Notice Of Assignment Of Debt

Notice Of Assignment Of Debt-43
Once the obligor has notice of the assignment, a settlement and release with the assignor will not defeat the assigned right.[xi] However, if the obligor pays the assignee after notice, even if there is a defect in the right of an assignee, the assignee has the same power that the assignor had to discharge or modify the duty of the obligor.The assignee can discharge or modify the duty of the obligor only if the obligor gives value to 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.

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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.

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.

If you wish to assign the payment of a debt that is owed to you to another person (the assignee), you can use this document to do so.

Once this debt has been assigned and the debtor has been notified of this assignment, the debtor will pay the debt to the assignee.Notice of assignment and discharge by performance Chee Ho Tham * “A debtor (A) who makes payment to the creditor (B) after having been given notice of its assignment to an assignee (C) is at risk of having to make payment again.” This appears to be a “well settled” aspect of the “transfer” of the legal rights to a debt effected by either equitable or statutory assignment.Yet it contradicts the common law rules as to invariability of a contractual obligation and the automatic discharge of an obligation when it is precisely performed.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.Thus, courts have held that notice to the debtor or to creditors of the assignor is not indispensable to complete the assignment.“The essential element is the bona fide agreement between the assignor and assignee, for a sufficient consideration and without intent to defraud creditors or subsequent purchasers.Even a preexisting debt can constitute sufficient consideration for assignment.[i] Although notice of assignment is not an essential prerequisite for assignment’s validity, notice is required in order to charge a third-party with the duty to make payment to the assignee.[ii] Paying the wrong party does not discharge a negotiable instrument.The paper will then examine whether the same may be true in the case of a statutory assignment. “NO DISCHARGE AFTER NOTICE” Say A owes B £1,000; but B owes £1,000 to C.It would not be unusual for B to wish for C to be “paid”, not directly by himself, but by A.

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