assignment in french law

Reform of the French Civil Code on contract law and the general regime and proof of obligations

Global |  Publication |  October 2016

On October 1, 2016, Order n°2016-131 of February 10, 2016, modifying the French Civil Code provisions on contract law and the general regime and proof of obligations, entered into force. The Order codified principles which have emerged from the case law of the French courts but also created a number of new rules applicable to pre-contractual and contractual relationships.

Pre-contractual relations

New article 1104 provides that contracts must be negotiated, concluded and performed in good faith 1  (previously the implied obligation of good faith applied only to performance) and failure to comply with such obligation can not only trigger the payment of damages, but also result in the nullification of the contract. New article 1112-1 provides specifically that if one party to the contractual negotiations is aware of information the significance of which would be determinative for the consent of the other party (except for information relating to the estimation of the value of services to be provided under the contract), it must inform such other party thereof if such other party is legitimately unaware of such information or relies on the first party.

New articles 1115 and 1116 provide that contractual offers 2 may be retracted if they have not yet reached the offeree, but they may not be retracted prior to any period for acceptance stated in the offer (or, if no such period is stated, a reasonable period). Offers retracted in violation of such rule but prior to acceptance prevent the conclusion of the contract; in such case the only remedy is damages, and such damages are limited to the costs and expenses resulting from the non-conclusion (and not anticipated profits). Conversely, new article 1118 provides that acceptance of the offer may be freely retracted as long as it has not been received by the offeror.

New article 1119 provides that general conditions invoked by a party have no effect against the other party unless they have been made known to such other party and accepted by it. In the event of a “battle of the forms” between two series of general condition (e.g., general sales conditions and general purchase conditions), those conditions which conflict are without effect.

Preference pacts and unilateral promises

Under new article 1123, if the undertaking party in a preference pact enters into an agreement in violation of this preference pact, the original beneficiary may obtain damages, and, if the new counterparty knew of the existence of the preference pact and the intention of the beneficiary to benefit thereby, the beneficiary may bring an action to have the offending contract declared null or request the judge to have the beneficiary substituted for the offending party in the contract. A third party may request in writing that the beneficiary of a preference pact confirm, within a reasonable period specified in the written request, whether or not there is a preference pact in force and if the beneficiary intends to rely thereupon. If no response is made to the request, the beneficiary of the preference pact may no longer request to be substituted for the requesting party or to have the contract declared null and void.

Contradicting previous decisions of French courts, new article 1124 provides that a contract concluded in violation of a unilateral promise with a third party which knew of the existence thereof is null and void.

Economic violence and unequal clauses

New article 1143 provides that violence exists when a party, abusing the state of dependency in which its co-contracting party finds itself, obtains from such co-contracting party an undertaking which such co-contracting party would not have otherwise agreed to in the absence of such constraint, and benefits thereby from a manifestly excessive advantage. The requirement to obtain a manifestly excessive advantage was added just prior to promulgation in order to limit the scope of this provision to particularly egregious situations.

Under new article 1171, in standard form agreements imposed by one party on another 3 ( contrats d’adhésion ), contractual clauses (other than those dealing with the principal object of the contract or with the price of the service provided) which create a significant imbalance ( déséquilibre significatif ) between the rights and obligations of the parties to the contract can be deleted by the judge at the request of the contracting party to the detriment of which it was stipulated. The limitation of this principle to “adhesion contracts” was added prior to promulgation of the Order, again in order to limit the scope of the provision to circumstances in which the party suffering from the “significant imbalance” had no opportunity to negotiate the contract.

Interpretation and nullification of contracts

French law has historically provided that a court interpreting an ambiguous contractual provision must determine the parties’ actual subjective intention rather than simply construing the actual words of the contract in an objective manner. This has been traditionally opposed to the Anglo-American principle of interpreting ambiguous provisions in the manner a “reasonable person” would understand them. However, under new article 1188, if the mutual intention of the parties cannot be determined, the contract is to be interpreted according to the sense that a reasonable person placed in the same situation would give to it. In standard form agreements ( contrats d’adhésion ), new article 1190 provides that, in the case of doubt, the contract is to be interpreted against the party who proposed the contract.

New article 1179 distinguishes between absolute nullity (in the case of contracts which violate a provision of law which protects the general interest), which can be requested by any person who can demonstrate an interest as well as by the public prosecutor, and relative nullity, which can be requested only by the person which the law is intended to protect. A party may request in writing to a person who would be entitled to claim the nullity of a contract either to confirm the validity of the contract or to bring an action to nullify the contract within six months, failing which the person will be foreclosed from alleging the nullity. If an action in nullity is not brought within six months, the contract will be deemed to have been confirmed. Under new article 1186, a contract validly formed may also become lapsed ( caduc ) if one of its essential components disappears. If the performance of several contracts is necessary for the realisation of the same transaction and one of such contracts disappears, all of the contracts the performance of which is rendered impossible by such disappearance, and all those for which the performance of the contract which disappeared was a determining condition of the consent of a party are also rendered caduc ; however, this only occurs if the contracting party against which such caducité is invoked was aware of the existence of the entire transaction when it consented to the contract to which it is a party.

Hardship and force majeure

New article 1195 provides that if a change in circumstances which could not have been predicted at the time the contract was entered into renders performance of the contract excessively onerous for a contractual party who had not assumed such risk, such party may request its counterparty to renegotiate the contract. The requesting party must continue to perform its obligations during the renegotiation. In the event of refusal of the other party to renegotiate or in the event that the renegotiation is not successful, the parties may agree to terminate the contract on the date and on the conditions determined by the parties, or mutually request the judge to adapt the contract. Without an agreement within a reasonable time period, the judge may, at the request of a party, revise the contract or terminate it. Because the article expressly states that it does not apply to a party who has assumed the relevant risk, it is likely that parties to French law contracts will henceforth include language specifically stating that risk of “hardship” is assumed; the Loan Market Association has for example recommended such an approach to loan agreements.

Force majeure is defined by new article 1218 as the occurrence of an event which is beyond the control of the obligor, which could not have been reasonably foreseen at the time of the entry into of the contract and the effects of which cannot be avoided by appropriate measures and which prevents performance of its obligation by the obligor. If the effects are temporary, the performance of the obligation is suspended unless the delay resulting therefrom justifies termination of the contract. If the effects are definitive, the contract is automatically terminated and the parties are discharged of their obligations (without damages being due).

Transfer of contracts, rights and obligations

New article 1216 provides that a contracting party may, with the consent of its co-contracting party, assign its position as party to a contract; such an “assignment of contract” ( cession de contrat ) will simplify considerably the manner in which contractual transfer occurs under French law. Such consent may be given in advance, including in the contract entered into between the future assignor and assigned party, in which case the assignment enters into force with respect to the assigned party when the contract concluded between the assignor and the assignee is notified to the assigned party or when the assigned party so acknowledges. The assignment must be made in writing or it is null and void. If the assigned party so expressly consents, the assignment of the contract liberates the assignor for obligations arising after the assignment; otherwise the assignor remains jointly and severally liable for the performance of the contract. If the assignor is not discharged by the assigned party, any security interests previously granted remain in force. Otherwise, security interests granted by third parties remain in force only with their agreement. If the assignor is discharged, any joint and several co-obligors remain liable, after deducting the share of the assignor in the obligations.

Assignment of receivables no longer requires to be effective as against the obligor of the receivable to be served on such obligor by huissier de justice ( signification ); under new article 1324, simple notice to or acknowledgement by the obligor is sufficient, and even this is not necessary if the obligor has given advance consent to such assignment. The assignment of receivables must be made in writing or it is null and void.

Assignment of debts ( cession de dettes ) is specifically permitted under new article 1327, as long as it is consented to or acknowledged by the creditor, including by the giving of advance consent. If the creditor so consents, the original obligor is discharged of its obligation; otherwise it is jointly and severally liable for payment of the debt. If the original debtor is not discharged of its obligation then the security interests which were originally granted survive; otherwise security interests granted by third parties only survive with the agreement of the persons having granted such security interests. If the assignor is discharged, any other jointly and severally liable co-obligors remain liable after deduction of the assignor’s portion of the debt.

Remedies for non-performance (new article 1217)

As revised, the Civil Code now sets out several different remedies for contractual non-performance:

• Refusal of the performing party to perform its own obligations or suspension of such performance ( exception d’inexécution ), not only when the other party is already failing to perform, but also when it is manifestly clear that the other party will not perform on the date performance is contractually required and if the consequences of such non-performance are sufficiently serious for the otherwise performing party.
• Specific performance ( exécution forcée ), after serving formal notice on the non-performing party to perform ( mise en demeure ) and unless such performance is impossible or if there exists manifest disproportion between the cost of performing for the obligor and the interest in performance for the obligee. It is also possible for the obligee, following the giving of a mise en demeure , to perform the obligation itself or cause it to be performed, with a reasonable time period and at a reasonable cost, or, following receipt of prior authorisation by the judge, destroy anything done in violation thereof. The obligee may request the obligor to reimburse sums paid by the obligee for such purpose, and may also file a motion before the court asking the obligor to advance to the obligee the amounts necessary for such performance or such destruction. This new remedy is a substantial departure from previous practice, under which specific performance was rarely permitted.
• Accept imperfect performance and request a proportional reduction in price, following a mise en demeure .
• Termination of the contract, after a mise en demeure . A clause résolutoire in a contract must specify those obligations the non-performance of which will trigger the termination of the contract. If the contract does not contain a clause résolutoire , the obligee may terminate the contract in the event of a sufficiently serious case of non-performance by simple notification but at its risk. The obligee is always entitled to request the court to terminate the contract; in such case, the judge may either acknowledge or order the termination of the contract or order the non-performing party to perform either immediately or within a period fixed by the court, or simply order the payment of damages.
• In addition, damages, after a mise en demeure, can always be claimed, either alone or in conjunction with the other remedies.

The parties may not contractually limit or exclude such obligation.

Containing all the essential elements of the potential contract and expressing the willingness of its author to be bound in the event of acceptance.

 Prepared by one party in which the counterparty has little or no opportunity to negotiate.

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French Civil Code 2016

The law of contract, the general regime of obligations, and proof of obligations the new provisions of the code civil created by ordonnance n° 2016-131 of 10 february 2016 translated into english, code civil title iii the sources of obligations, sub-title i contract chapter i introductory provisions, chapter ii formation of contracts, section i conclusion of contracts sub-section 1 negotiations, sub-section 2 offer and acceptance, sub-section 3 pre-emption agreements and unilateral promises, sub-section 4 special provisions governing contracts made by electronic means 8.

The different steps that must be followed to conclude the contract by electronic means;

The technical means by which the person to whom the offer is addressed, before the conclusion of the contract, may identify any errors in the data entry, and correct them;

The languages offered for the conclusion of the contract, which must include the French language;

Where appropriate, the ways in which the party issuing the offer is to file it, and the conditions for access to the filed contract;

The means of consulting electronically any business, professional or commercial rules to which the party issuing the offer intends (as the case may be) to be bound.

SECTION 2 Validity of the Contract

the consent of the parties;

their capacity to contract;

content which is lawful and certain.

Sub-section 1 Consent

Paragraph 1 – existence of consent, paragraph 2 – defects in consent, sub-section 2 capacity and representation, paragraph 1 – capacity.

minors who have not been emancipated;

protected adults within the meaning of article 425.

1. as regards acts made by minors, from the day of achieving majority or of emancipation;

as regards acts made by a protected adult, from the day when he becomes aware of them, provided that he was in a position to remake the acts validly;

as regards the heirs of a person subject to guardianship (whether as a minor or an adult) or of a person subject to an order empowering their family to act on their behalf, 12 from the day of the death, unless it has started to run before that time.

Paragraph 2 – Representation

Sub-section 3 the content of a contract, section 3 the form of contracts, sub-section 1 general provisions, sub-section 2 special provisions governing contracts concluded by electronic means.

signed acts relating to family law or the law of succession;

signed acts relating to personal or real security, whether made under civil or commercial law, unless they are entered into by a person for the purposes of his business or profession.

SECTION 4 Sanctions

Sub-section 1 nullity, sub-section 2 lapse, chapter iii contractual interpretation, chapter iv the effects of contracts, section 1 the effects of contracts between the parties sub-section 1 binding effect, sub-section 2 proprietary effect 17, section 2 the effects of contracts as regards third parties sub-section 1 general provisions, sub-section 2 standing surety and stipulations for third parties, section 3 the duration of contracts, section 4 assignment of contract, section 5 contractual non-performance.

refuse to perform or suspend performance of his own obligations;

seek enforced performance in kind of the undertaking;

request a reduction in price;

provoke the termination 22 of the contract;

claim reparation of the consequences of non-performance.

