deed of assignment of credit

Deed of Assignment or Deed of Novation: Key Differences and Legal Implications of Novation and Assignment Contracts

Novation and assignment stand out as pivotal processes for the transfer of contractual rights and obligations. These legal concepts allow a party to the contract to adapt to changing circumstances, ensuring that business arrangements remain relevant and effective. This article explores the nuances of novation and assignment, shedding light on their distinct legal implications, procedures, and practical applications. Whether you’re a business owner navigating the transfer of service contracts, or an individual looking to understand your rights and responsibilities in a contractual relationship, or a key stakeholder in a construction contract, this guide will equip you with the essential knowledge to navigate these complex legal processes.

Table of Contents

• What is a Deed of Novation? 
• What is a Deed of Assignment? 

Key Differences Between Novation and Assignment Deeds

Need a deed of novation or assignment key factors to consider, selecting the right assignment clause for your contract – helping you make the right choice, what is a deed of novation.

Novation is a legal process that allows a new party to a contract to take the place of an original party in a contract, thereby transferring both the responsibilities and benefits under the contract to a third party. In common law, transferring contractual obligations through novation requires the agreement of all original parties involved in the contract, as well as the new party. This is because novation effectively terminates the original contract and establishes a new one.

A novation clause typically specifies that a contract cannot be novated without the written consent of the current parties. The inclusion of such a clause aims to preclude the possibility of novation based on verbal consent or inferred from the actions of a continuing party. Nevertheless, courts will assess the actual events that transpired, and a novation clause may not always be enforceable. It’s possible for a novation clause to allow for future novation by one party acting alone to a party of their choosing. Courts will enforce a novation carried out in this manner if it is sanctioned by the correct interpretation of the original contract.

Novation is frequently encountered in business and contract law, offering a means for parties to transfer their contractual rights and duties to another, which can be useful if the original party cannot meet their obligations or wishes to transfer their contract rights. For novation to occur, there must be unanimous consent for the substitution of the new party for the original one, necessitating a three-way agreement among the original party, the new party, and the remaining contract party. Moreover, the novation agreement must be documented in writing and signed by all involved parties. Understanding novation is essential in the realms of contracts and business dealings, as it provides a way for parties to delegate their contractual rights and responsibilities while freeing themselves from the original agreement.

What is a Deed of Assignment?

A deed of assignment is a legal document that facilitates the transfer of a specific right or benefit from one party (the assignor) to another (the assignee). This process allows the assignee to step into the assignor’s position, taking over both the rights and obligations under the original contract. In construction, this might occur when a main contractor assigns rights under a subcontract to the employer, allowing the employer to enforce specific subcontractor duties directly if the contractor fails.

Key aspects of an assignment include:

• Continuation of the Original Contract: The initial agreement remains valid and enforceable, despite the transfer of rights or benefits.
• Assumption of Rights and Obligations: The assignee assumes the role of the assignor, adopting all associated rights and responsibilities as outlined in the original contract.
• Requirement for Written Form: The assignment must be documented in writing, signed by the assignor, and officially communicated to the obligor (the party obligated under the contract).
• Subject to Terms and Law: The ability to assign rights or benefits is governed by the specific terms of the contract and relevant legal statutes.

At common law, parties generally have the right to assign their contractual rights without needing consent from the other party involved in the contract. However, this does not apply if the rights are inherently personal or if the contract includes an assignment clause that restricts or modifies this general right. Many contracts contain a provision requiring the consent of the other party for an assignment to occur, ensuring that rights are not transferred without the other party’s knowledge.

Once an assignment of rights is made, the assignee gains the right to benefit from the contract and can initiate legal proceedings to enforce these rights. This enforcement can be done either independently or alongside the assignor, depending on whether the assignment is legal or equitable. It’s important to note that while rights under the contract can be assigned, the contractual obligations or burdens cannot be transferred in this manner. Therefore, the assignor remains liable for any obligations under the contract that are not yet fulfilled at the time of the assignment.

Choosing Between Assignment and Novation in a Construction Contract

Choosing between a deed of novation and an assignment agreement depends on the specific circumstances and objectives of the parties involved in a contract. Both options serve to transfer rights and obligations but in fundamentally different ways, each with its own legal implications, risks, and benefits. Understanding these differences and considering various factors can help in making an informed decision that aligns with your goals.

The choice between assignment and novation in a construction project scenario, where, for instance, an employer wishes to engage a subcontractor directly due to loss of confidence in the main contractor, hinges on several factors. These are:

• Nature of the Contract:  The type of contract you’re dealing with (e.g., service, sales) can influence which option is more suitable. For instance, novation might be preferred for service contracts where obligations are personal and specific to the original parties.
• Parties Involved: Consent is a key factor. Novation requires the agreement of all original and new parties, making it a viable option only when such consent is attainable. Assignment might be more feasible if obtaining consent from all parties poses a challenge.
• Complexity of the Transaction: For transactions involving multiple parties and obligations, novation could be more appropriate as it ensures a clean transfer of all rights and obligations. Assignment might leave the original party with ongoing responsibilities.
• Time and Cost: Consider the practical aspects, such as the time and financial cost associated with each option. Novation typically involves more complex legal processes and might be more time-consuming and costly than an assignment.

If the intention is merely to transfer the rights of the subcontractor’s work to the employer without altering the subcontractor’s obligations under a contract, an assignment might suffice. However, if the goal is to completely transfer the main contractor’s contractual role and obligations to the employer or another entity, novation would be necessary, ensuring that all parties consent to this new arrangement and the original contractor is released from their obligations.

The legal interpretations and court decisions highlight the importance of the document’s substance over its label. Even if a document is titled a “Deed of Assignment,” it could function as a novation if it transfers obligations and responsibilities and involves the consent of all parties. The key is to clearly understand and define the objective behind changing the contractual relationships and to use a deed — assignment or novation — that best achieves the desired legal and practical outcomes, ensuring the continuity and successful completion of the construction project.

