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Murdoch's Term of the Week: Assignment of Contract

Assignment of Contract:

Generally liabilities under a contract cannot be assigned without the consent of the other party to the contract. Liabilities can be assigned by Novation (qv). Some contractual rights in a contract cannot be assigned eg those involving Contracts of Service (qv) and some others require to meet statutory requirements eg transfer of shares in a company.

Other rights may be assigned in a number of ways: (a) by operation of law eg death passes the rights and liabilities of the deceased to his Personal Representatives (qv); bankruptcy passes all rights and liabilities to the Official Assignee in bankruptcy; (b) under equity, but the assignee takes subject to equities and (c) under the Judicature Act 1877 which carries the advantage that the assignee can sue in his own name; the assignment must be absolute, in writing with notice also in writing to the debtor and the assignee still takes subject to equities.

The assignment of insurance contracts is generally limited to those of life insurance, which is effected either by an endorsement on the policy itself or by a separate document, and gives to the assignee the right to sue thereon in his own name. See also Marine Insurance Act 1906 ss. 15 and 50.


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