Sub-section 1 Defence of Non-performance

Sub-section 2 enforced performance in kind, sub-section 3 price reduction, sub-section 4 termination, sub-section 5 reparation of loss resulting from non-performance of the contract, sub-title ii extra-contractual liability chapter i extra-contractual liability in general, chapter ii liability for defective products.

A person who presents himself as producer by attaching to the product his name, trademark or other distinguishing feature;

A person who imports a product into the European Community with the view to sale, hire (with or without an agreement to sell), or any other form of distribution.

that he had not put the product into circulation;

that, having regard to the circumstances, there is good reason to think that the defect causing the harm did not exist at the time when the product was put into circulation by him or that the defect arose afterwards;

that the product was not intended for sale or any other form of distribution;

that the state of scientific and technical knowledge at the time when he put the product into circulation did not allow discovery of the existence of the defect;

or that the defect is due to compliance of the product with mandatory legislative or administrative rules.

SUB-TITLE III OTHER SOURCES OF OBLIGATIONS

Chapter i management of another’s affairs, chapter ii undue payment, chapter iii unjustified enrichment, title iv the general regime of obligations, chapter i modalities of obligations, section i conditional obligations, section 2 time-delayed obligations, section 3 plural obligations sub-section 1 plurality of subject-matters, paragraph 1 – cumulative obligations, paragraph 2 – alternative obligations, paragraph 3 – optional obligations, sub-section 2 plurality of parties, paragraph 1 – joint and several obligations, paragraph 2 – obligations whose acts of performance are indivisible, chapter ii transactions relating to obligations, section 1 assignment of rights arising from obligations, section 2 assignment of debts, section 3 novation, section 4 delegation, chapter iii actions available to creditors, chapter iv extinction of obligations, section 1 satisfaction sub-section 1 general provisions, sub-section 2 particular provisions relating to monetary obligations, sub-section 3 notice to perform, paragraph 1 – notice to the debtor, paragraph 2 – notice to the creditor, sub-section 4 satisfaction with subrogation, section 2 set-off sub-section 1 general rules, sub-section 2 particular rules, section 3 merger, section 4 release of debts, section 5 impossibility of performance, chapter v restitution, title ivb proof of obligations, chapter i general provisions, chapter ii admissibility of kinds of proof, chapter iii the different kinds of proof, section 1 proof by written evidence sub-section 1 general provisions, sub-section 2 authenticated instruments, sub-section 3 signed instruments, sub-section 4 other writings.

wherever they formally acknowledge receipt of payment;

where they contain express mention that the writing has been made in order to remedy the defect in documentary evidence for whose benefit they refer to an obligation.

Sub-section 5 Copies

Sub-section 6 acts of acknowledgement, section 2 proof by testimonial evidence, section 3 proof by judicial presumption, section 4 admissions, section 5 oaths, sub-section 1 decisive oaths, sub-section 2 oath required by a court of its own initiative.

1 There is a difficulty in translating ‘le fait’ as sometimes it refers to a person’s action and sometimes more broadly to fact. We have therefore translated it differently according to context. 2 General note. The French uses “she” (elle) in this context because of the reference to la partie. Throughout the translation we follow the convention of English statutory drafting and use the masculine singular personal and possessive pronoun (which are to be read as referring equally to the feminine or neuter) rather than using “he/she”, “his/her” etc., or some form of circumlocution. 3 Here, ‘solemn’ refers to a particular class of contracts where formality is required, ‘les contrats solennels’: see below, arts 1172 – 1173. 4 ‘Bespoke contract’ translates ‘contrat de gré à gré’, which has the sense of a contract in which the parties come together in an amicable agreement. 5 ‘Standard form contract’ translates contrat d’adhésion, more literally ‘a contract to which one adheres’ and whose conclusion therefore involves no or little choice. 6 ‘Act of performance’ translates prestation in all cases except in the composite phrase ‘prestation de services’, which is translated as ‘supply of services’. See also note 10 to art. 1127-1. 7 The ‘general law’ (translating ‘le droit commun’) refers here to the general law of extra-contractual liability for fault under arts 1240 – 1241, below, except where the parties made contractual arrangements during negotiations. 8 Arts 1125 to 1127-6 implement Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) arts 9–11. Where the text of the Ordonnance follows the wording or the terminology of the French version of the Directive, we have used the counterpart in the English version of the Directive. 9 ‘Professionnel’ (either as a noun or an adjective) refers to a business as well as a profession in the usual English sense. 10 ‘prestation de services’ is the one phrase where we do not translate ‘prestation’ as ‘act of performance’, but as ‘supply’ of services. In a composite phrase like this (‘la fourniture de biens ou la prestation de services’) the reference to ‘supply’ covers both fourniture (of property) and prestation (of services). 11 ‘Employee’ here (and in art. 1242) translates ‘préposé.’ While this includes a person who works for another under a contract of employment (‘contrat de travail’), it is wider and extends to other situations where there is a ‘relationship of subordination’. The other party to such a relationship is termed le commettant, which we translate as ‘employer’: see art. 1242. We reserve the English ‘agent’ to translate ‘mandataire’: see art. 1301, below. 12 ‘[A] person subject to an order empowering their family to act on their behalf’ translates in an explanatory way ‘la personne faisant l’objet d’une habilitation familiale.’ On this habilitation familiale see arts 494-4 et seq of the Civil Code as inserted by Ordonnance n° 2015-1288 of 15 October 2015 concerning the simplification and modernisation of family law. 13 We have translated ‘opposabilité’ and its cognate terms by ‘set up against’. The sense of the French term is that a person may (or, as in art. 1156, may not) rely on a contract or other juridical act against another person. See further arts 1173, 1201, 1305-5, 1323, 1324, 1333, 1341-2, 1341-2, and 1346-5. 14 La résolution is used in the Code civil as promulgated in 1804 to denote the retroactive termination of a contract, coupled with (in principle) restitution and counter-restitution: this follows from the significance of its definition and use of la condition résolutoire: see arts 1183–1184 C.civ. Under the new law, la résolution is said to put an end to the contract (art. 1229 al. 1), but the effect of this may be retroactive or may instead be prospective, where it is termed ‘la résiliation’ (art. 1229 al. 3). We therefore use the neutral word ‘termination’ for la résolution and ‘resiling from a contract’ for ‘la résiliation’. 15 We translate ‘créancier’ generally as ‘creditor’ and ‘débiteur’ generally as ‘debtor’, following the French usage of these terms to denote the party with (respectively) the right and the duty under an obligation, without limiting such references to money obligations, as in the common usage of these terms in English law. 16 The ministère public is the magistrate who represents the public interest. 17 This translates ‘Effet translatif’, which refers to a contract’s effect of transferring property in a thing and this is the sense in which ‘proprietary effect’ should be understood. 18 This translates ‘fichier immobilier’. 19 Here ‘an office held by a professional who thereby enjoys public service powers’ translates in an explanatory way ‘un office ministériel’. 20 We translate ‘se porter fort’ as ‘to stand surety’, there being no exact equivalent in the common law; we translate ‘le cautionnement’ as ‘a guarantee’ and ‘la caution’ as ‘a guarantor’: see, e.g., arts 1335, 1350-2 and 1347-6. 21 Here, we have followed closely the language in the French, which itself evokes its own Romanist background. In English discussions, the ‘stipulator’ would often be termed the ‘promisee’. 22 See above, n. 14. 23 We translate ‘la résiliation’ as ‘resiling from a/the contract’ so as to distinguish it from ‘la résolution’ (‘termination’): see above, n. 14. 24 ‘Gross or dishonest fault’ translates ‘une faute lourde ou dolosive’. While we have translated ‘faute dolosive’ as ‘dishonest fault’, dishonesty for this purpose must be understood in a broad way so as to include situations treated as bad faith in the debtor, notably, where the non-performance is deliberate. 25 Here ‘employers’ translates ‘les commettants’ and ‘employees’ translates ‘[les] préposés’ on which see above, n. 11. 26 This translates ‘agissant à titre professionnel’: cf. above, n. 9. 27 This translates ‘de plein droit’. While in many discussions, this is to be understood to refer to ‘strict liability’ (as opposed to liability for fault) and the producer is liable strictly under these provisions, translating the first paragraph of art. 1245-10 as ‘The producer is liable strictly unless he proves’ one of the defences then set out would suggest that the defence changes the basis of liability (which is, of course, not the case). 28 We have translated ‘cédant’ as ‘original debtor’ as the context appears to so demand. 29 ‘His patrimonial rights and actions’ translates ‘ses droits et actions à caractère patrimonial’. Le patrimoine consists of the totality of a person’s property, rights and obligations. It is used by the Code civil, inter alia, in the context of a minor’s property (e.g. art. 387-1) and in the context of matrimonial property regimes (e.g. art. 1569). 30 As art.1354, below makes clear a ‘simple’ presumption is one which may be rebutted by proof to the contrary. 31 ‘The Caisse des Dépôts et Consignations is a special institution charged with the administration of deposits and consignments, the provision of services relating to the funds whose management has been entrusted to it, and the exercise of other functions of the same nature which are lawfully delegated to it’: art. L. 518-2 of the French Monetary and Financial Code (extract)). See further www.caissedesdepots.fr/. 32 We have translated ‘sous signature privée’ here as ‘privately signed’, but more generally we translate as ‘signed writing’, the significance being that something is merely signed as opposed to having been authenticated. Cf. arts 1369–1371 (on authenticated instruments) and 1372–1377 (on signed instruments). 33 This provision concerns various aspects of la comparution personnelle, which is a procedural mechanism for the collection of evidence available to a court and consists of the court putting questions orally to a party: see arts 184–194 Code de la procédure civile.

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• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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The Law of Assignment (3rd Edition)

Marcus smith, nico leslie.

This book is the leading text on the law relating to intangible property or choses in action. Its clear and approachable structure covers all forms of intangible property (debts, rights under contract, securities, intellectual property, leases, rights/causes of action, and equitable rights), considering the nature of intangible property, how it comes into being, and how it is transferred or assigned. The first part of the book analyses the general principles regarding intangibles and their transfer, and the second examines the practical considerations relating to particular types of intangibles, securities, insurance contracts, leases, and intellectual property under the law. This new edition includes new chapters on powers of attorney and factoring, areas particularly important to legal practice. Other significant developments include the expansion of the chapter on leases to include leasing of chattels, and more material on securities, especially regarding the operation of settlement systems.

Bibliographic Information

Affiliations are at time of print publication..

Marcus Smith, author

Nico Leslie, author

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• Foreword to The Third Edition
• Foreword to the Second Edition
• Foreword to the First Edition
• Preface to The Third Edition
• Preface to the First Edition
• Summary Contents
• Detailed Contents
• Table of Cases
• Statutory Instruments
• Netherlands
• United States
• Conventions
• Regulations
• International Conventions
• List of References
• List of Authority Abbreviations
• Preliminary Material
• Part III.01
• [195.158.225.230]
• 195.158.225.230

Accueil > Employment contract and international mobility

Employment contract and international mobility

Date of update

Is working in France a possibility? If so, in what context and for what purpose? How will it affect the contractual relationship between the employee and their foreign-based employer?

These are all questions that must be addressed before coming to France, to get a clear picture of how undertaking an assignment in France will impact on the employee’s employment contract.

Employment regulations

Termination of work contract

• Resignation
• Dismissal on economic grounds
• Dismissal on personal grounds
• Mutual termination of contract
• Termination of a fixed-term contract
• End-of-contract documents

Employment contract

• Recruitment
• Temporary workers: The temporary employment contract
• Fixed-term contract
• Permanent contract
• Employment contract clauses

The context

It is vital to consider the form this mobility will take.

When an employer decides to send one of its employees on assignment to France, it can choose between the following options:

• When a foreign company is providing an international service to a company based in France, under a commercial contract.
• As part of an intra-corporate mobility program, where the employee is seconded to a French company belonging to the same group of companies as their own.
• On the employer’s own behalf, i.e. there is no client company or host company in France (e.g. participation in seminars, training, events, etc.).
• Under a secondment contract between a foreign temporary employment company (temping or placement agency) and a client company based in France.
• Expatriating an employee to France on a more permanent basis . In the case of expatriation, the original employment contract is terminated or suspended. The expatriate employee is regarded as an employee of the company in France where they work.

Understanding the difference between secondment and expatriation

An employee is considered to have been seconded when their employer is registered outside France and entrusts them with a temporary assignment that must be carried out on French territory.

The employment contract between seconded employees and their original, foreign-based employer continues during the secondment period. They receive instructions from their original employer, which has the authority to monitor their performance or indeed to sanction any shortcomings.

Employers (and contracting parties) must comply with the regulations applicable to all workers in France (minimum wage, overtime compensation, legal working time, workplace health and safety legislation, etc.).