Understanding the distinction between assignment deeds and novation deeds is crucial for anyone involved in contractual agreements. Novation offers a clean slate by transferring both rights and obligations to a new party, requiring the consent of all involved. Assignment, conversely, allows for the transfer of contractual benefits without altering the original contract’s obligations. Each method serves different strategic purposes, from simplifying transitions to preserving original contractual duties. The choice between novation and assignment hinges on specific legal, financial, and practical considerations unique to each situation. At PBL Law Group, we specialise in providing comprehensive legal advice and support in contract law. Our team is dedicated to helping clients understand their options and make informed decisions that align with their legal and business objectives. Let’s discuss!

Authored By Raea Khan

Director Lawyer, PBL Law Group

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Assigning debts and other contractual claims - not as easy as first thought

Harking back to law school, we had a thirst for new black letter law. Section 136 of the Law of the Property Act 1925 kindly obliged. This lays down the conditions which need to be satisfied for an effective legal assignment of a chose in action (such as a debt). We won’t bore you with the detail, but suffice to say that what’s important is that a legal assignment must be in writing and signed by the assignor, must be absolute (i.e. no conditions attached) and crucially that written notice of the assignment must be given to the debtor.

When assigning debts, it’s worth remembering that you can’t legally assign part of a debt – any attempt to do so will take effect as an equitable assignment. The main practical difference between a legal and an equitable assignment is that the assignor will need to be joined in any legal proceedings in relation to the assigned debt (e.g. an attempt to recover that part of the debt).

Recent cases which tell another story

Why bother telling you the above?  Aside from our delight in remembering the joys of debating the merits of legal and equitable assignments (ehem), it’s worth revisiting our textbooks in the context of three recent cases. Although at first blush the statutory conditions for a legal assignment seem quite straightforward, attempts to assign contractual claims such as debts continue to throw up legal disputes:

• In  Sumitomo Mitsui Banking Corp Europe Ltd v Euler Hermes Europe SA (NV) [2019] EWHC 2250 (Comm),  the High Court held that a performance bond issued under a construction contract was not effectively assigned despite the surety acknowledging a notice of assignment of the bond. Sadly, the notice of assignment failed to meet the requirements under the bond instrument that the assignee confirm its acceptance of a provision in the bond that required the employer to repay the surety in the event of an overpayment. This case highlights the importance of ensuring any purported assignment meets any conditions stipulated in the underlying documents.
• In  Promontoria (Henrico) Ltd v Melton [2019] EWHC 2243 (Ch) (26 June 2019) , the High Court held that an assignment of a facility agreement and legal charges was valid, even though the debt assigned had to be identified by considering external evidence. The deed of assignment in question listed the assets subject to assignment, but was illegible to the extent that the debtor’s name could not be deciphered. The court got comfortable that there had been an effective assignment, given the following factors: (i) the lender had notified the borrower of its intention to assign the loan to the assignee; (ii) following the assignment, the lender had made no demand for repayment; (iii) a manager of the assignee had given a statement that the loan had been assigned and the borrower had accepted in evidence that he was aware of the assignment. Fortunately for the assignee, a second notice of assignment - which was invalid because it contained an incorrect date of assignment - did not invalidate the earlier assignment, which was found to be effective. The court took a practical and commercial view of the circumstances, although we recommend ensuring that your assignment documents clearly reflect what the parties intend!
• Finally, in Nicoll v Promontoria (Ram 2) Ltd [2019] EWHC 2410 (Ch),  the High Court held that a notice of assignment of a debt given to a debtor was valid, even though the effective date of assignment stated in the notice could not be verified by the debtor. The case concerned a debt assigned by the Co-op Bank to Promontoria and a joint notice given by assignor and assignee to the debtor that the debt had been assigned “on and with effect from 29 July 2016”. A subsequent statutory demand served by Promontoria on the debtor for the outstanding sums was disputed on the basis that the notice of assignment was invalid because it contained an incorrect date of assignment. Whilst accepting that the documentation was incapable of verifying with certainty the date of assignment, the Court held that the joint notice clearly showed that both parties had agreed that an assignment had taken place and was valid. This decision suggests that mistakes as to the date of assignment in a notice of assignment may not necessarily be fatal, if it is otherwise clear that the debt has been assigned.

The conclusion from the above? Maybe it’s not quite as easy as first thought to get an assignment right. Make sure you follow all of the conditions for a legal assignment according to the underlying contract and ensure your assignment documentation is clear.

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Deed of assignment | Practical Law

Deed of assignment

Practical law anz standard document w-002-8276  (approx. 19 pages).

Assignment of credits

1. ASSIGNMENT

Perfection of assignment

⦁ An assignment of credits and other incorporeal rights shall be perfected in accordance with the provisions of Article 1475. (Article 1624, Ibid.)

Cross-referenced article/sThe contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. (Art. 1475, Ibid.)From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. (Paragraph 2, Art. 1475, Ibid.)

⦁ Accessory rights included. The assignment of a credit includes all the accessory rights, such as a guaranty, mortgage, pledge or preference. (Article 1627, Ibid.)

To bind third parties

⦁ Public instrument for non-real properties; Recorded in Registry for real properties. An assignment of a credit, right or action shall produce no effect as against third person, unless it appears in a public instrument, or the instrument is recorded in the Registry of Property in case the assignment involves real property. (Article 1625, Ibid.)

2. DEBTOR IN GOOD FAITH

⦁ The debtor who, before having knowledge of the assignment, pays his creditor shall be released from the obligation. (Article 1626, Ibid.)

In good faith

⦁ The seller in good faith shall be responsible for the existence and legality of the credit at the time of the sale, unless it should have been sold as doubtful; but not for the solvency of the d...

