Notice Of Assignment Of Debt

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Should C be an equitable assignee, similar proceedings 3. The chose in action arising from the debt owed by A to B is legal and not equitable, since such chose in action would have been recovered or enforced by an action at law, prior to the enactment of the Judicature Act 1873.

Others would include: appointing C as B’s agent or attorney for the purposes of accepting payment from A, coupled with a mandate that C need not account to B for such receipts; promising to permit C to use B’s name (on an indemnity for costs) to bring legal proceedings against A on the debt, if unpaid; entering into a tripartite agreement wherein in consideration for A’s obligation to make payment to B being discharged, A promises to make payment to C (ie, a novation); or where, following a request by B that A make payment of the debt owing to B to C, A “acknowledges” to C that A will pay to C the sum otherwise payable to B on account of the loan agreement between them, eg, Shamia v. References to choses in action hereafter should be taken to refer to legal and not equitable choses , unless indicated otherwise. For ease of exposition, this paper will concentrate on the question as to whether a debtor is entitled to claim to be discharged by precise performance of her contractual obligation to pay her creditor.

If not, it may be equitable should the intention to make such an assignment be sufficiently made manifest.

Should C not be paid, as a statutory assignee, C is entitled to bring legal proceedings against A on the debt 5 directly in his own name.

When this is done, the assignment is complete, and a subsequent failure to give notice thereof does not affect the validity of the assignment.”[v] Even if the attaching creditor had no notice of the assignment at the time of institution of proceeding is immaterial and in such situations, the rights of the parties does not depend on notice because “a creditor can subject to legal process only the interest of his debtor, and his debtor has no interest in a chose in action he assigned before seizure by legal process.”[vi] Notice to the debtor of an assignment is not necessary to render the assignment binding as between the assignor and the assignee.

However, a debtor is not bound by the transaction until he/she receives notice of the assignment.It is suggested that neither the doctrine underlying equitable assignment nor the legislative framework for statutory assignment provides any basis for abrogating these two common law rules.It may therefore be time to upset this “well settled” rule. INTRODUCTION Notice plays an important role in the equitable assignment of legal choses in action, such as a contractual debt.As for negotiable instruments, notice to the maker of the transfer of the note is not required.This is because the maker can protect himself/herself by demanding production of the instrument and refusing to pay a party not in possession of it.[iv] Some courts have taken a contrary view and criticized the requirement of notice to perfect title in the assignee.This is prompted because the rule as applied in the context of equitable assignment of a debt presents a contradiction: it does not explain how it is that the common law rules as to discharge by precise performance and the invariability of contractual obligations are displaced by what appear to be equitable doctrines relating to assignment and notice thereof.By examining the mechanics and subject matter of an equitable assignment of a chose in action, this paper will demonstrate that the rule may, perhaps, have been too broadly stated and that the true position is quite otherwise: that a debtor is discharged from her obligation to make payment so long as she precisely performs her obligations as set out in the contract, even if the rights under that contract have been assigned to a third party to that contract, the equitable assignee, and even if she has been notified of such assignment.1 As noted in a recent treatise, 2 once the debtor is given notice of the equitable assignment: (i) should she pay the sum owed to her creditor, she is not discharged from her obligation but will have to make payment again to the assignee [the “no discharge after notice” rule]; (ii) the assignee’s right against the debtor has priority against subsequent assignments by the assignor, in order of precedence of notice [the rule as to priorities]; and (iii) the debtor is no longer entitled to assert such equities as may arise between herself and the creditor post-notice to reduce her liability to the assignee by way of set-off [the rule as to equities].Leaving aside discussion of the second and third of these rules for another day, this paper will focus on an examination of the “no discharge after notice” rule.This document will also create the required notice to the debtor, informing him/her that the debt has been assigned.An assignment is a transfer of property or of a right or interest in such property, from one person to another and the right to receive money due or to become due is generally assignable.


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