Important information : When an employee is posted to France, regardless of their nationality, their foreign-based employer must submit a secondment declaration via the Ministry for Labor’s online “Sipsi” service

Expatriation

Expatriation refers to a situation in which an employee is transferred to a company in France from a foreign company belonging to the same group. Thus, expatriate employees in France are employed by the French subsidiary of a group of companies. The company in France becomes their sole employer.

Impact on the employment relationship

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• > Understanding the Law of Assignment
• > Why It Matters

Book contents

• Understanding the Law of Assignment
• Copyright page
• Legislation
• Abbreviations
• Part I Introduction
• Part II The Model
• Part III Joinder
• Part IV Notice
• Part V Statutes
• Part VI Consequences
• 15 Why It Matters
• Bibliography

15 - Why It Matters

from Part VI - Consequences

Published online by Cambridge University Press:  10 October 2019

This chapter sets out a number of practical implications from the analysis in the preceding chapters. It explains how, on the model of equitable and statutory assignment set out in this book, anti-assignment clauses may have a limited effect even in connection with equitable assignments. It also explains how the ‘rule’ in Dearle v. Hall may still berelevant when a chose in action has been assigned in accordance with the requirements of Law of Property Act 1925, section 136(1). Third, it shows that the English position that it is still possible to make a parol gift of a presently existing legal chose in action is dictated by the limited operation of the Law of Property Act 1925, section 136(1). Fourth, it explains how it is possible to assign parts of a chose in action, whether such chose be one arising at common law, or even in equity. Fifth, this chapter explains how equitable defences such as laches and ‘clean hands’ may have a wider role to play in connection with equtiable assignments than is usually assumed. Finally, this chapter points out that payments to an assignor of the benefit of a common law debt will not attract restitutionary liability.

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• Why It Matters
• C. H. Tham , Singapore Management University
• Book: Understanding the Law of Assignment
• Online publication: 10 October 2019
• Chapter DOI: https://doi.org/10.1017/9781108636674.025

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• Practical Law

Assessing Assignability: Transferring Contractual Rights or Obligations

Practical law legal update 5-546-6326  (approx. 7 pages).

• An intended transfer is of the type that is prohibited by law or public policy (see Practice Note, Assignability of Commercial Contracts: Statutory and Public Policy Exceptions ).
• The parties expressly agree to restrict transferability (see Practice Note, Assignability of Commercial Contracts: Contractual Anti-assignment and Anti-delegation Clauses ).
• Breaching the contract.
• Making an ineffective and invalid transfer.

Distinguishing Between Assignment and Delegation

• The assignment of rights to receive performance.
• The delegation of duties to perform.

Characteristics of Assignments

• The right to receive performance from the assignor.
• Its remedies against the assignor for any failure to perform.

Characteristics of Delegation

The general rule governing assignment and delegation.

• Most assignments of contractual rights.
• Many delegations of contractual performance.
• Assignments and delegations that violate public policy or law.
• Assignments of rights or delegations of performance that are personal in nature.
• Contracts with anti-assignment or anti-delegation clauses.

Contracts That Present the Greatest Challenges

• Personal services contracts (see Personal Services Contracts ).
• Non-exclusive intellectual property licenses (see Intellectual Property Licenses ).
• Contracts with anti-assignment and anti-delegation clauses (see Contracts With Anti-assignment and Anti-delegation Contract Clauses ).

Personal Services Contracts

Intellectual property licenses, contracts with anti-assignment and anti-delegation clauses, is a change of control an assignment.

• Contains an anti-assignment and anti-delegation clause expressly restricting a change of control.
• States that a change in management or equity ownership of the contracting party is deemed to be an assignment.

When Does an Involuntary Transfer Trigger a Restricted Transfer?

• A contractual anti-assignment and anti delegation clause applies to a specific type or transfer.
• The transfer is permissible, with or without a contractual anti-assignment and anti-delegation provision.

Drafting and Negotiating Anti-assignment and Anti-delegation Clauses

• Directly addressing assignment of rights and delegation of performance.
• Clarifying the universe of restricted transfers.
• Designating the non-transferring party's consent rights.
• Specifying any exceptions to non-transferability.
• Requiring notification of a permitted transfer.
• Including a declaration that impermissible transfers are void.
• Adding a novation to the anti-assignment and anti-delegation provision.
• General Contract and Boilerplate
• General Commercial

Intellectual property and technology

France is a civil law country.

Most of the rules and requirements applicable to intellectual property rights derive either from French law or European Union law and are codified in the French Intellectual Property Code.

Last modified 13 Jun 2024

French law does not provide a unitary set of rules only applicable to commercial contracts. The following legal provisions may be applicable to commercial contracts:

The French Civil Code, which contains (i) most provisions on contract law, including rules regarding contracts in general ( ie, contract formation, validity, term, performance, enforceability, assignment, termination, liability and remedies) and rules regarding specific contracts ( eg, sales, statutory warranties, agency, lease, loan, escrow and guarantees) and (ii) provisions on tort liability.

The French Commercial Code, which contains some specific rules applicable in business-to-business agreements ( eg, payment terms, interest for late payment, general terms and conditions, distribution, commercial agency, commissionaire and commercial leases agreements).

The French Intellectual Property Code for contract terms relating to intellectual property rights.

The French Consumer Code, which contains important rules that professionals must comply with when dealing with consumers, but which may also have to be taken into account when contracting with another business when the end-user is a consumer or in all cases when contracting with another business ( eg, the prohibition of misleading commercial practices is also applicable to business transactions).

The Judicial Organization Code, which contains rules on the jurisdiction of intellectual property proceedings.

This list is not exhaustive, and specific provisions may be implicated by certain types of commercial contracts ( eg, Transport Code, Law on Subcontracting, Data Protection Law or Law on Confidence in the Digital Economy).

Nature of right

Legal framework, duration of right, ownership / licenses, remedies for infringement.

Copyrights include economic rights and moral rights. French law grants copyright protection to:

"the rights of authors in all works of the mind, whatever their kind, form of expression, merit or purpose ."

There are 2 main conditions for copyright protection:

• The work must be fixed in a material or immaterial form ( ie, on paper, in a computer program or in an electronic document) – mere ideas are not protected – and
• The work must be original ( ie, it must be endowed with the personality of its author).

Part I of the French Intellectual Property Code (Articles L. 111-1 et seq . and R. 111-1 et seq.), which implements the 2001 European Copyright Directive, governs the protection of copyrights in France.

The revised Audiovisual Media Services Directive has entered into force on 18 December 2018 and was transposed into French law, via an Ordinance No. 2020-1642 voted on 21 December 2020. Video-sharing platforms will now be submitted to this regulation. The Ordinance notably amended the Law of 30 September 1986 on freedom of communication, the Code of cinema and moving image, as well as the deadlines for the exploitation of cinematographic works. It also provides for the prohibition of incitement to terrorist acts in television programs and the strengthening of the rules on the protection of minors by prohibiting service providers from processing the personal data of minors for commercial purposes.

Part of the Audiovisual Media Services Directive was also implemented by the Law of 25 October 2021 and by Decree No. 2021-1853 of 27 December 2021, which materializes the merger of the Audiovisual Superior Council (CSA) and the Supreme Authority for the Distribution and Protection of Intellectual Property on the Internet (HADOPI) in a new independent authority: the Audiovisual and Digital Communication Regulatory Authority (ARCOM). The prerogatives of the new institution have been extended with regard to the fight against piracy. The law also creates a regime to protect the French public's access to cinematographic and audiovisual works in the event of the transfer of catalogues of works to a foreign operator.

With regard to media law, Article L. 137-1 of the Intellectual Property Code now defines the online content sharing service provider as the person who provides an online public communication service, one which has a main objective of storing and giving the public access to a significant quantity of works or other protected objects uploaded by its users, and who organizes and promotes the content with a view to making a direct or indirect profit from it. Decree No. 2021-1369 of 20 October 2021 specifies the methods for assessing the "significant quantity" of protected works uploaded. This text provides that this quantity may be deemed to have been reached when the service's audience and the number of content files uploaded by users of this service exceed a threshold of 400,000 unique visitors in France per month per online public communication service calculated on the basis of the last civil year.

The European Directive on Copyright and Related Rights in the Digital Single Market of 17 April 2019 has been transposed into French Law and has therefore created a related right for press agencies and press editors. Since 25 October 2019, all platforms, social networks and other sites aggregating information must obtain authorization from the publisher or the press agency, for any reproduction or communication to the public, in whole or in part, in digital form, of press publications. In return, publishers and press agencies may request remuneration.

In addition, Decree No. 2022-928 of 23 June 2022, which completes the transposition of the European Directive on Copyright and Related Rights in the Digital Single Market of 17 April 2019, has enshrined the exception to copyright for text and data mining for scientific and other purposes into French law.

On September 12, 2023, a new law proposal aims to provide a copyright framework for artificial intelligence. If adopted in its current wording, it would supplement the French Intellectual Property Code to enable artists to take better account of their rights in the face of the development of generative AI.

The main provisions of the contemplated law include the obligation to obtain an authorization for the use of protected works, the collective management of rights to works generated by AI, the obligation to mention the original authors and the taxation regime of works of indeterminate origin.

The economic rights of the author last for 70 years after their death. The 70 years are calculated from January 1 of the civil year following the death of the author. The date of death of the last contributor serves as the reference point for the 70-year post mortem auctoris period for collaborative works. Moral rights are personal, perpetual, inalienable and not subject to statutes of limitations.

There are no formal requirements for copyright protection.

Copyright cannot be registered in France, but a work can be filed (in an enveloppe Soleau or E-Soleau ) at the French Intellectual Property Office (INPI) or with a trusted 3rd party to secure the date of the creation (and, to a lesser extent, proof of existence and authorship).

Under French law, copyright is, by principle, vested in the author upon creation of the work.

Only economic rights are assignable. Moral rights are inalienable and belong to the author perpetually.

Assignment of copyright by the author must comply with the stringent requirements of Article L. 131-3 of the French Intellectual Property Code, which provides that the assignment agreement must expressly mention all and any rights assigned ( eg, right of reproduction, right of representation and communication, adaptation or translation) together with their associated scope and span.

The author is entitled to enforce copyright.

Copyright infringement actions may be brought before specialized courts, usually after having gathered evidence via an infringement seizure ( saisie-contrefaçon ), by way of an action on the merits and a summary action, in order to obtain an interlocutory injunction.

An injunction against the further manufacture, import, offer, sale, use or storage of the work can be ordered with immediate enforceability and impose penalties.

In determining the amount of damages to be awarded (compensatory – not punitive), French courts take into account distinctively:

• The negative or detrimental economic consequences of infringement, including lost gains and losses suffered by the rights holder
• The moral harm suffered by the rights holder and
• The profits earned by the infringer, including intellectual, tangible and promotional investments saved or not incurred by the infringer.

However, as an alternative and by request of the author, the court may set the damages as a lump sum. The lump sum must be greater than the royalties or rights that would have been owed if the infringer had asked for the authorization to exercise the right that has been violated. This amount is not exclusive of compensation for moral harm caused to the author.

Remedies also include, notably, the recall, destruction or confiscation of the infringing products and the publication of the judgment.

Legal costs and attorneys' fees may be recovered at the discretion of the judge.

Before the criminal courts, an infringer faces a fine of up to EUR300,000 (or EUR750,000 in certain circumstances) and imprisonment for up to 3 years (7 years in certain circumstances).

Mask works are protectable as an industrial property title relating to a final or intermediary semiconductor product topography and grants to its owner an exclusive right of exploitation or reproduction.

There are 2 main conditions for the protection of a semiconductor product's final or intermediary topography: it must result from its creator's own intellectual effort and it must not be commonplace in the semiconductor industry.

The exclusive rights shall not come into existence or shall no longer apply to the topography of a semiconductor product if an application for registration in due form has not been filed with the INPI within 2 years of the first commercial exploitation or more than 15 years after it has been fixed or coded for the first time – in case it has never been exploited.

The exclusive rights on the semiconductor product topography shall include the rights to authorize or prohibit the reproduction, commercial exploitation or importation of a topography or of a semiconductor product manufactured by using the topography.

These exclusive rights shall not apply to reproduction for the purpose of analyzing, evaluating or teaching and shall not extend to the creation of a semiconductor product topography on the basis of an analysis and evaluation of another topography.

Semiconductor topographies are protected pursuant to Part VI of the French Intellectual Property Code (Articles L. 622-1 et seq. and R. 622-1 et seq.), which implements the European Directive 87/54/EEC of December 16, 1986 on the legal protection of topographies of semiconductor products.

Protection is granted as from the earlier of the following dates: the filing of the application or the first act of commercial exploitation. Protection is granted until the end of the 10th calendar year following this event.