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Deed of Assignment (for Intellectual Property)

In the realm of intellectual property, a Deed of Assignment is a formal legal document used to transfer all rights, title, and interest in intellectual property from the assignor (original owner) to the assignee (new owner). This is crucial for the correct transfer of patents, copyrights, trademarks, and other IP rights. The deed typically requires specific legal formalities, sometimes notarization, to ensure it is legally enforceable.

To be legally effective a deed of assignment must contain:

• Title of the Document : It should clearly be labeled as a "Deed of Assignment" to identify the nature of the document.
• Date : The date on which the deed is executed should be clearly mentioned.
• Parties Involved : Full names and addresses of both the assignor (the party transferring the rights) and the assignee (the party receiving the rights). This identifies the parties to the agreement.
• Recitals : This section provides the background of the transaction. It typically includes details about the ownership of the assignor and the intention behind the assignment.
• Definition and Interpretation : Any terms used within the deed that have specific meanings should be clearly defined in this section.
• Description of the Property or Rights : A detailed description of the property or rights being assigned. For intellectual property, this would include details like patent numbers, trademark registrations , or descriptions of the copyrighted material.
• Terms of Assignment : This should include the extent of the rights being transferred, any conditions or limitations on the assignment, and any obligations the assignor or assignee must fulfill as part of the agreement.
• Warranties and Representations : The assignor typically makes certain warranties regarding their ownership of the property and the absence of encumbrances or third-party claims against it.
• Governing Law : The deed should specify which jurisdiction's laws govern the interpretation and enforcement of the agreement.
• Execution and Witnesses : The deed must be signed by both parties, and depending on jurisdictional requirements, it may also need to be witnessed and possibly notarized.
• Schedules or Annexures : If there are detailed lists or descriptions (like a list of patent numbers or property descriptions), these are often attached as schedules to the main body of the deed.

Letter of Assignment (for Trademarks and Patents)

This is a less formal document compared to the Deed of Assignment and is often used to record the assignment of rights or licensing of intellectual property on a temporary or limited basis. While it can outline the terms of the assignment, it may not be sufficient for the full transfer of legal title of IP rights. It's more commonly used in situations like assigning the rights to use a copyrighted work or a trademark license.

For example, company X allows company Y to use their trademark for specific products in a specific country for a specific period.  

At the same time, company X can use a Letter of Assignment to transfer a trademark to someone. In this case, it will be similar to the Deed of Assignment. 

Intellectual Property Sales Agreement

An IP Sales Agreement is a detailed contract that stipulates the terms and conditions of the sale of intellectual property. It covers aspects such as the specific rights being sold, payment terms, warranties regarding the ownership and validity of the IP, and any limitations or conditions on the use of the IP. This document is essential in transactions involving the sale of IP assets.

However, clients usually prefer to keep this document confidential and prepare special deeds of assignment or letter of assignment for different countries.

IP Transfer Declaration

In the context of intellectual property, a Declaration is often used to assert ownership or the originality of an IP asset. For example, inventors may use declarations in patent applications to declare their invention is original, or authors may use it to assert copyright ownership. It's a formal statement, sometimes required by IP offices or courts.

When assigning a trademark, the Declaration can be a valid document to function as a proof of the transfer. For example, a director of company X declares that the company had sold its Intellectual Property to company Y. 

Merger Document

When companies or entities with significant IP assets merge, an IP Merger Document is used. This document outlines how the intellectual property owned by the merging entities will be combined or managed. It includes details about the transfer, integration, or handling of patents, copyrights, trademarks, and any other intellectual property affected by the merger.

In all these cases, the precise drafting of documents is critical to ensure that IP rights are adequately protected and transferred. Legal advice is often necessary to navigate the complexities of intellectual property laws.

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Assignment Of Debt

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What is an assignment of debt.

Assignment of debt is an agreement that transfer debt, rights, and obligations from a creditor to a third party. Assignment of debt agreements are commonly found when a creditor issues past due debt to a debt collection agency. The original lender will be relieved of all obligations and the agency will become the new owner of the debt. Debt assignment allows creditors to improve liquidity by reducing their financial risk. If a creditor has taken on a large amount of unsecured debt, an assignment of debt agreement is a quick way to transfer some of the unsecured loans to another party.

Common Sections in Assignments Of Debt

Below is a list of common sections included in Assignments Of Debt. These sections are linked to the below sample agreement for you to explore.

Assignment Of Debt Sample

Reference : Security Exchange Commission - Edgar Database, EX-10 19 ex107.htm ASSIGNMENT OF DEBT AND SECURITY , Viewed October 25, 2021, View Source on SEC .

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As an attorney licensed in California and currently practicing in Ohio, my primary focus is on drafting and reviewing prenuptial and postnuptial agreements. I offer help in drafting or navigating these agreements, ensuring they are tailored to each client's unique situation and needs. While my background includes experience in cybersecurity, my current legal services are centered around family law, particularly in the creation and revision of prenuptial and postnuptial agreements. Additionally, I provide services in wills and trusts, along with other legal areas, to offer comprehensive solutions to my clients.

As a licensed AL lawyer with over 7 years of experience in the legal field, I have spent more than 15 years working in the business and finance sector. I am deeply passionate about immigration, contracts, & my expertise spans a wide range of projects. From handling ICOs & IPOs to navigating VCs, SaaS, OnlyFans, Wholesaler & Manufacturing Agreements, Prenups, Movie Finance, M & As, Visas, Green Cards and more. I have a comprehensive understanding of various contractual needs. Whatever your contract requirements may be, feel free to reach out to me—I can craft or work on any contract with precision and expertise.

