Assignment of a Chose in Action

Generally, a chose in action may be assigned, subject to exceptions.  A legal assignment may be effected in accordance with the Supreme Court of Judicature (Ireland) Act, 1877.  An equitable assignment is one which falls short of the requirements of a legal assignment, but to which effect is given by a court of equity.

In certain cases, the assignment is by a method peculiar to the nature of the right.  Negotiable instruments are assigned by delivery and/or endorsement. Policies of assurance are subject to special legislation. Securities generally require an instrument of transfer and registration in the company’s records. Certain choses in action are not assignable for reasons of public policy.

An assignment in writing is stampable. Most now qualify for stamp duty relief.

Statutory Legal Assignment

The 1877 Act, which merged the courts of law and the courts of equity, provides that a legal assignment must be in writing, signed by the assignor.  It must be absolute and must not be by way of charge.  Notice of the assignment must be given to the debtor or obligor.  Proof of notice is best obtained by an acknowledgement of notice signed by the obligor.  The assignment is perfected from the date of notice and is subject to any equities which subsist and have priority over the rights of the assignor, at that date.

The provisions do not make assignable, contracts which are not assignable in equity.  Contractual rights but not obligations are usually assignable.  Many contractual rights will not be assignable, as they must be performed by the counterparty personally (or through its particular agents).

It may or may not be permissible, as a matter of interpretation, to subcontract elements of performance. A sum due under a personal service contract may be assigned, notwithstanding that the personal service obligation itself is not assignable.

A legal assignment has advantages in terms of enforceability. A debt must be for a definite sum in order to be assignable under the statutory provisions for legal assignment under the 1877 Act. The assignment must be absolute and not be by way of charge.

The assignment of the balance remaining after payments and deductions to be made may be an effective legal assignment, on the basis that it attaches to an ascertainable balance. Also held to be within the legislation are judgment debts, rent already accrued, debts due on mortgage covenants and deposits standing at banks. A future debt may be capable of falling within the legislation.

Choses Non-Assignable under Act

Choses in action which are not assignable under the Act, include

  • the equity redemption under a mortgage already assigned by way of mortgage;
  • the right to sue for breach of contract;
  • the right to sue for damages in tort;
  • the benefit of a contract to lend;
  • contracts requiring special qualifications on the part of the parties; and
  • shares in a company.

These rights may be assignable by other means and mechanisms, but not by way of the mechanism in the Judicature Act.

A voluntary assignment may be within the Act, even if it would not be enforceable in equity by the assignee as against the assignor. The obligor may not take this up as a defence in an action by the assignee.

Requirements for Assignment

The assignment must be in writing “under the hand” of (signed by) the assignor.  No particular form of writing is required.  Formerly, many written assignments were stampable, but wide-ranging exemptions now exist for assignment of debts and obligations due.

In order for the legal assignment to take effect, notice must be given to the debtor, trustee or other person who owes the obligation (the obligor).  The notice need not be formal. It may be given to the personal representatives of a deceased obligor.  In the case of a company, a notice to the appropriate directors or managers will suffice.

Insurance policies are subject to the same rules as apply to legal assignments. This is confirmed by statute; the Policies of Assurance Act 1867

Effect of Statutory Assignment

An assignment under the Supreme Court of Judicature (Ireland) Act 1877 transfers the legal right to the assigned obligation /thing as and from the date of the notice.  The assignee may sue in his own name to enforce the assigned obligation. A legal assignment passes the full benefit of the chose in action to the assignee.

It may be enforced by the assignor in his own name in cases where before the Act, he could have sued in equity in the name of the assignor. An assignee of a judgment debt may enforce it by the usual means of enforcement.  There may be rules applicable to the method of enforcement which must be considered in the case of an assigned judgment debt.

The assignment is subject to the existing equities in respect of the chose in action which have priority.  The assignee cannot be in a better position than the assignor.  Equities and rights of the obligor which exist prior to the assignment will affect the assignee.

Where the obligor has notice that the assignor or someone who claims through him, disputes the assignment, interpleader may be required.

Equitable Assignments I

Certain categories of rights were not assignable at law but were assignable in equity.  The 1877 Act applies to certain such rights, so as to make them assignable at law. This category includes certain rights of compensation for compulsory acquisition, the benefit of certain types of supply contracts and certain types of covenant.

Equity recognises assignments of choses in action when made for valuable consideration and not contrary to public interest.  Equitable assignments may be by way of charge.  They may be based on a contract or by a direction to a third person such as a mandate.  A mandate may be revocable or irrevocable.

No particular form of wording is required for an equitable assignment.  It may be verbal, except where required by law to be in writing, as is the case in relation to an assignment of an interest in land.  It may be addressed to the debtor or the assignee.  It may arise out of a course of dealing.

