assignment of choses in action in nigeria

Nigeria: Assignment Of Choses In Action

INTRODUCTION

As a general rule and based on the doctrine of privity a contract cannot confer rights or impose obligations on any person except the parties to the contract. Accordingly, a contract cannot be enforced by or against a person who is a stranger to it even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. The main reason for this is that it is the parties' contract, and they are always free to vary or discharge it by agreement. The creation of a third party right would impede this freedom unless an agreement for such third party involvement has been made part of the agreement. 2

As with every general rule, there is always an exception. One of the exceptions to the doctrine of privity of contract arises in the assignment of choses in action where the owner of a contractual right can transfer same to a third party without the consent of the debtor (the counter-party to the contract), thereby enabling the third party to enforce the right against the debtor. The process of transfer of such a right is known as "assignment" and the types of property which are susceptible to this type of transfer are known as "choses in action." 3

This article sets out to trace the evolution, incidence, and the conditions precedent for a valid assignment of choses in action under Nigerian law.

WHAT ARE CHOSES IN ACTION?

Choses in action is a legal expression used to describe all personal rights of property which can only be claimed or enforced by action and not by taking physical possession of them. They are also called "things in action" because they are things which a person is not possessed but has to bring an action in court in order to recover them. 4 Choses in action may be legal or equitable. Legal choses in action are those which could historically only be enforced by an action at common law whilst equitable choses in action are choses in action which could only be enforced in the courts of equity- they arose out of property rights over which the Chancery Court formerly had exclusive jurisdiction. 5 Examples of choses in action include debts, shares, negotiable instruments, policies of insurance, bills of lading, patents, copyrights, rights under trusts and legacies, 6 benefit of a contract for sale of reversionary interest, rights to claim indefinite sums of money, as for compensation under Statute; damages for loss in which the assignee was the assignor's insurer, a debt or benefit arising out of an existing contract, but payable at a future time 7 and a claim for damages in tort. 8 All these are intangible rights which cannot be physically possessed but only claimed or enforced by an action in court. They are in law permitted to be assigned by the holders (though they can neither be seen nor possessed) to third parties who would be able to enforce the rights against the debtors even though they were not parties to the original contract.

ASSIGNMENT OF CHOSES IN ACTION

The term "assignment" refers to the act of transferring to another all or part of one's property, interest, or rights. The term denotes not only the act of transfer, but also the instrument by which it is effected. 9 In Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd 10 the Court of Appeal held that "assignment means to give something to some body for their use or benefit. It also may mean to transfer right, property or title from the persons legally entitled to them to some body else for their benefit."

The assignment of choses in action may be legal or equitable. Due to the vagaries of the historical evolution of law and equity, different considerations apply to the assignment of choses in action at law and in equity. 11

ASSIGNMENT AT COMMON LAW

Historically, under common law contractual rights were hitherto not assignable without the consent of both contracting parties since they were things in action as opposed to things in possession. This common law rule stemmed from the difficulty of conceiving of transfer of an intangible, and the desire to avoid maintenance and champerty. 12 The only methods of assigning contractual rights at common law were by novation and by procuring the debtor's acknowledgment that he held for the assignee, both of which required the consent of the debtor, unless the assignment was done by the king or it involved the assignment of a mercantile chose in action like a negotiable instrument which are transferrable by mere delivery. Accordingly, legal choses in action could only be assigned at law with the consent of the debtor. The assignor was however, required to be joined as a party to any action to enforce the assignment (either as a plaintiff if he consented or as a defendant in the absence of consent) since there was no privity of contract between the debtor and the assignee.

Given the rigors of assignment of legal choses in action under the common law, the courts of equity developed more flexible requirements for the assignment of equitable choses in action. However, the most significant intervention was introduced by the enactment of the English Judicature Act of 1873 13 which introduced the concept of statutory assignment.

STATUTORY ASSIGNMENT

The enactment of the Judicature Act, 1873 (a statute of general application in Nigeria) 14 created an exception to the doctrine of privity of contract by introducing the concept of trust of a chose in action in section 25(6) 15 of the Act, which provides as follows:

Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice;- (a) The legal right to such debt or thing in action (b) All legal and other remedies for the same and (c) The power to give a good discharge for the same without the concurrence of the assignor; Provided that if the debtor, trustee or other person liable in respect of such debt or thing in action has notice:- i. That the assignment is disputed by the Assignor or any person under him or; ii. Of any other opposing or conflicting claim to such debt or thing in action, he may if he thinks fit either call upon the person making claim hereto to inter plead concerning the same, or pay the debt or other in action in Court.