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Erik J. Washington completed his undergraduate studies at Florida A&M University, where he earned his Bachelor of Science degree in Business Administration with a concentration in Finance. Mr. Washington went on to earn his Juris Doctor from Florida A&M University College of Law. Upon receiving his J.D., Mr. Washington was admitted to The Florida Bar and the United States District Court, Middle District of Florida. Mr. Washington started his legal career by working with a boutique Orlando law firm where his practice concentrated on family law, bankruptcy, helping clients with estate planning and probate matters, and advising homeowner’s association boards on proper administration. After that experience Mr. Washington later joined another mid-size Orlando law firm where he would eventually become the Managing Consumer Bankruptcy Attorney where he oversaw the filing and administration of hundreds of chapter 7 and chapter 13 cases. Prior to starting the Washington Law Firm, Mr. Washington was an associate at a Central Florida Bankruptcy law firm working under the tutu ledge of a highly respected bankruptcy attorney with over 20 years of bankruptcy experience. Mr. Washington has learned that bankruptcy is a tool designed that not only benefits a person in debt but is also good for the economy as a whole. It is because this new beginning and fresh start that it becomes a means of not only helping a person in debt, but it gives that person once in debt the chance to reestablish good credit and yet again borrow money to spend. Mr. Washington focuses on consumer bankruptcy, real estate, probate, and auto accidents.

Christopher M.

Skilled and experienced business attorney with vast experience in a wide array of commercial contracts. Strong emphasis on the lodging and hospitality practice field, including real estate acquisition and disposition, management agreements, franchise agreements, design & construction contracting and finance.

I have been licensed for 23 years in Texas and federal courts. I am available to work as registered In House Counsel in other states. For the past 14 years I have practiced Corporate Law, Oil and Gas, Agricultural Law, Commercial Real Estate (transactional), HR Law, and Environmental and Land Use. Prior to that, I practiced Criminal Law for both the prosecution and defense for ten years.

Successful entrepreneur and business attorney with keen insight into the challenges faced by small and medium-sized businesses. In addition to my solo practice, I have extensive experience as general counsel for highly regulated businesses where I have negotiated and drafted a wide array of contracts, conducted internal regulatory compliance, engaged in transactional work and assisted with general commercial litigation.

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January 1989 - Philippine Supreme Court Decisions/Resolutions

Philippine Supreme Court Jurisprudence

* Penned by then Judge of the Court of First Instance of Manila, Ameurfina Melencio-Herrera, now Associate Justice of the Court.