Where a topography has not been commercially exploited within a period of 15 years from its first fixation or encoding, any exclusive right in existence shall come to an end.

Ownership lies with the persons who are the creators of the topographies of semiconductor products and the successors in title of these persons.

Mandatory licenses may apply in certain situations. The licensee bears the obligation to exploit.

A person who acquires a semiconductor product in good faith is not considered to be infringing the rights in the semiconductor product topography. However, if such person wants to continue to exploit commercially such semiconductor product, they must pay a fair indemnity.

An injunction to stop infringing acts can be ordered with immediate enforceability and impose penalties.

As an alternative and upon request of the rights holder, French courts may set the damages as a lump sum. This sum must be greater than the royalties that would have been owed if the infringer had sought a license. This amount is not exclusive of compensation for moral harm caused to the rights holder.

Legal costs and attorneys' fees may be recovered at the discretion of the judge. Note that, in case of topographies infringement, it is not possible to bring an action before the criminal courts.

Patents are an industrial property title relating to an invention and granting to its owner an exclusive right of exploitation or use.

The patent owner may, at any time, waive the patent or file a request for limitation of said patent.

Patents are governed by Part VI of the French Intellectual Property Code (Articles L. 611-1 et seq. and R. 611-1 et seq.), the European Patent Convention (also referred to as the Munich Convention) and EU regulations Nos. 1257/2012 and 1260/2012 of December 17, 2012 regarding the unitary patent (not yet effective; they will only apply from the date of entry into force of the UPC Agreement).

The "first to file" system is defeated in case of fraud and mitigated in case of prior personal possession.

The law No. 2019-486 of May 22, 2019, known as the PACTE law, is an important reform of French patent law. It strengthens the examination procedure, modifies the limitation periods, extends the duration of utility certificates and allows their transformation into patent applications. It also introduces the possibility for 3rd parties to oppose French patents whose grants have been published as of April 1, 2020, before the National Institute of Industrial Property (INPI).

Regulations (EU) No. 1257/2012 and No. 1260/2012 of 17 December 2012, which implement enhanced cooperation in the creation of unitary patent protection, set up the European Unitary Patent System. These regulations entered into force on January 20, 2013 [vl1] [LC2] and are applicable from June 1, 2023 which is the date of entry into force of the Agreement on a Unified Patent Jurisdiction establishing the Unified Patent Court (UPC).

To date, 17 Member States have ratified the UPC Agreement (including the 3 Member States with the highest number of European patents in force in 2012: Germany, France and Italy). It is expected that further Member States will ratify the UPC Agreement in the coming year.

The unitary patent system makes it possible to receive patent protection in up to 24 EU Member States by submitting a single application with the European Patent Office, thus simplifying the procedure and making it more affordable for applicants.

The Unified Patent Court (UPC) is an international court established by the participating EU Member States to deal with infringement and validity cases of unitary patents as well as European patents, thus eliminating costly parallel proceedings and increasing legal certainty. The unified patent jurisdiction consists of a first-level court in Paris (with a section in Munich) and a court of appeal in Luxembourg, as well as local divisions in several countries. For instance, Paris, hosts a local division.

Then, from June 1, 2023, and for a transitional period of at least 7 years, national courts will continue to have concurrent jurisdiction for "classic" European patents and supplementary protection certificates.

The UPC have exclusive jurisdiction to rule on the validity and infringement of patents with unitary effect.

Patent protection is granted for 20 years from the filing of the patent application.

Duration of protection may be extended, for medicinal products, via supplementary protection certificates and pediatric extensions.

Patents can be invalidated by Paris courts in case of lack of novelty, lack of inventive step, insufficiency of description or added matter.

An opposition procedure for patents before the National Institute of Industrial Property (INPI) was also created in 2019 as part of the “Loi PACTE” and can result in the patent being invalidated should it infringe a 3rd party’s right.

Co-ownership is possible. In the absence of a co-ownership agreement, the relevant provisions of the French Intellectual Property Code automatically apply.

Assignments and licenses must be recorded at the INPI for opposability purposes.

There is a right of pre-emption by the French government, and mandatory licenses may apply in certain situations.

The licensee bears the obligation to exploit/work the patent in full.

French law prohibits both direct infringement and contributory infringement.

Patent infringement actions may be brought before Paris courts (which have exclusive jurisdiction), usually after having gathered evidence via an infringement seizure ( saisie-contrefaçon ), by way of an action on the merits and a summary action in order to obtain an interlocutory injunction.

Manufacturers and importers are regarded as automatic infringers ( ie, need not be aware of the patent at stake to qualify as infringers).

Since 2019, such infringement action must be brought within 5 years of the acts concerned, provided such action is not subject to any other statutes of limitations.

An injunction against the further manufacture, import, offer, sale, use or storage of the work may be ordered with immediate enforceability and subject to penalties.

A trademark is any sign capable of representation that serves to distinguish the goods or services of a natural or legal person. Since 2019, signs no longer need to be capable of graphical representation to be registered as trademarks. It is sufficient for the sign to be capable of being represented in such a way as to enable any person to determine precisely and clearly the subject matter of the protection conferred on its owner, such representation being clear, precise, distinct, easily accessible, intelligible, durable and objective. Therefore, for example, a word, sound, picture, movement or hologram may notably be protected as a trademark. Trademarks serve as an indication for the consumers of the commercial origin of the marked products or services.

Trademarks are governed by Part VII of the French Intellectual Property Code including notably:

• Law No. 64-1360 on Trademarks and Services Marks, dated December 31, 1964; Law No. 91-7 on Trademarks and Services Marks, dated January 4, 1991; and Law No. 2014-315 Reinforcing the Fight Against Counterfeiting, dated March 11, 2014 .
• EU Regulation 2017/1001 and Directive 2015/2436 on the European Union Trademark, dated December 16, 2015.
• The reform of trademark law resulting from the transposition of the "trademark package" was implemented by Order No. 2019-1169 of November 13, 2019 and its implementing decree. These texts largely modify the provisions of Part VII of the Intellectual Property Code to create a new trademark law.

France became a member of the Madrid Agreement in 1892.

France became a member of the Madrid Protocol in 1997.

France became party to the Trademark Law Treaty in 1995.

Following approval by the Council of the European Union and the European Parliament, the Regulation on the protection of geographical indications for artisanal and industrial products (GIPAI) was published in the Official Journal of the European Union on October 27, 2023.

It creates a single system of protection for industrial and artisanal products throughout the European Union, following the example of agri-food geographical indications.

This regulation will come into force in December 2025, and will complement the French system in place since 2014 and operated by the INPI. The INPI will continue to examine applications at national level, before forwarding them to the European Union Intellectual Property Office (EUIPO) for registrations at European level. The INPI will also be able to transform geographical indications already registered locally, directly at European level, without having to carry out a new registration procedure.

Protection is through registration only. Registration remains in effect for 10 years and is renewable indefinitely so long as the mark is used and remains distinctive.

A trademark owner is free to transfer or license any and all of its rights under the trademark to a 3rd party.

Joint ownership is possible.

A trademark may be used as a security ( eg, mortgage).

Remedies are available regardless of whether the infringement is willful. No punitive damages will be awarded, even if the infringement is willful.

Trademark infringement actions may be brought before specialized courts (Paris courts having exclusive jurisdiction for EUTMs), usually after having gathered evidence via an infringement seizure ( saisie-contrefaçon ), by way of an action on the merits and a summary action, in order to obtain an interlocutory injunction.

Since 2020, the National Institute of Industrial Property (INPI) has exclusive jurisdiction for trademarks cancellation and revocation actions, when such actions are brought as a principal claim and are based on an absolute ground for nullity, or a relative ground for nullity related to the existence of certain prior rights, or a ground for revocation of any kind. French courts remain competent for other types of actions.

Since 2019, such actions generally need to be brought within 5 years of the acts concerned, provided such action is not subject to any other statutes of limitations (except for well-known trademarks).

The negative or detrimental economic consequences of infringement, including lost gains and losses suffered by the rights holder.

The moral harm suffered by the rights holder.

As an alternative and on request by the trademark owner, the court may set the damages as a lump sum. The lump sum must be greater than the royalties that would have been owed if the infringer had sought a license. This amount is not exclusive of compensation for moral harm caused to the trademark owner.

Trademarks can be filed with French Customs to prevent importation of infringing goods, provided those goods originate from outside the European free market.

As defined by EU Directive 2016/943 on Trade Secrets of June 8, 2016, a protectable trade secret is information that:

• Is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question.
• Has commercial value because it is secret.
• Has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

Trade Secrets are governed by the following legal framework:

• EU Directive 2016/943 on Trade Secrets dated June 8, 2016
• Part V of the French Commercial Code: Article L. 151-1 et seq.
• Law No.  2018-670 dated July 30, 2018 implementing the EU Directive 2016/943 and
• Decree No. 2018-1126 on Trade Secrets dated December 11, 2018.

It is completed by Article 39 of the TRIPS Agreement.

Article L. 621-1 of the French Intellectual Property Code is specifically related to the disclosure of secret manufacturing processes by directors and/or employees.

As long as secrecy is preserved.

Ownership and licenses require appropriate identification of the trade secrets at stake.

Articles L. 151-7 et seq. of the French Code of Commerce provide exceptions to the trade secret protection (eg, legal obligation to communicate and legal proceedings).

Following transposition of the directive, several remedies for trade secret infringement are available under French law, namely the incurring of the civil liability of the trade secret infringer. The French Commercial Code now contains a series of corrective measures ( eg, injunction banning or ordering to cease the use and/or disclosure of trade secrets), provisional and protective measures, publication measures and compensation. Those measures may be sought by way of an action on merits or by way of a summary action, namely in case of imminent infringement.

Remedies may include banning the manufacturing, marketing and/or use of the goods which significantly result from a trade secret infringement or the import, export or storage of such products, as well as the partial or total destruction of any document, object or file containing the infringed trade secret.

The negative or detrimental economic consequences of infringement, including lost gains and losses suffered by the trade secret holder, inclusive of loss of opportunity.

The moral harm suffered by the trade secret holder.

As an alternative and upon request of the trade secret holder, French courts may set the damages as a lump sum. This amount is not exclusive of compensation for moral harm caused to the rights holder.

In case of dilatory or abusive actions, French courts may order the trade secret holder to pay a civil fine and/or be liable for damages for dilatory or abusive actions.

Registered designs

An industrial design is the ornamental or aesthetic aspect of an article. The design may consist of 3-dimensional features, such as the shape or surface of an article, or 2-dimensional features, such as patterns, lines or colors.

To be protected, an industrial design must be non-functional.

The design must not consist of features solely determined by the object's technical function. This means that an industrial design is primarily of an aesthetic nature and any technical features of the article to which it is applied are not protected.

In order to be able to register a design, the design must:

• Be new if no identical design is known to have existed before. Designs must be considered identical if their features differ only in immaterial details
• Have an "individual character" ( caractère propre ) if the overall visual impression it produces on the informed observer differs from that produced by any design or model disclosed before the date of the filing of the application for registration or before the date of priority claimed.

A database is defined as a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.

Databases may be protected through copyright and/or a sui generis right.

Additionally, copyright protection may be awarded to the structure of a database if fulfilling the criteria for such copyright protection (fixation in a material form and originality).

Sui generis rights apply to the benefit of the database producer if there were qualitatively and/or quantitatively substantial investments, whether related to the collection, verification or presentation of the content of the database.

The sui generis protection lies on an economic vision and does not include moral rights.

Registered designs are governed by Part V of the French Intellectual Property Code.

On November 28, 2022, the Commission published a package of measures comprising 2 proposals: a Regulation amending Council Regulation (EC) No 6/2002 on Community designs, and a Directive on the legal protection of designs (recasting Directive 98/71/EC). The Council formalized its position on September 25, 2023. The Council and the European Parliament have reached a provisional agreement on the revision of the 2 legislative proposals in the design package: the Directive on the legal protection of designs and the Regulation on Community designs.

The provisional agreement reached must now be approved and formally adopted by both institutions.

The new texts will update 20-year-old design legislation, with the aim of facilitating the protection of industrial designs and adapting EU legislation in this field to the challenges of the digital age, notably including 3D printing.

Databases are governed by:

Articles L. 111-1 et seq. and R. 111-1 et seq. for copyright protection and

Part V of the French Intellectual Property Code (Articles L. 341-1 et. seq. and R. 341-1 et. seq.) for the sui generis protection, which implements the EU Directive 96/9/EC of March 11, 1996 in France.

A registered French design can be protected for a maximum of 25 years. The initial term of protection is 5 years, which may be renewed by 4 consecutive 5-year periods.

For the duration of copyright, when applicable, see the "Copyrights" section.

