of future interest that doesn't fully meet legal standards, but will still be honored by courts. This is an example of a situation covered by equity, or fairness, rather than specific legal doctrine. Courts will enforce such agreements when they are not covered by existing laws, as long as they appear ...
Equitable assignment Definition
What does Equitable assignment mean? Assignments can occur in equity when any of the requirements of legal assignment are not satisfied. The assignor can inform the assignee that he transfers a right or rights to him or instruct the other party or parties to the agreement to discharge their obligations to the assignee. Only the benefit of an ...
Equitable assignment
Equitable assignment. An assignment which does not fulfil the statutory criteria for a legal assignment. An equitable assignment may be made in one of two ways: The assignor can inform the assignee that he transfers a right or rights to him. The assignor can instruct the other party or parties to the agreement to discharge their obligation to ...
equitable assignment Definition, Meaning & Usage
Definition of "equitable assignment" A transfer of property or rights, particularly those in which the transferor has a future interest, that may not technically be legal, but would be considered fair and just by a court focusing on justice and fairness ; How to use "equitable assignment" in a sentence.
What is the significance of an equitable assignment in the context of
An assignment is the transfer of a right or an interest vested in one party (assignor) to another party (assignee). The effect of a valid assignment is to entitle the assignee to demand performance of a contractual obligation.. Assignments may be legal or equitable. A legal assignment is one which meets the requirements set out in section 136(1) of the Law of Property Act 1925 (LPA 1925).
Transferring a loan by assignment
equitable. Under English law, an assignment is a transfer of rights; it does not transfer obligations (in contrast to a novation—see Practice Note: Transferring a loan by novation). This Practice Note discusses: • requirements for a legal assignment • how legal assignments differ from equitable assignments •
Different Models of Equitable Assignment (Chapter 4)
This chapter explores the two main conceptions of equtiable assignment as are currently found in the academic discourse, namely, a 'substitutive transfer' model, and a 'partial trust' model. The former denies that an equitable assignment operates by way of a trust, at all. The latter, however, admits taht where a legal chose in action ...
Equitable Assignment
Equitable Assignment. An assignment of an equitable chose in action, for example, a legacy or an interest in a trust fund may be assigned in equity and the assignee may sue in his or her own name. For a valid equitable assignment, there must be a contractual agreement, an intention to enter into such an agreement and consideration. The ...
EQUITABLE ASSIGNMENT Definition & Legal Meaning
Definition & Citations: A result that falls short of meeting the requirements of a legal assignment, yet, in the interest of fairness and justice, will be enforced by the courts, and documented as valid. Find the legal definition of EQUITABLE ASSIGNMENT from Black's Law Dictionary, 2nd Edition. A result that falls short of meeting the ...
FAQs on assignments in finance transactions
legal assignment are broadly equally available to an assignee under a notified equitable assignment for value. These benefits are: a. once the debtor has received notice of an absolute assignment, it must pay or perform the assigned rights in favour of the assignee; b. notice to the debtor is capable of establishing the priority of the assignment
PDF TWO CONCEPTIONS OF EQUITABLE ASSIGNMENT
conception of equitable assignment is that equitable assignment essentially involves the creation of a trust. Unless the case is brought within the statute, and a legal assignment effected, title never passes. The right of action remains with the assignor, and what the assignee acquires is a right against the assignor relating to that right of ...
Legal and equitable assignments
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. A legal assignee has this right, but there is a question over whether an equitable assignee has this ...
The Assignment of Commercial Contracts in Legal Practice
An assignment may be enforceable as an equitable assignment even if it does not fulfill the formality criteria of a statutory assignment. An equitable assignment does not necessitate the use of any specific terms or form. However, in order to comply with any provincial statutes of frauds regulations, the assignment must be in writing. ...
What are equitable assessment practices?
General Principles. Student learning is prompted by early, low-stakes, frequent assessment and feedback for learning. Students will rise to high expectations if they have appropriate support. Assessments should utilize multiple and varied methods of student performance. Student learning is enhanced by exercises or assignments that promote self ...
Notice of Assignment: Debt Terms explained
We set out the differences between legal and equitable assignments below. Legal. A legal assignment gives the purchasing party the power to enforce the debt. You will also then make payments to this company instead of the original creditor. Equitable. When a debt goes through an equitable assignment, it is only the amount owed that is transferred.
Equitable assignment
Equitable assignment. An assignment which does not fulfil the statutory criteria for a legal assignment. An equitable assignment may be made in one of two ways: The assignor can inform the assignee that he transfers a right or rights to him. The assignor can instruct the other party or parties to the agreement to discharge their obligation to ...
Assignments: The 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 ...
Assignment (law)
An equitable assignment is an assignment, or transfer of rights, in equity. General principles. There are numerous requirements that exist for an equitable assignment of property, outside the 'standard' clear and unconditional intention to assign. These requirements are fundamental characteristics of a statutory assignment: Absolute assignment ...
Legal Terms Explained: Assignment
Assignment in a construction context typically refers to a legal or equitable assignment (although assignment can also occur by other means, e.g. operation of law). A key difference between legal and equitable assignments is that, in the case of a legal assignment, the assignee may enforce any assigned rights in its own name.
What Is an Equitable Title in Real Estate?
While legal title signifies actual ownership and the right to sell or transfer the property, equitable title implies a right to obtain full ownership in the future or to benefit from the property. It embodies the idea that while someone else might have legal rights (like the name on a deed), the person with equitable title has the right to use ...
Assignments: why you need to serve a notice of assignment
An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.
Equitable Estoppel
Essentially, equitable estoppel is a method of preventing someone from going back on his word in a court of law. For example, equitable estoppel would be granted to a defendant if the plaintiff previously gave his permission for the defendant to do something, and then sued the defendant once he did. To explore this concept, consider the ...
I.S. Berry left the CIA in frustration. Now her novel is racking up
I.S. Berry scored rave reviews and awards for her literary debut, "The Peacock and the Sparrow," a novel mined from her time at the CIA.
Should you give job applicants assignment during interview process
For job seekers, an assignment during the interview process might also help them stand out from the competition. It can also offer a window into what their day-to-day in the new role might entail ...

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The Assignment of Commercial Contracts in Legal Practice

The Definitions of Assignment and Delegation

What is an Assignment?

The Effects of Assignment

What is Delegation?

Types of Assignment – Legal (Statutory) Assignment vs. Equitable Assignment

Requirements for a Legal (Statutory) Assignment

Requirements for an Equitable Assignment

Contractual Anti-Assignment & Anti-Delegation Clauses

What are equitable assessment practices?

General Principles

Grading, Equity and Ungrading

Equitable assignment

Assignments: The Basic Law

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