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• G.R. No. 78315 January 2, 1989 - COMMERCIAL CREDIT CORP. v. COURT OF APPEALS
• G.R. No. 72806 January 9, 1989 - EPIFANIO CRUZ v. INTERMEDIATE APPELLANT COURT
• G.R. No. L-74806 January 9, 1989 - SM AGRI AND GENERAL MACHINERIES v. NATIONAL LABOR RELATIONS COMMISSION
• G.R. No. 76761 January 9, 1989 - ASST. EXECUTIVE SEC. FOR LEGAL AFFAIRS v. COURT OF APPEALS
• G.R. No. 77959 January 9, 1989 - RADIO COMMUNICATIONS OF THE PHILS. v. SEC. OF LABOR AND EMPLOYMENT
• G.R. Nos. 79123-25 January 9, 1989 - PEOPLE OF THE PHIL. v. EMELIANO TRINIDAD
• G.R. No. 78169 January 12, 1989 - BIBIANO REYNOSO IV v. COMMERCIAL CREDIT CORP.
• G.R. No. 43862 January 13, 1989 - MERCANTILE INSURANCE CO. v. FELIPE YSMAEL, JR. & CO.
• G.R. No. 47425 January 13, 1989 - PEOPLE OF THE PHIL. v. METODIO S. BASIGA
• G.R. No. 51554 January 13, 1989 - TROPICAL HOMES, INC. v. WILLELMO C. FORTUN
• G.R. No. 53955 January 13, 1989 - MANILA BANKING CORP. v. ANASTACIO TEODORO JR.
• G.R. No. 54330 January 13, 1989 - JULIO E. T. SALES v. SECURITIES AND EXCHANGE COMMISSION
• G.R. No. 66712 January 13, 1989 - CALIXTO ANGEL v. PONCIANO C. INOPIQUEZ
• G.R. No. 66865 January 13, 1989 - MAGTANGGOL QUE v. INTERMEDIATE APPELLATE COURT
• G.R. No. 74047 January 13, 1989 - PEOPLE OF THE PHIL. v. GRACIANO E. GENEVEZA
• G.R. No. 75016 January 13, 1989 - PERLA C. BAUTISTA v. BOARD OF ENERGY
• G.R. No. 76592 January 13, 1989 - ERDULFO C. BOISER v. NATIONAL TELECOMMUNICATIONS COMMISSION
• G.R. No. 77298 January 13, 1989 - ANGELES CENTINO v. COURT OF APPEALS
• G.R. No. 79518 January 13, 1989 - REBECCA C. YOUNG v. COURT OF APPEALS
• G.R. No. 36187 January 17, 1989 - REYNOLDS PHILIPPINE CORP. v. COURT OF APPEALS
• G.R. No. 73835 January 17, 1989 - CHINA AIRLINES, LTD. v. INTERMEDIATE APPELLATE COURT
• G.R. No. 33425 January 20, 1989 - PROCTER AND GAMBLE PHIL. MFG. CORP. v. COMMISSIONER OF INTERNAL REVENUE
• G.R. No. 42278 January 20, 1989 - GOVERNMENT SERVICE INSURANCE SYSTEM v. COURT OF APPEALS
• G.R. No. 48008 January 20, 1989 - BARTOLOME MACARAEG v. COURT OF APPEALS
• G.R. No. 49739 January 20, 1989 - BONIFACIO LOPEZ v. COURT OF APPEALS
• G.R. No. 55457 January 20, 1989 - FILOMENO QUILLIAN v. COURT OF APPEALS
• G.R. Nos. 61167-68 January 20, 1989 - FIDEL A. DE GUZMAN v. THE INTESTATE ESTATE OF FRANCISCO BENITEZ
• G.R. No. 66350 January 20, 1989 - ALBERTO DE GUZMAN v. INTERMEDIATE APPELLATE COURT
• G.R. No. 67115 January 20, 1989 - FILOIL MARKETING CORPORATION v. INTERMEDIATE APPELLATE COURT
• G.R. No. 74249 January 20, 1989 - CORNELIO T. RIVERA v. INTERMEDIATE APPELLATE COURT
• G.R. No. 74679 January 20, 1989 - ROSITA DE ASIS v. INTERMEDIATE APPELLATE COURT
• G.R. No. 78524 January 20, 1989 - PLANTERS PRODUCTS, INC. v. NATIONAL LABOR RELATION COMMISSION
• G.R. No. 83616 January 20, 1989 - INDUSTRIAL TIMBER CORPORATION v. NATIONAL LABOR RELATIONS COMMISSION
• G.R. No. 72306 January 24, 1989 - DAVID P. FORNILDA v. BRANCH 164, REGIONAL TRIAL COURT, PASIG
• G.R. No. 78648 January 24, 1989 - RAFAEL N. NUNAL v. COMMISSION ON AUDIT, ET AL.
• G.R. No. 83882 January 24, 1989 - IN RE PETITION FOR HABEAS CORPUS OF WILLIE YU v. MIRIAM DEFENSOR-SANTIAGO
• A.C. No. 3277 January 24, 1989 - DAVID P. FORNILDA v. BRANCH 164, REGIONAL TRIAL COURT, PASIG
• G.R. No. 33955 January 26, 1989 - FORTUNATO DA. BONDOC v. COURT OF INDUSTRIAL RELATIONS
• G.R. No. 34613 January 26, 1989 - ANTONIO J. CASTRO v. COURT OF APPEALS
• G.R. No. 40778 January 26, 1989 - PEOPLE OF THE PHIL. v. ARCILLO MANLOLO
• G.R. Nos. 44715-16 January 26, 1989 - ERLINDA BARRERAS v. GREGORIO N. GARCIA
• G.R. No. 49410 January 26, 1989 - DEVELOPMENT BANK OF THE PHIL. v. COURT OF APPEALS
• G.R. No. 51214 January 26, 1989 - EDGARDO DORUELO v. MINISTRY OF NATIONAL DEFENSE
• G.R. No. 66807 January 26, 1989 - REPUBLIC OF THE PHILIPPINES v. MELITONA ALAGAD
• G.R. No. 74246 January 26, 1989 - MARIWASA MANUFACTURING, INC. v. VICENTE LEOGARDO, JR.
• G.R. No. 75079 January 26, 1989 - SOLEMNIDAD M. BUAYA v. WENCESLAO M. POLO
• G.R. No. 75256 January 26, 1989 - JOHN PHILIP GUEVARRA v. IGNACIO ALMODOVAR
• G.R. No. 75439 January 26, 1989 - SILVINO P. PIANO v. COURT OF APPEALS
• G.R. No. 79347 January 26, 1989 - PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS v. PURA FERRER CALLEJA
• G.R. No. 80680 January 26, 1989 - DANILO B. TABAS v. CALIFORNIA MANUFACTURING COMPANY
• G.R. No. 81816 January 26, 1989 - NATIVIDAD Q. SALOMON v. NATIONAL ELECTRIFICATION ADMINISTRATION
• A.M. No. R-225-RTJ January 26, 1989 - HIMINIANO D. SILVA v. GERMAN G. LEE, JR.
• G.R. No. 29541 January 27, 1989 - CARLOS GABILA v. PABLO PEREZ
• G.R. No. 47027 January 27, 1989 - BEATRIZ DE ZUZUARREGUI VDA. DE REYES v. COURT OF APPEALS
• G.R. No. 50041 January 27, 1989 - PEOPLE OF THE PHIL. v. ILDEFONSO L. ABONADA
• G.R. No. 56457 January 27, 1989 - PEOPLE OF THE PHIL. v. DIOSDADO PEDROSA
• G.R. No. 56524 January 24, 1989 - RAMON ARENAS v. COURT OF APPEALS
• G.R. No. 79404 January 27, 1989 - FELICIANO BEJER v. COURT OF APPEALS
• G.R. No. 79955 January 27, 1989 - NELSON L. CERVANTES v. GINA C. FAJARDO
• G.R. No. 29184 January 30, 1989 - BENEDICTO LEVISTE v. COURT OF APPEALS
• G.R. No. 37704 January 30, 1989 - ERLINDA TALAN v. PEOPLE OF THE PHIL.
• G.R. No. 44466 January 30, 1989 - MAGDALENA V. ACOSTA v. ANDRES B. PLAN
• G.R. No. 70149 January 30, 1989 - EUSEBIO C. LU v. INTERMEDIATE APPELLATE COURT
• G.R. No. 72222 January 30, 1989 - INT’L CATHOLIC MIGRATION COMMISSION v. NAT’L LABOR RELATIONS COMMISSION
• G.R. No. 74423 January 30, 1989 - EUSTAQUIO BAEL v. INTERMEDIATE APPELLATE COURT
• G.R. No. 78298 January 30, 1989 - WOLVERINE WORLDWIDE, INC. v. COURT OF APPEALS
• G.R. No. 42808 January 31, 1989 - ROSARIO VDA. DE SUANES v. WORKMEN’S COMPENSATION COMMISSION
• G.R. No. 43602 January 31, 1989 - PEOPLE OF THE PHIL. v. ANTONIO PAILANO
• G.R. No. 46807 January 31, 1989 - MAURO OMANA v. PEOPLE OF THE PHIL.
• G.R. No. 48066 January 31, 1989 - DIRECTOR OF LANDS v. KALAHI INVESTMENTS, INC.
• G.R. No. 56705 January 31, 1989 - COMMISSIONER OF CUSTOMS v. PROCTER AND GAMBLE PHIL. MFG CORP.
• G.R. No. 58797 January 31, 1989 - ANTONIO QUIRINO v. NATHANAEL M. GROSPE
• G.R. Nos. 65345-47 January 31, 1989 - PEOPLE OF THE PHIL. v. HERMENEGILDO RAMIREZ
• G.R. Nos. 66178-79 January 31, 1989 - PEOPLE OF THE PHIL. v. JOHN PELOTIN
• G.R. No. 70446 January 31, 1989 - PEOPLE OF THE PHIL. v. VICENTE ALVAREZ
• G.R. No. 70926 January 31, 1989 - DAN FUE LEUNG v. INTERMEDIATE APPELLATE COURT
• G.R. No. 72828 January 31, 1989 - ESTELITA S. MONZON v. INTERMEDIATE APPELLATE COURT
• G.R. No. 73886 January 31, 1989 - JOHN C. QUIRANTE v. INTERMEDIATE APPELLATE COURT
• G.R. No. 73913 January 31, 1989 - JERRY T. MOLES v. INTERMEDIATE APPELLATE COURT
• G.R. No. 75082 January 31, 1989 - JOSE F. PUZON v. ALEJANDRA ABELLERA
• G.R. No. 75853 January 31, 1989 - PEOPLE OF THE PHIL. v. ANDRES BUGTONG
• G.R. No. 76988 January 31, 1989 - GENERAL RUBBER AND FOOTWEAR CORP. v. FRANKLIN DRILON
• G.R. No. 77116 January 31, 1989 - PEOPLE OF THE PHIL. v. FERDINAND CAMALOG
• G.R. No. 78687 January 31, 1989 - ELENA SALENILLAS v. COURT OF APPEALS
• G.R. No. 79570 January 31, 1989 - GASPAR MEDIOS v. COURT OF APPEALS
• G.R. No. 80447 January 31, 1989 - BALIWAG TRANSIT, INC. v. COURT OF APPEALS
• G.R. No. 83268 January 31, 1989 - JOSEFINA B. CALLANGAN v. NATIONAL LABOR RELATION COMMISSION
• G.R. No. 84423 January 31, 1989 - JOSE B. NAVARRO v. COURT OF APPEALS
• A.M. No. P-88-181 January 31, 1989 - ROBERTO S. CHIONGSON v. MATEO MAGBANUA