The sui generis protection is granted for 15 years, starting from the date of completion of the database. It expires 15 years following the 1st of January of the year following the date of completion of the database.

If the database is made available to the public within this 15-year time period, protection runs until 15 years following January 1 of the year following the date of publication.

If the database is subject to new substantive investment, the 15-year period of protection starts following January 1 of the year following the date of this new investment.

The protection of the design is acquired by the registration of the owner.

The author of the application for registration is, unless proven otherwise, regarded as the beneficiary of this protection.

A design owner is free to transfer or license any and all of its rights under the design to a 3rd party.

There are no formal requirements for sui generis protection.

Under the sui generis protection, a database producer ( ie, a natural person or a legal entity initiating and supporting the investment) is free to transfer or license any and all of its rights under the database to a 3rd party.

A design infringement lawsuit may be brought by the recorded owner of the registered design whose rights have been infringed, or by the exclusive licensee duly recorded with the INPI, before either the criminal or civil courts.

The unauthorized use of a registered design constitutes infringement.

In assessing infringement, the French courts take into account the overall visual impression that the design created for the informed observer, setting aside insignificant differences.

French courts take the following into consideration when determining the amount of compensatory damages to award:

As for patents and trademarks, as an alternative and on request of the registered design owner, the court may set the damages as a lump sum. The lump sum must be greater than the royalties that would have been owed if the infringer had sought a license. This amount is not exclusive of compensation for moral harm caused to the registered design owner.

For copyright-grounded remedies, see the "Copyrights" section.

Under the sui generis protection, the database producer may prevent extraction and/or re-utilization of the whole or of a substantial part of the database, evaluated qualitatively and/or quantitatively, of the content of that database. The database producer may also prevent repeated and systematic extraction or re-utilization of non-substantial parts of the database, when such operations exceed the normal conditions of use of the database.

Before the criminal court, an infringer faces a fine of up to EUR300,000 (or EUR750,000 in certain circumstances) and imprisonment for up to 3 years (7 years in certain circumstances).

Consultants / contractors

There is no work for hire under French law, except for:

• Copyright on software and related documentation and
• Patents, to a certain extent and provided that certain conditions be met.

For a work made by an employee within the course of their employment, the rights in the work belong to the employee (although some case law has admitted implicit transfer to employer). Rights are vested in the employer only if the work is collective or, in certain circumstances, if the work is a software or related documentation.

There is no "work for hire" applicable to consultants and contractors under French law and, generally, intellectual property rights must be specifically assigned or licensed to the engaging entity or remain vested in the consultant or contractor.

Ordinance No. 2021-1658 of 15 December 2021 introduced a devolution of rights arising from software or inventions made by a person who is neither an employee nor a public agent, to the private or public legal entity carrying out the research that hosts them. The Ordinance therefore creates an automatic devolution of economic rights to the host legal entity carrying out the research.

2 decrees dated August 11, 2023 have now -finally- specified this financial compensation:

For inventors who are not salaried nor public agents to the private or public legal entity carrying out the research that hosts them, the provisions relating to the financial contribution for patentable inventions are set out in Decree no. 2023-770 of August 11, 2023 relating to the procedures for the devolution of industrial property rights on assets obtained by inventors who are not salaried employees or public servants hosted by a legal entity carrying out research. It defines the calculation of the incentive bonus paid to such inventors.

For software authors who are not salaried, nor public agents to the public legal entity carrying out the research that hosts them, the Decree no. 2023-772 of August 11, 2023 organizes the devolution of their economic rights. It defines the rules governing profit-sharing for these authors when they have participated, alone or as co-authors, in the creation of software whose economic intellectual property rights have thus been vested in the public-sector legal entity whose permanent research staff are public-sector employees, and when these rights are exploited by this legal entity.

Registration of commercial agreements

Recognized language of commercial agreements, country-specific issues for online content, enforceability of online/clickwrap/shrinkwrap terms, governing law.

There is no general registration requirement for commercial contracts under French law.

There is no requirement under French law that business-to-business contracts must be in French.

However, if documentation is provided to French consumers, the contract should at a minimum specify which party is responsible for producing French labeling or users' guides. Pursuant to the French Language Law of August 4, 1994 ( Loi Toubon ), any documentation or communication made to French consumers must be in French; any French translation must be as legible as the original version.

In addition, under the French Language Law, a French or translated version of the agreement is required when concluding a contract with a public entity in France.

Specific rules apply when consumers are concerned, such as the requirement to put in place a double-click system when a consumer makes a purchase online or the obligation to provide consumers with certain mandatory information via a durable medium ( ie, in a PDF document or in the content of an email). In any event, the French Consumer Act (Loi Hamon) of March 17, 2014 has implemented European Directive 2011/83/EU dated October 25, 2011 on consumer rights. Thus, the rules applicable to agreements with consumers concluded online are, to a certain extent, similar in all European Union countries, save any local specificity.

Law no. 2023-451 of June 9, 2023, on the regulation of commercial influence and on the fight against the abuses of influencers on social networks has been promulgated. Prior to this text, there was no legal framework applicable specifically to influencers. Promotions aimed at the French public have to contain specific provisions depending on their content (sponsored, modified, virtual). To better inform their subscribers, influencers have to clearly indicate the mention "advertising" or "commercial collaboration" on their promotional content.

Online terms are generally viewed as enforceable if conspicuous, and users have an opportunity to review and indicate affirmative assent (eg, check a box).

Governing law and venue for resolution of disputes specified in a commercial contract are generally accepted. However, a consumer in France will be entitled to the protection of French law if French law is more favorable to the consumer than the stipulated governing law. In all cases, French law that is considered by French courts to rise to the level of public policy will be applied by a French court. In respect of international contracts (eg, where a party is not French), there is little case law holding which types of French law are public policy in international matters.

Enforceability of warranty disclaimers

Enforceability of exclusions/limitations of liability indemnification.

Indemnification

Electronic signatures

Certain statutory warranties such as the warranty of conformity ( conformité ), warranty against latent defects ( vices cachés ) or quiet title warranty cannot be excluded except under specific circumstances.

Consumers are entitled to specific additional warranties, and warranty disclaimers are generally unenforceable toward consumers.

Moreover, recent provisions transposing the European Directives (EU) 2019/770 and (EU) 2019/771 into French law have extended the legal guarantee of conformity for digital goods, content and services. They have also clarified the new obligations of certain undertakings under the legal guarantee of conformity, such as the obligation to provide customers with specific information. For example, providers of digital goods and services shall now disclose, if relevant, the functionality of the digital content as well as any interoperability options.

Exclusions or limitations of liability between businesses for breach of contract are both enforceable and common. Liability for gross negligence or willful misconduct cannot, however, be excluded. It is not uncommon to contractually cap one's liability, for example, to the total aggregate amount paid during a certain period in application of a given contract.

French law only makes a distinction between direct and indirect losses. Direct losses are those that are direct, foreseeable and caused by the act or breach concerned. Indirect losses are those that are not foreseeable but are linked to the act that has generated the loss (such as loss of data, revenue and goodwill). On occasion, courts consider that lost revenues were foreseeable and therefore constitute direct losses.

Tort liability cannot be limited or excluded under French law.

Exclusions or limitations of liability towards consumers are generally unenforceable under French law.

Indemnification clauses are commonly used in French contracts, in particular where intellectual property rights are involved.

Generally, these clauses have 3 distinct obligations: defend, indemnify ( ie, pay damages) and hold harmless ( ie, indemnifying party responsible for any other liability arising out of the claim). Indemnification is not limited to 3rd-party claims.

Caps on liability under indemnification provisions may be enforceable, provided that the limitation liability clause does not empty the essential obligation from its substance. Indemnification clauses are generally unenforceable against consumers, provided that such clause is not considered as unfair pursuant to consumer law provisions and does not create significant imbalance between the rights and obligations of the parties for standard, non-negotiated contracts. 

Under French law, an electronic signature has the same status as a handwritten signature provided that the technology utilized contains reliable means of identification and guarantees the link between the electronic signature and the act to which it is attached.

The reliability of this means shall be presumed when an electronic signature is created, when the identity of the signatory is assured and when the integrity of the act is guaranteed, under the conditions laid down by decree. This is a rebuttable presumption. The French decree 2001-272 dated March 30, 2001 defines 3 conditions of reliability:

• A secure electronic signature
• Created by a secure signature creation device and
• The signature verification is based on the use of a qualified electronic certificate.

The choice of an electronic signature solution shall therefore take into consideration both technical and legal aspects of the relevant jurisdictions.

The European Parliament and the Council adopted Regulation (EU) No. 910/2014 on electronic identification and trust services for electronic transactions in the internal market (eIDAS Regulation) on July 23, 2014. The eIDAS Regulation – which creates a directly applicable and comprehensive legal framework for both electronic identification and authentication services – is in force since July 1, 2016. It abrogates and replaces the former Electronic Signatures Directive, dated 1993, which had been the basis for the construction of the French law on electronic signatures, via a complex set of legal texts.

In terms of inputs, the regulation notably introduces a distinction between 3 types of signatures: "basic/standard," "advanced" and "qualified" signature. Clarification is, however, still expected as to the interrelation of these new types of signature with the pre-existing French definition of "e-signature."

On November 8, 2023, the European Commission endorsed the provisional political agreement of the European Parliament and the Council of the EU including the key elements of the proposal for a legal framework for a European Digital Identity, also called eIDAS 2.0. This new version of the Regulation 910/2014 of July 23, 2014 aims to strengthen security and user confidence in digital interactions within the EU, and to create a digital environment that is both reliable and fluid.

Indeed, with the eIDAS 2.0 Regulation, it will now be possible to have a unique and recognized means of identification within the European Union. This will apply not only to identity documents, but also to all attributes (such as nationality, age or marital status) used to authenticate a person remotely.

Carol A. F. Umhoefer

David Alexandre

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Out-Law Guide 4 min. read

Assignment and novation

19 Aug 2011, 4:40 pm

Assignment involves the transfer of an interest or benefit from one person to another. However the 'burden', or obligations, under a contract cannot be transferred.

Assignment in construction contracts

As noted above only the benefits of a contract can be assigned - not the burden. In the context of a building contract:

• the employer may assign its right to have the works constructed, and its right to sue the contractor in the event that the works are defective – but not its obligation to pay for the works;
• the contractor may assign its right to payment of the contract sum - but not its obligation to construct the works in accordance with the building contract or its obligation to meet any valid claims, for example for defects.

After assignment, the assignee is entitled to the benefit of the contract and to bring proceedings against the other contracting party to enforce its rights. The assignor still owes obligations to the other contracting party, and will remain liable to perform any part of the contract that still has to be fulfilled since the burden cannot be assigned. In practice, what usually happens is that the assignee takes over the performance of the contract with effect from assignment and the assignor will generally ask to be indemnified against any breach or failure to perform by the assignee.  The assignor will remain liable for any past liabilities incurred before the assignment.

In construction contracts, the issue of assignment often arises in looking at whether collateral warranties granted to parties outside of the main construction contract can be assigned.

Funders may require the developer to assign contractual rights against the contractor and the design team as security to the funder, as well as the benefit of performance bonds and parent company guarantees. The developer may assign such rights to the purchaser either during or after completion of the construction phase.

Contractual assignment provisions

Many contracts exclude or qualify the right to assignment, and the courts have confirmed that a clause which provides that a party to a contract may not assign the benefit of that contract without the consent of the other party is legally effective and will extend to all rights and benefits arising under the contract, including the right to any remedies. Other common qualifications on the right to assign include:

• a restriction on assignment without the consent of the other party, whether or not such consent is not to be unreasonably withheld or delayed;
• only one of the parties may assign;
• only certain rights may be assigned – for example, warranties and indemnities may be excluded;
• a limit on the number of assignments - as is almost always the case in respect of collateral warranties;
• a right to assign only to a named assignee or class of assignee.

Note that in some agreements where there is a prohibition on assignment, it is sometimes possible to find the reservation of specific rights to create a trust or establish security over the subject matter of the agreement instead.

Legal and equitable assignment

The Law of Property Act creates the ability to legally assign a debt or any other chose in action where the debtor, trustee or other relevant person is notified in writing. If the assignment complied with the formalities in the Act it is a legal assignment, otherwise it will be an equitable assignment.

Some transfers can only take effect as an equitable assignment, for example:

• an oral assignment;
• an assignment by way of charge;
• an assignment of only part of the chosen in action;
• an assignment of which notice has not been given to the debtor;
• an agreement to assign.

If the assignment is equitable rather than legal, the assignor cannot enforce the assigned property in its own name and to do so must join the assignee in any action. This is designed to protect the debtor from later proceedings brought by the assignor or another assignee from enforcing the action without notice of the earlier assignment.