Equitable Assignments II

An assignment of a chose in action may be enforced in equity even if given without value provided the donor has done everything in order to transfer the debt or fund.  Equitable assignments include directions and letters requesting monies to be paid from particular funds or accounts. An assignment of future assets may operate as a contract to assign when the property comes into existence. Accordingly, consideration is required.  An assignment by way of charge must be based on a contract / obligation and requires consideration.

A declaration of trust for the benefit of another may suffice for an equitable assignment.  An order by a creditor to a debtor to pay money to a third party where no fund is specified is not an equitable assignment.  An agreement to pay the proceeds of sale of goods purchased with borrowed money is not sufficient to assign the proceeds

A possible interest is not assignable at law.  If the assignment is for value and is binding on the conscience of the assignor, it may be binding in equity if it is of a type and nature capable of being identified. An equitable assignment does not become effective until communicated to the assignee.  It may be revoked prior to communication.

Imperfect Assignments

A request by a party who has the funds of another, made to that other to pay a sum to a third party if not communicated to the latter, is insufficient.  A direction to pay to the account of the creditor at a bank is insufficient.  An authority to collect freight given by the master of a ship to an agent is insufficient.

A garnishee order is not an equitable assignment. A promise to pay when certain funds are received is insufficient to assign or charge those sums.  A letter from a bank stating it has opened a credit for a particular sum is not an equitable assignment of that sum.

As between assignor and assignee, an equitable or incomplete assignment is effective notwithstanding that notice has not been given to the obligor, debtor, fund holder etc.  Notice is not necessary as regards third-parties who stand in the same position as the assignor, such as a receiver, a creditor who has obtained a charge over the proceeds or the benefit of a garnishee order etc.


Notice is necessary to the obligor/debtor in order to bind him to make the payment to the assignee. If the obligor pays the assignor before the assignee gives notice, then the assignee must give him credit for the payment to the assignor.  This is so even if a cheque is still outstanding in the hands of the assignor for the sum concerned.

Except where writing is required by statute, formal notice need not be given provided the assignment is definitely brought to the attention and mind of the obligor/fund holder concerned.  Notice of any disposition of an interest in the land must be in writing.  Notice given to a trustee of land after the creation of a trust must be given in writing. The notice may be received from a third party. However, it must be in definite and not be in mere casual terms.

The notice need not specify the amount of the charge. The person to be served is the person who is obligor or holds the relevant fund.  This may be a trustee, registrar, debtor etc. depending on the nature of the interest.  In some cases, the statute indicates who is to be served.

Where there are several trustees or joint obligors, it is best to give notice to each of them.  Complicated issues may arise where one trustee only has notice of the assignment. It is generally sufficient to give notice to one trustee alone, although in some cases, this may not be sufficient.

In the case of stocks and shares standing in the books of public authorities, notice may be given by service of an affidavit and notice in the manner prescribed by the rules of court.  If funds are in court, the notice is by way of a stop order. In the case of shares, notice is given to the company secretary.

Priority and Notice

Notice of the assignment must be given to the debtor or obligor.  Proof of notice is best obtained by an acknowledgement of notice signed by the obligor.  The assignment is perfected from the date of notice and is subject to any equities which subsist and have priority over the rights of the assignor, at that date.

Priority as between multiple assignments by the same assignor is determined by the order in which notice is given to the obligor.  Accordingly, if a second assignee gives notice first, he obtains priority, provided that he had no knowledge of the prior assignment.  The relevant time for the purpose of knowledge is the time when the security is taken, and not when notice is given.

Constructive notice to a second assignee of a prior assignment is sufficient.  Mere notice of the existence of a prior document which may or may not affect the property is insufficient. The absence of negligence on the part of the first assignee who does not give notice before the second assignee does so is immaterial.

Subject to Equities I

An assignee of a chose in action takes it subject to all rights as subsist between the obligor and the original debtor/assignor.  He is said to take it subject to the “equities” and rights as may exist.  The equities apply as against the assignor but not as against intermediate assignors.  With statutory exceptions, the assignee is not in any better position than the assignor, relative to the obligor.

The assignee should make enquiries of the obligor, who, however, is not bound to give information unless the notice shows that the assignee has been deceived.  In this case, if the debtor does not disabuse him of the misapprehension, he may be prevented from taking advantage of equities / rights as between himself and the assignor.

If the original obligation is voidable, so as to be vulnerable to be set aside due to some misrepresentation, fraud, mistake etc., the assignee takes it with this vulnerability.  The principle of negotiability is an exception to this principle so that in some cases, the assignor can give a better title than he himself holds.

Subject to Equities II

Where the assignor has a right to set-off which has accrued before notice, he may avail himself of the right against the assignee.  This may be varied by the terms of the contract.  Where the debt assigned is payable in the future, the debtor may set-off a debt which becomes payable by the assignor after notice of the assignment, but before the assigned debt becomes payable. This is so, provided the debt to be set-off matured at the date of the notice. It must be a present debt, albeit payable in the future.