Drafting an Assignment of Proceeds Agreement

Parties sometimes wish to assign all or part of the proceeds they will receive from an investment or other interest.  Individuals often seek to accept a lump sum in cash in exchange for payments they will receive over time in order to invest in other projects or to create liquidity in their operations.  However, there are a few considerations that should be kept in mind when drafting an assignment of proceeds agreement.

Scope of the Proceeds

Perhaps the most important issue to keep in mind when drafting an assignment of proceeds agreement is the scope of the proceeds to which the Agreement applies.  Sometimes, parties wish to assign all of the proceeds related to an investment or other interest.  This includes reimbursement of any original investment made, dividends, rental income if applicable, and other monies.  However, sometimes the parties wish to assign only part of the proceeds that the assignor may realize from an investment or other interest.  The scope of the applicable proceeds is often the biggest source of disputes in assignment of proceeds agreements, so it is important that parties carefully consider and list all of the types of monies that will be applicable to the agreement.

Further Assignment

Another important consideration when drafting an assignment of proceeds agreement is whether such an agreement may be further assignable.  Assignees often wish for assignment of proceeds agreements to be further assignable without obtaining prior consent from the assignor.  The assignee may wish to sell their interest in the proceeds at issue in the assignment agreement to generate income or liquidity for themselves.  However, assignors may not want such an agreement to be further assigned, or at least require the Assignee to obtain the Assignor’s consent before the agreement is further assigned.  Assignees often may not wish to be involved with parties to which they do not have a pre-existing relationship, so they may wish to negotiate safeguards to the unconditional further assignment of an assignment of proceeds agreement.

Termination Right

Another critical factor to keep in mind when drafting an assignment of proceeds agreement is whether there should be a termination right.  Some such agreements permit the assignor to terminate the agreement to assign proceeds at some future time so long as they refund the purchase price for the assignment and make some other concession.  This gives the parties flexibility in case they wish to stop following an assignment of proceeds agreement.  However, the duration after the closing date that a termination right vests may be a point of contention between the parties.  Moreover, the amount of the concession that must be paid to terminate such an agreement is often negotiated between the parties.  Each party to an assignment agreement needs to carefully evaluate their situation and determine which negotiation right is best for their circumstances.

Bill of Assignment

A bill of assignment may be important when drafting an assignment of proceeds agreement.  After a sale, sometimes parties execute a shorter document simply relating that the sale took place and conveying some important information about the transaction.  This document is usually called a “bill of sale.”  In an assignment of proceeds transaction, it might also be important to have a similar document known as a “bill of assignment.”  This document lists all of the parties to the assignment and the purchase price of the assignment.  The document may also note whether or not the assignment is further assignable, and this document may reference the longer assignment of proceeds agreement.  A bill of assignment may go a long way toward making a further assignment possible and can be useful for other legal, tax, or accounting purposes.

Right to Audit

The ability to audit where proceeds are coming from is an important part of drafting an assignment of proceeds agreement.  Parties often cannot be trusted to fairly and accurately calculate the proceeds which will be conveyed to a third party under an assignment of proceeds agreement.  Sometimes, the amount of the proceeds may be difficult to calculate, and the sum of the money may be subject to different interpretations.  In order to ensure that they will be treated fairly, parties to which proceeds are assigned may wish to audit the party who is paying the proceeds.