Security assignments

Using assignment as a way of taking security requires special care, as follows:

• if the assignment is by way of charge, the assignor retains the right to sue for any loss it suffers caused by a breach of the other contract party;
• if there is an outright assignment coupled with an entitlement to a re-assignment back once the secured obligation has been performed, it is an assignment by way of legal mortgage.

Please see our separate Out-Law guide for more information on types of security.

Restrictions on assignment

There are restrictions on the assignment of certain types of interest on public policy grounds, as follows:

• certain personal contracts – for example, a contract for the employment of a personal servant or for the benefit of a motor insurance policy cannot be assigned;
• a bare cause of action or 'right to sue' where the assignee has no commercial interest in the subject matter of the underlying transaction cannot be assigned;
• certain rights conferred by statute – for example, a liquidator's powers to bring wrongful trading proceedings against a director – cannot be assigned;
• an assignment of a contract may not necessarily transfer the benefit of an arbitration agreement contained in the contract;
• the assignment of certain rights is regulated – for example, the assignment of company shares or copyright.

If you want to transfer the burden of a contract as well as the benefits under it, you have to novate. Like assignment, novation transfers the benefits under a contract but unlike assignment, novation transfers the burden under a contract as well.

In a novation the original contract is extinguished and is replaced by a new one in which a third party takes up rights and obligations which duplicate those of one of the original parties to the contract. Novation does not cancel past rights and obligations under the original contract, although the parties can agree to novate these as well.

Novation is only possible with the consent of the original contracting parties as well as the new party. Consideration (the 'price' paid, whether financial or otherwise, by the new party in return for the contract being novated to it) must be provided for this new contract unless the novation is documented in a deed signed by all three parties.

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Commercial Law — Financial law — Assignment of future receivables

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Assignment is a legal term whereby an individual, the “assignor,” transfers rights, property, or other benefits to another known as the “ assignee .”   This concept is used in both contract and property law.  The term can refer to either the act of transfer or the rights /property/benefits being transferred.

Contract Law   

Under contract law, assignment of a contract is both: (1) an assignment of rights; and (2) a delegation of duties , in the absence of evidence otherwise.  For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C.  That is, this assignment is both: (1) an assignment of A’s rights under the contract to the $50; and (2) a delegation of A’s duty to teach guitar to C.  In this example, A is both the “assignor” and the “delegee” who d elegates the duties to another (C), C is known as the “ obligor ” who must perform the obligations to the assignee , and B is the “ assignee ” who is owed duties and is liable to the “ obligor ”.

(1) Assignment of Rights/Duties Under Contract Law

There are a few notable rules regarding assignments under contract law.  First, if an individual has not yet secured the contract to perform duties to another, he/she cannot assign his/her future right to an assignee .  That is, if A has not yet contracted with B to teach B guitar, A cannot assign his/her rights to C.  Second, rights cannot be assigned when they materially change the obligor ’s duty and rights.  Third, the obligor can sue the assignee directly if the assignee does not pay him/her.  Following the previous example, this means that C ( obligor ) can sue B ( assignee ) if C teaches guitar to B, but B does not pay C $50 in return.

            (2) Delegation of Duties

If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor.  It can only be delegated if the promised performance is more commonplace.  Further, an obligee can sue if the assignee does not perform.  However, the delegee is secondarily liable unless there has been an express release of the delegee.  That is, if B does want C to teach guitar but C refuses to, then B can sue C.  If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.

Lastly, a related concept is novation , which is when a new obligor substitutes and releases an old obligor.  If novation occurs, then the original obligor’s duties are wiped out. However, novation requires an original obligee’s consent .  

Property Law

Under property law, assignment typically arises in landlord-tenant situations.  For example, A might be renting from landlord B but wants to another party (C) to take over the property.   In this scenario, A might be able to choose between assigning and subleasing the property to C.  If assigning , A would be giving C the entire balance of the term, with no reversion to anyone whereas if subleasing , A would be giving C for a limited period of the remaining term.  Significantly, under assignment C would have privity of estate with the landlord while under a sublease, C would not. 

[Last updated in May of 2020 by the Wex Definitions Team ]

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Home News Legal Insights Reform of French legal provisions governing security interests: Simplification and modernization

Reform of French legal provisions governing security interests: Simplification and modernization

The reform of french legal provisions governing security interests, initially scheduled for may 2021, should finally be enacted by september 23, 2021 and enter into force on january 1, 2022. it will be carried out by way of an ordinance, pursuant to the authorization given by the legislator to the government under the so-called pacte law of may 22, 2019., in the wake of the reform already carried out in 2006 [1] , the 2021 reform shows a clear desire to simplify and modernize french legal provisions governing security interests. this objective is both necessary and ambitious, as its scope impacts major areas of our laws, such as the law governing distressed and bankrupt companies, which is also being overhauled in the context of the transposition of the european directive of june 19, 2019 (no. 2019/1023) on restructuring and insolvency..

The objectives of the reform , as they emerge from the orientations defined under Article 60 of the so-called PACTE Law [2] , are as follows:

• Improving the legibility and intelligibility of French legal provisions governing security interests for the sake of legal security and attractiveness of French law;
• Reinforcing the effectiveness of such provisions while guaranteeing a balance between the interests of creditors, debtors and guarantors.

A draft Ordinance was circulated in June 2021 following the consultation organized by the Ministry of Justice with legal practitioners, economic circles and academics on a preliminary draft published on 18 December 2020. The Ordinance must be published by September 23, 2021 at the latest.

Traditionally, there are two categories of security interests: personal securities interests ( sûretés personnelles ) and in rem security interests ( sûretés réelles ). While the purpose of a personal security interest is to add one or more other debtors to the principal debtor, the purpose of an in rem security interest is to specifically allocate one or more assets to guarantee the payment of the debt.

The personal guarantee, a personal securities interest par excellence , is at the heart of this reform, but some in rem security interests will also be impacted.

Reform of personal guarantees ( cautionnements )

As the reform of March 23, 2006 did not concern personal guarantees, it became essential to rework this instrument which plays a key role under French law, in order to make the rules governing it more readable and to improve its efficiency, while protecting the natural person guarantor.

As such, and for simplification and unification purposes, the legal provisions on personal guarantees are grouped within the French Civil Code , whereas they are currently also found in the French Consumer Code and the French Monetary and Financial Code. The first demand guarantee ( garantie à première demande ) introduced into the French Civil Code in 2006 is not affected by the 2021 reform and it is to be hoped that the changes now being made to the rules governing personal guarantees will resolve disputes over the distinction between these two types of personal security interests.

The draft Ordinance includes personal guarantees in the definition of a commercial transaction ( acte de commerce ) set out in Article L. 110-1 of the French Commercial Code. As such, the guarantee of a commercial debt will thus be deemed to be commercial, between all persons, whereas it is currently civil in nature, except in certain cases defined in particular by case law. This change in the law should help reduce the significant amount of litigation on this subject.

A personal guarantee given by a natural person that is manifestly disproportionate to the income and assets of the guarantor may be reduced. This sanction, as opposed to the impossibility to enforce the guarantee as is currently the case under French law, is preferable for the beneficiary creditor.

The draft Ordinance enshrines the obligation for any professional creditor to warn the natural person guarantor “ whenever the commitment of the principal debtor is inadequate with the latter’s financial capacities ” [3] .

The French Consumer Code currently requires the insertion of a standard handwritten note for personal guarantees issued by natural persons for the benefit of professional creditors, failing which such guarantees are deemed null and void . [4] This very strict formality, which gives rise to a substantial amount of litigation, will be replaced by a new, less restrictive statement, now inserted in the French Civil Code [5] , which will benefit all natural persons and will be imposed on all creditors.

The obligations to provide information to the guarantor , which are currently set forth in the French Civil Code, the French Monetary and Financial Code and the French Consumer Code, will be grouped together in the French Civil Code and will henceforth benefit all natural persons who are guarantors towards professional creditors. The system of annual information of guarantors by credit institutions, as currently provided for in Article L. 313-22 of the French Monetary and Financial Code, will therefore be repealed.

The guarantor will henceforth be able to raise against the creditors “ all objections, personal or inherent to the debt, which are available to the debtor ” [6] , as opposed currently to only the objections inherent to the debt [7] which is not without prejudice to the accessory nature of the personal guarantee. The reform should in this respect avoid a recurrent dispute on the determination of objections which are purely personal to the debtor and objections which are inherent to the debt.

Reform of some in rem securities interests:

The draft Ordinance abolishes a certain number of general liens as well as special pledges that are now obsolete and introduces instead a single set of ordinary law provisions. This abolition concerns the pledge over inventories under the French Commercial Code, the pledge over a motor vehicle, the pledge over equipment and tools, so called oil warrants (operators and holders of stocks of crude oil or petroleum products may issue stock warrants as security for their borrowing, while retaining custody thereof at their plants or depots) as well as special types of pledges over hotel equipment and furniture, war supplies and industrial products.

New Article 2323 of the French Civil Code resulting from the draft Ordinance defines in rem security interest as “ the allocation of a property or a set of properties, present or future, to the preferential or exclusive payment of the creditor “, which covers gages (i.e., pledges on tangible movable property only), liens and nantissements (i.e., pledges on intangible movable property only).

In addition, with respect to in rem security interests, the guarantor will now benefit from the new protective set of rules and remedies available to natural person guarantors under the reform (in particular, the duty to warn, the obligation to inform the creditor, the so-called bénéfice de discussion (i.e., the right of a guarantor to require that the creditor should exhaust all recourses against the principal debtor before turning to the guarantor) and bénéfice de subrogation (i.e., once the creditor has turned to the guarantor to recover his due, the latter is subrogated in all the creditor’s rights in this respect.)

With a view to simplifying and unifying in rem security interests on immoveable properties , the draft Ordinance abolishes the distinction between real estate liens. Traditionally, a distinction is made between special real estate liens ( privilèges immobiliers spéciaux ) (which confer a preferential right and a priority right and allow the property to be seized irrespective of whoever has control of it) and so-called general liens ( privilèges dits généraux ) which cover all of the debtor’s assets, including real estate property. All of these will henceforth be general liens integrated into the framework of legal mortgages.

The draft ordinance enshrines the assignment of receivables as a security ( cession de créance à titre de garantie ) which, unlike the assignment of professional receivables known as “cession Dailly”, will guarantee any type of commitment and not only credit transactions. In addition, the assignment of sums of money as a security ( cession de sommes d’argent à titre de garantie ), commonly known as pledge over cash ( gage d’espèces ) and widely used in practice, is now part of French law [8] .

While the analysis of the draft Ordinance shows that the simplification objectives seem to have been achieved, the reinforcement of the effectiveness of French legal provisions governing security interests thus revised will have to be tested in the light of the French law governing distressed and bankrupt companies which is also being overhauled within the framework of the transposition of the European Directive on restructuring and insolvency (cf. above).

[1] Ordinance No. 2006-346 of March 23, 2006 on security interests

[2] Law No. 2019-486 of May 22, 2019 on business growth and transformation – https://www.legifrance.gouv.fr/loda/article_lc/LEGIARTI000038497746/

[3] Article 3 of the draft Ordinance – Article 2299, as amended, of the French Civil Code

[4] Article L. 331-1 of the French Consumer Code

[5] Article 3 of the draft Ordinance – Article 2297, as amended, of the French Civil Code

[6] Article 3 of the draft Ordinance – Article 2298, as amended, of the French Civil Code

[7] Article 2313 §2 of the French Civil Code

[8] Article 11 of the draft Ordinance – Article 2374, as amended, of the French Civil Code

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Assignment of contract

This article is written by Neha Dahiya, a law student at Dr. B.R. Ambedkar National Law University, Sonipat. This article explains the meaning, types, and conditions of the assignment of contract. It also seeks to explain the judicial opinion about assignment by the means of a case study. 

This article has been published by Sneha Mahawar .

Table of Contents

Introduction

A contract binds the involved parties to fulfil their obligations. Non-fulfillment of the obligations results in the breach of the contract. Thus, the rights and obligations arising from the contract are owned by the contracting parties. However, in certain cases, these contractual rights and obligations can be transferred to a third party. This is known as the assignment of contract. In a world where the complexity of transactions is increasing continuously, such assignments have become very common. 

Basics of a contract 

Section 2(h) of the Indian Contract Act, 1872 defines a contract as “an agreement enforceable by law”. It is characterised by an offer and an acceptance along with consideration and is backed by the power of law. An agreement is a promise by one party to another. A proposal once accepted becomes a promise. The formation of a contract results in rights and obligations for both parties. A lawful contract binds both parties to fulfil their obligations. In case they are not fulfilled, the aggrieved party can avail of the remedies provided by the law. 