The obligor may not set off an independent debt which has accrued since the notice of assignment, although due under a contract made before that date.  He may set-off a debt accrued before notice, if it has arisen out of a transaction inseparably connected with the original debt / transaction, or if it was the intention of the parties, that one should be set off against the other.

The debtor may meet the assignee’s claim by a counterclaim for unliquidated damages against the assignor if they arise out of the same contract.  The assignee cannot be made liable, but set-off may be allowed.  The counterclaim must arise out of the same contract and not something done outside it (as for example, a personal claim for fraud against the assignor).

Subject to Equities III

When the benefit of a contract is assigned, the assignee takes it subject to the rights of the other party to the contract, except those which are of a purely personal nature.  The debtor may contract out of his right to enforce equities against the assignee, or he may release them.  He may by his conduct waive the right to enforce them.

The assignee in due course of a negotiable instrument generally takes it free from equities. This is similar to the position of a pledgee in good faith of share certificates.

An equitable assignment transfers the right to recover the debt / obligation.  If the claim is “legal” and the assignment is absolute, the assignee may sue in his own name without making the assignor a party.  If the chose in action is “equitable”, the assignor must be made a party to the action, either as plaintiff or defendant.  Where there is an assignment by way of security, the assignor must be made a party, for the reason that he has a right to redeem.


If the assignor does not take legal action, the assignee may do so in the name of the assignor subject to giving a proper indemnity against costs and charges, consequent on using his name.  If the assignor fails or refuses to permit his name to be used, he may be made a defendant.  The court may dispense with the assignor being a party, if he cannot be found or if his interest in the matter has ceased.

Where there are several parties who have an interest in the matter, all must be made a party to an action.  An account may be required to be taken of the share of profits, where there are multiple parties entitled.

After the debtor/obligor receives notice of the assignment, he must not pay the assignor.  He is liable to the assignee and payment to the assignor does not discharge him.  Payment may be made with the consent of the other party to either the assignor or assignee.


Certain types of chose in action may be assigned by statute.  These include

  • administration bonds;
  • negotiable instruments;
  • shares;
  • interest in government stock;
  • debentures and mortgages issued by companies;
  • shares in a company;
  • policies of assurance;
  • copyright

Bills of lading are assignable, and the assignee may sue on them in his own name, subject to the liabilities as if the contract has been made with him.

Bills of exchange, promissory notes, bearer drafts, policies of insurance and bills of lading are assignable at common law.  In some of these cases, the assignment is now regulated by statute.

Non-Assignable Choses

Some kinds of chose in action are not assignable for public policy reasons.  This includes public salaries and pension, most social welfare and social insurance benefits. Sums received by a spouse arising from matrimonial proceedings are not assignable.

A bare right of litigation is a mere right to damages and is not assignable.  An assignment of the right to sue on the chance of recovery is void.  An assignment of a licence to take possession of goods, an assignment of a right to set aside a deed, an assignment of a debt due from a company coupled with the right to proceed with a winding-up already filed, is invalid.

Contracts involving personal skill and confidence are not assignable.

Parties may by express provision render the benefit of a contract incapable of being assigned. The insertion of a condition against assignment does not necessarily prevent assignment of the beneficial interest.

Location of Chose

A chose in action, being a right to recover by legal action, does not have a specific local existence.  Debts are treated as having a location for the purpose of conflict of laws, taxation and other purposes. The chose in action are regarded as situated in the jurisdiction where they may be enforced. This is generally the place of residence of the debtor.

Specialty debts are those acknowledged in an instrument delivered as a deed.  At common law, they are situating where the instrument is situated.

The capacity to assign a chose in action is governed by the law of the domicile of the assignor or the law of the country where the assignment takes place.

References and Sources

Irish Texts

Modern law of personal property in England and Ireland 1989  Bell

Consumer Law Rights & Regulation 014       Donnelly & White

Commercial Law White           2012 2nd ed

Commercial & Economic Law in Ireland        2011 White

Commercial Law 2015 Forde 3rd ed

Irish Commercial Precedents (Looseleaf)

Commercial & Consumer Law: Annotated Statutes 2000  O’Reilly

Personal Property Law: Text and Materials  2000  Sarah Worthington

Personal Property Law (Clarendon Law Series) 2015 Michael Bridge

The Law of Personal Property 2017   Professor Michael Bridge and Prof. Louise Gullifer

The Principles of Personal Property Law 2017  Duncan Sheehan

Crossley Vaines on Personal Property 1967 by J C Vaines

The Law of Bills of Sale 2017 James Weir

Palmer on Bailment 2009  Norman Palmer

The Reform of UK Personal Property Security Law: Comparative Perspectives  2012 John de Lacy

The Law of Personal Property Security 2007  Hugh Beale and Michael Bridge