It is important to list all the books, records, and other materials that can be inspected about any audit under an assignment of proceeds agreement.  In addition, the cost of such an audit may also be a point of contention between the parties.  Normally, the party conducting the audit will bear any expenses accruing as a result of the audit.  However, if discrepancies are found in the amount of proceeds paid to a party, that other party may be held responsible for the cost of an audit.  It is also important that audits only occur at a certain frequency and requests for audits are reasonable so that parties are not unreasonably burdened because they need to participate in an audit under an assignment of proceeds agreement.

Drafting an assignment of proceeds agreement can be a difficult process, and it is important to choose an experienced attorney who knows all of the issues that may arise from a transaction involving the assignment of proceeds.  If you are looking for an experienced New York and New Jersey attorney to handle your assignment of proceeds agreement or other legal issue, please feel free to contact The Rothman Law Firm to request a free consultation.

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Assignment of Accounts Receivable: Meaning, Considerations

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

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What Is Assignment of Accounts Receivable?

Assignment of accounts receivable is a lending agreement whereby the borrower assigns accounts receivable to the lending institution. In exchange for this assignment of accounts receivable, the borrower receives a loan for a percentage, which could be as high as 100%, of the accounts receivable.

The borrower pays interest, a service charge on the loan, and the assigned receivables serve as collateral. If the borrower fails to repay the loan, the agreement allows the lender to collect the assigned receivables.

Key Takeaways

• Assignment of accounts receivable is a method of debt financing whereby the lender takes over the borrowing company's receivables.
• This form of alternative financing is often seen as less desirable, as it can be quite costly to the borrower, with APRs as high as 100% annualized.
• Usually, new and rapidly growing firms or those that cannot find traditional financing elsewhere will seek this method.
• Accounts receivable are considered to be liquid assets.
• If a borrower doesn't repay their loan, the assignment of accounts agreement protects the lender.

Understanding Assignment of Accounts Receivable

With an assignment of accounts receivable, the borrower retains ownership of the assigned receivables and therefore retains the risk that some accounts receivable will not be repaid. In this case, the lending institution may demand payment directly from the borrower. This arrangement is called an "assignment of accounts receivable with recourse." Assignment of accounts receivable should not be confused with pledging or with accounts receivable financing .

An assignment of accounts receivable has been typically more expensive than other forms of borrowing. Often, companies that use it are unable to obtain less costly options. Sometimes it is used by companies that are growing rapidly or otherwise have too little cash on hand to fund their operations.

New startups in Fintech, like C2FO, are addressing this segment of the supply chain finance by creating marketplaces for account receivables. Liduidx is another Fintech company providing solutions through digitization of this process and connecting funding providers.

Financiers may be willing to structure accounts receivable financing agreements in different ways with various potential provisions.​

Special Considerations

Accounts receivable (AR, or simply "receivables") refer to a firm's outstanding balances of invoices billed to customers that haven't been paid yet. Accounts receivables are reported on a company’s balance sheet as an asset, usually a current asset with invoice payments due within one year.

Accounts receivable are considered to be a relatively liquid asset . As such, these funds due are of potential value for lenders and financiers. Some companies may see their accounts receivable as a burden since they are expected to be paid but require collections and cannot be converted to cash immediately. As such, accounts receivable assignment may be attractive to certain firms.

The process of assignment of accounts receivable, along with other forms of financing, is often known as factoring, and the companies that focus on it may be called factoring companies. Factoring companies will usually focus substantially on the business of accounts receivable financing, but factoring, in general, a product of any financier.

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Deed of Assignment of Debt – Everything You Need to Know

Scott Nelson

Managing Director

MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.

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Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.

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Are you facing a ‘deed of assignment of debt’? Are you worried about a debt collector knocking on your door?

You’re in the right place. Each month, over 170,000 people visit our site looking for guidance on debt issues, just like this one. 

In this article, we’ll explain:

•  What a ‘deed of assignment’ is
•  What it means for your debts
•  Different types of assignment
•  Why companies sell their debts
•  Ways to handle your debt situation

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Deed of Assignment of Debt – the basics

Being in debt is confusing enough as it is. And it can get even more complicated when you get a letter through the door from a company you may never have heard of demanding (often in quite a strongly-worded way) that you make your payments to them instead.

What’s going on, you might ask yourself?

At the end of the day, the creditor will want the money that you owe back.

However, sometimes when an account falls into arrears , they won’t have the capabilities or resources to claim it back . This is when the original company you owe money might ‘ assign’ your debt . 

What is a Deed of Assignment of Debt?

This is notice that tells you that you now owe a debt collection agency or another collection service the money you originally owed to the creditor .

Instead of paying the company you might have originally owed money to, you now owe a third party company. 

A deed of assignment of debt is a legal documen t alerting you of the transfer of ownership of your debt to another person. The right to receive payment from the debt you owe is transferred over to this new party as well.

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What does a Deed of Assignment of Debt mean?

A deed of assignment of debt is used to transfer or sell the right to recover a debt .

Without a deed of assignment of debt, the two companies are not able to do this – you need a written transfer document. 

Once the transfer document, or deed of assignment of debt, has been signed by the assignee (the party transferring the debt) and the party receiving the debt ( assignor ), they must give notice to the debtor (the person that owes the company the sum of money).

Notice must be given within 7 days of assigning the debt. Unless someone gives notice to the debtor, then the new owner of the debt can’t enforce the debt by suing in court.

Is there more than one type of assignment? 

Confusingly, there are actually two different sorts of assignment that a creditor can make. These are Legal and Equitable.

Both types of assignment fall under the Law of Property Act 1925 , and both require the creditor to inform you of the change in writing – this is known as a notice of assignment of debt .

1. Legal Assignment

Legal assignment of debt gives the company who are purchasing the debt the power to enforce it .

Basically it means that you make payments to this company instead of the original creditor, and they can send you letters and make calls to your home.