Thus, Contract= (Offer + Acceptance) Agreement + Enforceability of law 

For example: ‘A’ promises to sell his house to ‘B’ for a consideration of Rs. 50 lakhs. Here, there was an offer to sell the house by ‘A’ and acceptance by ‘B’ for consideration of a fixed sum. It is a lawful agreement and hence is a contract. Here, ‘A’ has the obligation to give the house to ‘B’ and ‘B’ has an obligation to pay the amount. If either of them fails to fulfil their respective obligation, it will result in a breach of the contract. 

What is assignment of contract 

When the rights and obligations in a contract are transferred to a third party, who is not a party to the contract, it is called the assignment of contract. For example, in the case where there was a contract between ‘A’ and ‘B’ where ‘A’ was supposed to pay ‘B’ some amount, ‘A’ had an obligation to pay ‘B’ the amount and ‘B’ had the right to receive the amount. Along with this, if ‘B’ had to pay the same amount to ‘C’ and he asked ‘A’ to pay the money directly to ‘C’, it can be called an assignment of the obligation by ‘B’ to ‘A’. It is covered in Section 37 of the Indian Contract Act, 1872. The Section provides that a party can dispense the performance of the contract by the assignment of it to a third party. This concept can also be found in the Transfer of Property Act, 1882 . The use of assignments has increased tremendously in recent times owing to the financial and contractual complexities of the transactions. Usually, it is employed in high-risk transactions that are secured by assigning the contractual rights along with the securities (like hypothecation or mortgage).

The party currently holding the rights and obligations of the existing contract is called the ‘assignor’ and the party to whom they are assigned and taking over the position is called the ‘assignee’. The transfer takes place from the assignor to the assignee. Also, it is pertinent to note that assignment does not affect the rights and responsibilities of the parties involved in any way. These rights and duties remain the same. And even after the transfer, the assignor remains liable if any problems arise unless there was an agreement to the contrary. Thus, the assignment of the contract involves an incorporeal transfer of the rights and obligations. And as per the laws of India, these transfers must be brought onto paper.  

How does assignment of contracts work 

The assignment depends upon several factors including the provisions of the contract entered into by the parties. The original contract may contain a clause that does not permit the assignment or make the consent of the other party necessary before the assignment. The contract can also contain a stipulation that states that the liability of the agreement would lie with the original parties, even after the assignment. This happens in situations where the assignor acts as a guarantor for the performance of duties as per the contract by the assignee. Acting as a guarantor makes the assignor liable. It is also possible that a contract may permit an assignment without any formal notification to the other party. But in this case, it is important for that party to create a ‘Letter of Assignment’ containing the details to notify all other contracting parties. The letter must be signed by both outgoing and incoming parties. 

For example: If ‘A’ and ‘B’ enter into a contract and include a clause that does not allow the assignment of the contract, neither of them can transfer their rights and liabilities to a third party. And if the contract contains a clause that necessitates the requirement of consent, then neither of them can transfer the rights and obligations without the other party’s consent. Also, if ‘A’ decides to assign his obligations to ‘C’ and acts as a guarantor for ‘C’, then also ‘A’ will continue to hold the liability. 

Enforceability of the assignment

Usually, assignments of contract rights and obligations are enforceable. However, under some circumstances, they are not enforced. These are as follows:

• If the provisions of the contract prohibit the assignment of the contract explicitly and it still happens somehow, it will be considered to be void. Such a clause is called an ‘anti-assignment clause’. 
• Sometimes, due to the assignment of contractual rights and obligations, the basics of the contract are altered. In such circumstances, it cannot be considered enforceable. For example, if performance is affected by the assignment, it will probably not be enforced by the court. 
• The assignment will not be enforced if it is illegal or contrary to the law in some or the other way. 

Contracts that can be assigned 

As per Indian law, any kind of contract can be assigned, provided it conforms to the provisions of the contract and is carried out with the consent of the parties involved. Also, for any contract whose foundation lies upon the ‘personal skills’ of the promisor, such a contract cannot be assigned under any circumstances. This is because such a contract depends upon the qualities or qualifications of the promisor only and cannot be found in someone else, thus, the obligations cannot be assigned in such a case. This has also been highlighted by our judiciary that two types of contracts can never be assigned, that are:

• Where the contract is personal in nature.
• Where the assignment of rights is prohibited either by the law or by the contract.

Thus, it is prudence that is followed while deciding the assignability of a contract. It is prudent to explicitly state the conditions regarding assignment in the contract itself, taking due care of the limits placed by the law.  

Who can handle assignment of a contract 

The most competent person to handle the assignment of contract is an attorney. An attorney is a licensed court practitioner who acts as a deputy or the agent of the party he/she is representing in the court of law. Such contracts need professional expertise as they contain some very technical and intricate details that are crucial for the correct and beneficial assignment. 

Types of assignable contracts

As per the common law, the assignment was done by the way of  three kinds of transactions:

• Novation- In simple words, it is an agreement wherein both contracting parties permit the substitution of an existing party with a new one in the contract. Thus, there is a novation of contract where the original party is discharged of its obligations and they are transferred to a new party. This can be called the assignment of contractual obligations. However, there is an essential difference between both. In the assignment, the rights and obligations are transferred from one party to another. But in novation, instead of a transfer, one party substitutes another.  
• Acknowledgment – Where both the parties acknowledge that the interests in the contract can be assigned to a third party in the contract, then the assignment can take place with the consent of both. 
• Power of attorney – It is a legal document that allows a person to appoint someone to organise or manage various affairs including personal and financial. Thus, in a way it is like appointing an agent to conduct professional transactions, settle claims and cater to business demands.

As per the existing laws in India, there are broadly two types of assignment. 

• Legal – A legal assignment is the one that is carried out as per Section 130 of the Transfer of Property Act, 1882 . it is characterised by all the formalities, intention to assign, communication to the assignee, and notice to the debtor. In this, a proper formal agreement is drafted giving assent to the assignment, as per the procedure laid down by the law. The consent of the party is sought first and a notice is sent. Proper communication is sent to the assignee as well. Finally, with all the formalities done, the assignment is carried out. 
• Equitable – An equitable assignment holds good only in equity and not in the eyes of law. It can be related to a transfer of future benefits which is not enforceable by law. In respect of equitable charges attached to a property, the courts are bound to follow the laws laid down. Thus, as held in B.N. Railway Employees’ Urban Bank v. Seager (1941), an equitable assignment can be created only by a written document as per the provisions of the Transfer of Property Act, 1882. 

Modes of assignment 

The assignment of contractual rights and liabilities has been covered under Section 130 of the Transfer of Property Act, 1882 under the heading of ‘actionable claim’. An actionable claim can be transferred simply by the execution of a written instrument. Nothing more is required. The contract permitting assignment must be clearly laid down, strictly adhering to the provisions of this Section. The intention to assign must be clear and certain. Under Indian property laws, a deed is required for the assignment. And this deed must be duly stamped. However, stamp duty is extremely high in India. Also, it is a subject that falls in the concurrent list. So when it is legislated on by both centre and states, it leads to variations and there is no uniformity. This acts as a hindrance in the way of assignment. 

Validity of part-assignment

In the case of Doraisami v. Doraisami (1924), following the English precedent, it was held that if there is an assignment of a debt, the transfer must be of the whole debt and not just a portion of it. Thus, part-assignment was not recognised. However, in the subsequent case of Rajamier v. Subramaniam (1928) , the previous judgement was overruled. It was recognized that even though part-assignment was not recognised in the English common law, part-assignment of debt was a valid transfer as it was held to be good in equity. However, it was also laid down that in such part-assignments, while enforcing a claim, it was necessary to implead the owner of the rest of the portion as well. It was observed that no such distinction was made in the Transfer of Property Act, 1882. Thus, both may be transferred under the term ‘actionable claims’. 

However, the only problem that persists is presented by Order 2 Rule 2 of the Code of Civil Procedure, 1908. As per this, a single cause of action cannot be allowed to be split into many. Thus, it may prevent the owner of a part of the debt from enforcing his rights. Thus, to avoid this, the lenders often submit a substitution claim or notice in the court so that this provision is not applied. 

Assigning intellectual property 

Assignment of intellectual property implies the transfer of the owner’s rights in copyrights, patents, trade secrets, trademarks, and such other intangible properties. Many times, companies look to sell or transfer their intellectual property because an excess of these can prove to be a burden for them. Maintaining intellectual property requires continuous registrations, defending suits against third-party claims or marketing, and creating a finished product. Thus, such transfers can generate good profit for the company and save it from unnecessary expenditure. On the other hand, several companies look for purchasing such property to provide an impetus to their growth. Thus, when intellectual property is assigned, all the rights, titles, and interests with respect to it are transferred to the assignee from the assignor.  

Assignment of contract in real estate 

The use of assignments in real estate is known as ‘real estate wholesaling’ . As per this, the real estate dealers instead of going by the conventional way of buying and selling the house, enter into a contract and then reassign it to another buyer so as to avoid the additional costs and pocket the profit earned in doing so. This is possible because a real estate purchase agreement does not contain a binding obligation to actually buy the property. Such an agreement is called an ‘Assignment of Real Estate Purchase and Sale’ agreement. Thus, here the assignor merely acts as a middleman, selling their right to buy the property with an equitable interest, i.e. in exchange for an assignment fee from the assignee, who is the ultimate buyer of the property.

Alternatives to assignment of contract 

There are certain other types of transfers that operate as an alternative to assignment. 

They are as follows:

• Licensing- It is an agreement under which a party owning the rights over the property (for example – owning patent rights in case of intellectual property) leases those rights to another, without actually selling or assigning them. Thus, the second party gets a licence to use those rights owned by the first party, for its benefit.  
• Delegation- Delegation basically implies appointing someone else to do the work for you. For example, ‘A’ gets a contract to cut the grass from ‘B’s garden. ‘A’ might delegate the work to ‘C’ without actually assigning the contract to him. But ‘A’ will still control the work and receive the payment. 

Case laws on assignment of contract 

Kapilaben and ors. v. ashok kumar jayantilal sheth through poa gopalbhai madhusudan patel and ors., (2019), facts of the case.

In this case, the appellants here had executed an agreement to sell in 1986 in favour of some of the respondents. The respondents had paid only a portion of the consideration amount. Thereafter, the original buyers, i.e. the respondents executed another agreement to sell in 1987 in respect of the same property in favour of Respondent 1 who was not included in the agreement of 1986. Subsequently, a dispute arose among the parties, and Respondent 1 filed a petition against both the original sellers and buyers seeking specific performance of the 1987 agreement. The petition was dismissed by a trial court citing that the original buyers could not have transferred the contract and assigned their obligation to a third party without the written consent of the original seller. Additionally, there was no evidence suggesting that the seller’s consent was taken. However, the decision was overruled by the High Court of Gujarat. Later on, the matter went to the Supreme Court of India

Issue involved in the case

Was the assignment of obligations by the original buyers to Respondent 1 without the consent of the original seller valid? 

Judgment of the Court

The Supreme Court laid down the following principles in its judgment:

• Assignment of contractual liabilities, where the parties agree to substitute the old contract with a new one where the same responsibilities are transferred to another party is called novation. However, this assignment cannot occur without the consent of the other party to the contract. 
• The rights and obligations under a contract are freely assignable unless the contract is personal in nature or is prohibited by the law. 
• It was finally held that an assignment cannot be held valid just because it is not explicitly prohibited by the provisions of the contract. In order to classify an interest in the contract to be assignable, the terms of the contract and circumstances must be taken into consideration to infer whether the pirates intended to make the interests assignable.

Robinson v. Davison, (1871) 

In this case , the defendant’s wife had promised to play the piano at a concert. However, she failed to perform owing to her bad health. As a result, the plaintiff sued for compensation. 

Issues involved in the case

• Can the plaintiff seek compensation in the present case?
• Could assignment of contract be allowed to a third party?

The Court held that the performance of the present contract depended upon the personal skills of the defendant’s wife, which in turn depended on her good health. Thus, non-performance due to ill-health discharged the contract. Hence, no compensation could be claimed. Also, since the contract was based on the promisor’s personal skills and capability, it could not be assigned to a third party. 

Conclusion 

Assignment of contracts has become a common phenomenon in recent times. However, it is important that the assignments conform to the provisions laid down by the law. It must be carried out with the consent of the contracting parties. There are certain cases where the assignment is not possible like the contracts which are personal in nature, where there is an explicit provision in the contract to prohibit it, or when the law does not allow it in particular cases. These conditions must be adhered to. In fact, our law recognises both legal and equitable assignments. These assignments are covered under the provisions of the Transfer of Property Act, 1882, and the Indian Contract Act, 1872. Thus, all the contracts where the contractual rights and obligations are transferred to a third party are valid, provided all the conditions laid down by law are followed. 

References 

• http://docs.m anupatra.in/newsline/articles/Upload/E915DA6B-361C-493B-91D1-96D8EB703128.pdf
• https://www.thebalancesmb.com/what-is-an-assignment-of-contract-in-a-business-agreement-4587747
• https://www.nolo.com/legal-encyclopedia/assignment-of-contract-basics-32643.html
• https://www.contractscounsel.com/b/assignment-of-contract  

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Kamala Harris: Everything you need to know

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Kamala Harris’ life has been filled with milestones.

Her elementary school class in the 1970s was the second one to integrate Berkeley schools .

Harris was the first woman elected as San Francisco’s district attorney.

She was the first woman to be elected as California’s attorney general.

She was the first woman of color to be elected to the U.S. Senate from California.

She was first woman elected vice president of the United States.

Now, with President Biden announcing Sunday that he will step aside as the Democratic presidential nominee and endorsing Harris, she is close to becoming the party’s Democratic nominee for president.

The Times has been covering Harris extensively for two decades. Here is an overview of her story from our pages.

California roots

From Oakland to Canada and back, with inspiration from India

• Harris was born in Oakland to parents who had come to California to study at UC Berkeley. Her father, who has roots in Jamaica, was an economics professor; her mother, who had roots in India, was a cancer researcher. Harris spent several years as a child in Oakland and Berkeley, but after her parents divorced, she and her mother moved to Canada.
• Harris has spoken of her Indian grandfather as being a key force in her life, and of her interest in government. P.V. Gopalan was an Indian civil servant on assignment in an era of postcolonial ferment. As The Times reported, “Until his death in 1998, Gopalan remained from thousands of miles away a pen pal and guiding influence — accomplished, civic-minded, doting, playful — who helped kindle Harris’ interest in public service.”
• From seventh grade to the end of high school, Harris and her mother lived in Montreal and its Westmount neighborhood.

Harris earned her bachelor’s degree at Howard University in 1986.

• After graduating from the University of California Hastings College of Law in San Francisco, Harris passed the bar examination and worked her way up in the Alameda County and San Francisco County district attorney’s offices. Harris was San Francisco district attorney from 2004 to 2010.
• Harris started dating entertainment attorney Doug Emhoff and permanently relocated to Brentwood by the time they married in 2014.
• In 2016, Harris was elected to the U.S. Senate, leaving her California job to take office early in 2017.

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Political beginnings

A prosecutor with an ambition for Bay Area politics

• Harris got her start in Bay Area politics and law enforcement. She prosecuted murder, rape, assault and drug cases at the Alameda County district attorney’s office in Oakland from 1990 to 1998.
• San Francisco Dist. Atty. Terence Hallinan had hired Harris in 1998 to lead his career-criminal unit. She ended up running against him and winning in 2003. The campaign was bruising, with critics citing her relationship with San Francisco’s colorful and controversial Mayor Willie Brown. Her record as a prosecutor included some progressive policies but other ones that critics would later say were too “tough on crime.”

In 2010, Harris moved to statewide politics, defeating Republican Steve Cooley for attorney general.

• As attorney general, she started implicit-bias training for law enforcement, and as district attorney she launched a program that enabled first-time nonviolent offenders to get their charges dismissed if they finished job training. Critics have faulted her, though, for working in court to uphold California’s death penalty, despite her personal opposition, her threats to jail parents of chronically truant schoolchildren and flop flops.
• In 2016, The Times editorial board praised Harris for being willing to stand up for the little guy as attorney general. But it issued this warning: “Harris has at times seemed more focused on her political career than on the job she was elected to do. She has been too cautious and unwilling to stake out a position on controversial issues, even when her voice would have been valuable to the debate.”
• Harris gained national attention for her efforts to have courts overturn California’s ban on gay marriage and allow same-sex couples to legally marry.

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National stage

Breaking barriers with a rise to Washington

• Her next move was the 2016 race to replace the retiring Barbara Boxer as U.S. senator. With Democrats dominant in California, it came down to a history-making battle between her and Southern California’s Loretta Sanchez. When Harris won, The Times declared that she tore “down a color barrier that has stood for as long as California statehood.”
• In 2019, she began her campaign for U.S. president. Early on she built strong momentum, drawing a crowd of roughly 20,000 to a lavish Oakland rally. She raised $1.5 million in just 24 hours. She boasted a string of endorsements from California politicians.
• But her campaign slowly sputtered. As The Times reported in March 2019, the fall “stems in part from Harris’ failure to present a compelling case for her candidacy beyond her background as a prosecutor, her buoyant personality and a deep contempt — shared by others in the contest — for President Trump.”
• In December, she suspended her campaign. The Times called it a “lackluster end to an initially soaring presidential bid premised on the California senator’s personal biography and prosecutorial acumen. Ultimately, her run foundered with a muddled purpose, campaign infighting and an inability to sustain support from vital Democratic voting blocs, particularly African Americans.”

• Biden locked in the nomination, but there was no guarantee he would pick her as his running mate. Some felt the Biden team was angry at her treatment of him during the campaign. But Biden ended up selecting Harris. The Times said at the time: “In many ways, Harris is a safe pick — broadly popular in the Democratic Party and well acquainted with the rigors of a national campaign. But her selection also carries symbolic heft in this moment when race relations are at top of mind for voters.”
• Harris held her own during her debate with Vice President Mike Pence and serving as an effective surrogate. The Times reported “Those who have spoken with Harris say she sees the changes — in style, in her approach to campaigning, in the faces surrounding her — worth the goals she now pursues: replacing Trump with Biden and becoming the first female vice president in history.”

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Vice president

Struggling to find her footing in a big job

• Harris made history when she took office.
• But her term has been marked by successes and struggles.
• After her first year in office, The Times offered this assessment: “Harris has struggled to tell her own story, leaving others to fill the void. Conservative media have attacked her while mainstream outlets have published a string of stories about low morale and high staff turnover in her office. Like many vice presidents, Harris is learning how hard it is to define herself as a No. 2.
• She was handed a difficult assignment in those early months: Leading diplomatic efforts to curb migration from Central America. There were early controversies, such as when she told would-be immigrants not to come to the United States . As the immigration issue has become hot in the 2024 race, Harris faces tough questions about her role in Biden policies.
• Democrats worried about Harris’ lackluster poll numbers as they considered a leader of the party after Biden. “Harris has become a source of tension among Democrats, as growing worries over Harris’ political stature collide with concerns that any move to sideline her would alienate the voters needed to win elections and undercut the party’s promise of equity,” The Times wrote in 2021.
• After the Supreme Court struck down Roe vs. Wade, Harris emerged as a leading voice in protecting reproductive rights.

• Barabak in early 2024 rated her this way : “Harris finally seems to have found her footing in a role to which she is accustomed and adept: prosecuting attorney.”
• Harris has endured unprecedented levels of hate on social media. “Research shows that Harris may be the most targeted American politician on the internet, one who checks every box for the haters of the fever swamps: She’s a woman, she’s a person of color and she holds power,” The Times found.
• Before Biden’s disastrous debate performance, Harris was still struggling to present herself as a successor. “More than three years into the oldest president in history’s first term, his understudy has failed to win over a majority of voters or convince them that she is ready to step in if Biden falters, according to polls ,” The Times reported in April.
• Harris’ star rose as Democrats began to call on Biden to step aside and end his reelection campaign. She had remained publicly supportive of Biden, even as calls for her to replace him at the head of the ticket grew louder.

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Correction: A earlier version of this story incorrectly stated Harris was the first person of color elected to the U.S. Senate from California. She was the first woman of color elected to the Senate.

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'Coordinated sabotage' disrupts French rail network ahead of Olympics opening ceremony

July 26 (UPI) -- France's high-speed rail network was severely disrupted Friday by a series of arson attacks hours before the Paris Olympics were due to open, the state operator of the country's trains said.

The massive "sabotage" attacks affected at least 800,000 travelers after SNCF was forced to cancel or divert a large number of trains on three of its four main 200-mph TGV lines with Paris particularly badly hit, SNCF Group President Jean-Pierre Farandou told French television network BFMTV. Advertisement

He warned of paralysis of the company's LGV Atlantique, Nord and Est networks that could last all weekend as the breakdowns meant many trains would be either unable to depart the capital or delayed.

An attempt to sabotage the iconic Sud-Est line, Europe's busiest high-speed route, linking Paris with the big cities in the south -- Lyon and Marseille -- was foiled by transit police. Advertisement

Eurostar trains in France, to and from Paris, were being diverted with several delayed. Services between London and Paris were also affected with several trains canceled and all its normal 185 mph high-speed services diverted onto the slower "classic" line.

Increasing journey times from around 135 minutes to 3 3/4 hours, according to a statement on the company's website.

Long lines began building up at Paris's Gare du Nord and Gare du Montparnasse stations and at London St. Pancras where Eurostar began urging passengers to stay home.

In a post on X , passenger trains operator SNCF Voyaguers appealed to passengers not to go to stations and to postpone traveling, if possible, promising all those whose journeys were disrupted would be entitled to exchange their tickets or get a refund. It said affected travelers will be contacted by email or text.

Farandou said the timing and targeted nature of the attacks left him in no doubt of the intent.

The locations of the sites hit -- Courtalain on the Atlantic line, Croisilles in the North and Pagny-sur-Moselle in the East -- were at key junctions in the national network specifically "chosen so that with a fire, we would lose two lines at once," he said. Advertisement

SNCF said its engineering response teams were already on site to carry out diagnosis and begin repairs.

Prime Minister Gabriel Attal condemned what he said were "prepared and coordinated" attacks on SNCF installations, saying the intelligence services and law enforcement were working to find and punish those responsible.

"The consequences on the rail network are massive and serious", he said in a post on X in which he expressed solidarity with his countrymen, especially those preparing to go on their vacations.

The disruption came as organizers prepared the finishing touches to an opening ceremony Friday night that will see more than 10,000 athletes transported past Paris' iconic sights along the River Seine on a flotilla of boats watched by an audience of 300,000 people, VIPs and celebrities.

A massive security operation is in place involving 77,000 national police, gendarmes, troops and private security guards and a sealed security perimeter on the left and right banks of the Seine.

IOC President Thomas Bach brushed off the sabotage attacks saying he did not think it would affect the opening ceremony and that he had "full confidence" in French authorities.

The attacks also coincided with the start of the "grand départ," the day millions of Parisians traditionally leave the city for their summer vacation. Advertisement

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Valerie French Kilroy case: Park ranger found guilty of wife’s murder

The jury rejected james kilroy’s defence that he should be found not guilty by reason of insanity.

A park ranger who claimed he was insane when he beat, stabbed and strangled his wife to death has been found guilty of her murder by a unanimous jury decision.

The eight women and four men at the Central Criminal Court took about two hours to reject James Kilroy’s defence that he should be found not guilty by reason of insanity due to a cannabis-induced psychosis or a form of acute and transient psychotic disorder.

Members of victim Valerie French Kilroy’s family, who have attended every day of three trials, cried and thanked the jury when the verdict was revealed.

The two previous trials collapsed due to unforeseen difficulties that arose during the course of the evidence. Kilroy will be sentenced to the mandatory term of life imprisonment next Monday when members of Ms French Kilroy’s family will be invited to address the court.

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Before she was murdered, Ms Kilroy had been enjoying a night out with friends. When she arrived home, Kilroy set upon her with a knife and beat and strangled her. There was evidence that he used a ligature and that she struggled during the unprovoked attack.

Kilroy was found some hours later wandering naked in a nearby field.

He told gardaí and psychiatrists of various delusional beliefs including that his wife was working with Donald Trump’s bodyguards to capture, torture and kill him.

There was also evidence that Kilroy was a regular user of cannabis and had a previous psychotic episode related to drug use in 2001.

Mr Kilroy (51) murdered his wife at their home in Kilbree Lower, Westport, Co Mayo, between June 13th and June 14th, 2019.

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The European elections in 2024 took place from Thursday to Sunday, 6 - 9 June. 

Millions of people across the EU cast their vote to choose who will represent them in the European Parliament, the world’s only directly elected transnational assembly.

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In the weeks and months following the elections, the newly elected Members of the European Parliament (MEPs) elect their new leadership and resume work on legislation that was not finished in the 2019-2024 term.

MEPs also vote to elect the new President of the European Commission, proposed by the leaders of EU countries, and they approve the entire College of Commissioners. The new European Commission is then appointed by the European Council.

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The European Parliament ran a public information campaign called ‘Use your vote or others will decide for you’ to encourage people to vote.

In the European Union, democracy may seem obvious to us today. But this has not always been the case. Democracy is a precious gift passed on to us from previous generations.

Now it is up to us to maintain it, to make it stronger and pass it on to the generations to come. The most effective way to do so is by voting - because the more people vote, the stronger democracy becomes.

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