2. Equitable

If a debt is an equitable assignment, only the amount you owe is transferred , and the original creditor will still retain the original rights and responsibilities .

The purchasing company will not be able to enforce the debt either.

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Why do companies sell their debts?

A deed of assignment of debt can be a real headache, as you now have another layer of money owed. You will probably rightly ask yourself – why? And how can they sell it?

It may seem strange and confusing, but it’s actually completely legal for them to sell your debt . When you sign a credit agreement, there is almost always a clause in fine print that states that the original creditor has the power to assign their rights to a third party.

As you have signed this agreement, they don’t actually need to ask for your permission to assign your debt.

This also means that you cannot dispute it or make a complaint about it either. The only exception to this rule is if you have given evidence of mental health issues .

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Deed of Assignment of Debt – next steps

So that’s the basics about a Deed of Assignment of Debt. But what does this mean for you? 

If your creditor passes one of your debts onto a third party company or debt collection agency, it will be officially noted that this new company is now responsible for collection .

You will be able to see this change on your credit report , and any defaults will also be registered in their name too. 

While it certainly adds another layer of confusion to proceedings and you may be unsure of what’s going on when you find out about a deed of assignment of debt, it can occasionally be a bit of a blessing in disguise. 

You may find it much easier dealing with the new company, as they could be more flexible when it comes to discussing interest and additional charges.

There is also the likelihood that these companies actually specialise in collecting debts , and so know how to approach you as the customer with more tact and delicacy than the original creditor.

Is there something missing? We’re all ears and eager to improve. Send us a message and let us know how we can make our article more useful for you.

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What Is a Deed in Lieu of Foreclosure? An Option for When You Default on Your Mortgage

A deed in lieu of foreclosure is one of the options available to homeowners who default on their mortgage .

For borrowers at risk of losing their home, a deed in lieu of foreclosure can be a better solution than a full foreclosure  for a number of reasons—chief among them the fact that your credit score will take less of a hit.

Here’s what to expect when you’re asking a lender to consider this.

What is a deed in lieu of foreclosure?

Homeowners who decide not to fight to keep their homes or to stave off foreclosure can instead pursue a deed in lieu of foreclosure. A deed is essentially a legal and binding document that transfers the title from the homeowners to the bank that holds the mortgage.

This process means signing over any legal right to your home, and handing over both the deed and the keys to the house. In exchange, the lender agrees to immediately release the borrowers from their mortgage obligations. Lenders tend to be open to this option. After all, when a homeowner comes to a bank and says, “Take my house, I know I can’t pay,” a lender is saving the costs that come with a traditional foreclosure process.

The same goes for the homeowner. “They give the house back to the lender to avoid the hassle of dealing with the legal process and harm it causes to their credit,” explains  Eric Wilson , director of operations at Better Mortgage, an online direct mortgage lender in New York City.

This approach was especially common in the early 2000s, says  John Moran , a home mortgage specialist in Telluride, CO. Banks would often make deed in lieu of foreclosure a more appetizing option by throwing in some cash to sweeten the deal. Often called “ cash for keys ,” the option allows homeowners to leave the home in good condition and provide the deed in return for a cash payment.

Be aware that some mortgage agreements don’t allow for a deed in lieu of foreclosure.

“Most loan programs have specific guidelines that determine what options a homeowner can pursue when they go into default,” Wilson says.

Advantages of a deed in lieu of foreclosure for borrowers

If your mortgage service has given you the go-ahead for a deed in lieu of foreclosure, there are some things that will benefit you.

By admitting fault from the start, a homeowner essentially stops foreclosure proceedings in their tracks. The bank doesn’t have to file paperwork, and the homeowner doesn’t have to go through the back-and-forth of whether or not the bank will take the house.

While some homeowners want to delay the process while they scramble to pull together the cash to save their home, opting for the deed in lieu of foreclosure can be a relief, Moran says.

“It also allows them to begin fresh sooner than they might if they were to go through the process of a full foreclosure,” he says. “The mental toll on a family waiting to be foreclosed upon is pretty significant, so the deed in lieu gives them some control over the timeline.”

There can be financial advantages, too. Most homeowners walk away from the mortgage without having to pay the difference between the money owed and the value of the home when the lender sells it, saving them a large chunk of cash. Some banks even provide money directly to the borrower—in the “cash for keys” situation.

And while foreclosure will almost certainly hurt your credit score, a deed in lieu of foreclosure tends to be viewed more favorably by future lenders, Wilson says.

It’s rated on par with a short sale by most creditors who are reviewing a borrower’s ability to purchase a future home.  Fannie Mae and Freddie Mac guidelines require just four years from a deed in lieu or short sale before allowing someone to take out another home loan. If a full foreclosure takes place, a seven-year waiting period is required.

And while short sales require listing a home and trying to find a buyer to get out of foreclosure, the deed in lieu process skips that step. Your bank will have to find a buyer, allowing you to walk away without another headache.

Disadvantages of a deed in lieu of foreclosure for borrowers

Despite all these advantages, a deed in lieu option does not always guarantee you will save money. In some states and situations, the homeowner may be on the hook for the difference between what was owed and what the lender was able to recover when tax season comes around.

There’s also the credit hit to consider. While this route does mitigate the damage to a credit score that’s suffered if the bank forecloses, the deed in lieu route still shows up negatively on a credit report.

Moran says some lenders report a deficiency (the amount of money they were not able to recoup when the property was eventually sold) as a separate derogatory account on credit.

“The impact of the entire situation will depend on how long the loan was in default, when the deed in lieu or short sale took place, and how the lender reported the whole situation to the [credit-reporting] bureaus.”

Experts suggest consulting an attorney and having a conversation with your lender before you offer up a deed in lieu of foreclosure.

Jeanne Sager has strung words together for the New York Times, Vice, and more. She writes and photographs people from her home in upstate New York.

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