By section 25(6) of the Judicature Act, a contractual party could assign his rights under the contract subject to the conditions stated in the Act without any need for a novation or acknowledgment by the debtor.

CONDITIONS FOR A VALID ASSIGNMENT OF CHOSES IN ACTION

In order for Section 25(6) of the Judicature Act 1873 to apply, three conditions must be fulfilled:

The assignment must be absolute and not purport to be by way of charge only

An absolute transfer is a transfer of the whole not a part of the chose in action. The test to be applied in determining whether an assignment is absolute is whether the assignor has unconditionally transferred to the assignee for the time being, the sole right to the debt in question as against the debtor in which case the assignment is absolute. The fact that the assignee is to hold proceeds of the debts or the surplus proceeds beyond the stated amount, on trust for the assignor does not prevent the assignment from being absolute. 16

An assignment that purports to be by way of charge only is not an absolute assignment. The relevant test is to decide whether the assignment merely gives a right to the assignee to payment out of a particular fund by way of security rather than an unconditional transfer of the fund to the assignee. The judicial reasoning behind the requirement for an absolute assignment is that the debtor should not be put in doubt or jeopardy by the arrangements between the assignor and the assignee as to whom he is to discharge his obligations. 17

No particular form or mode is prescribed or required by law for a legal assignment as long as the assignor absolutely and unequivocally indicates the transfer of the benefit, interest or title to the assignee. 18

It must be in writing under the hand of the assignor

No particular mode or form is necessary as the writing can be informal, as for instance, a direction in writing by a creditor to his debtor to pay the assignee, handed to the assignee, may amount to an assignment but such a direction handed to the debtor may not by itself constitute an assignment unless there is evidence that the assignee has requested or consented to it. It is also the law that even if the debtor has the direction, it may not constitute more than authority to pay, and gives the assignee no rights unless the instructions can be said to amount to an irrevocable mandate to the debtor. 19

Express notice in writing thereof must be given to the debtor or trustee

This notice is not required to be in a separate document purposely prepared as a notice and described as such. What is needed is that information relative to the assignment shall be conveyed to the debtor, and that it shall be conveyed in writing. A written demand for payment sent by the assignee to the debtor has been held to be sufficient once the notice is unconditional and given to the debtor personally before the assignee commences his action. It has also been held that since a creditor can assign by directing his debtor to pay the assignee, a single written document would suffice to constitute both the Assignment as well as the notice envisaged by the Act. 20 Furthermore, it is not necessary for the notice to the debtor to be given by the assignor or the assignee; it may be given by a third party. 21

LEGAL EFFECT OF A STATUTORY ASSIGNMENT

Once the above conditions have been fulfilled, certain legal consequences immediately follow:

The assignee can sue the debtor in his own name instead of having to sue in the name of the assignor and perhaps to go to the Court of equity to compel his joinder in the action. 22
Consideration is not required for the assignment. 23
The consent of the assignee is not required for the assignment. However, where it is the liabilities or the burdens under a contract that are to be assigned to a debtor, the consent of the assignee is required. 24
EQUITABLE ASSIGNMENT OF CHOSES IN ACTION

An equitable assignment of a chose in action arises in the event of an assignment of an equitable chose in action and where there has been a failure to comply with the statutory conditions for a valid assignment of a legal chose in action. Such an assignment which fails to comply with the requirements of the statute will not become invalid but will operate as an equitable assignment.

An equitable assignment may be in writing or oral. It may operate by way of a charge only or be part of the debt or chose. If there is an equitable assignment of an equitable chose in action the assignment being absolute, then the assignee is entitled to sue in his own name. 25

Any words will suffice provided they are unambiguous to the effect that an identifiable debt has been made over by the creditor to some third person. 26 No privity of contract or consideration is required for equitable assignment provided that the assignor has, at the material time, done all that he can to perfect the gift. 27

An equitable assignment is binding even without notice to the debtor. However, as a matter of practice, notice to the debtor is very important for three reasons: 28

In the absence of notice the debtor is entitled to discharge his obligations to the assignor and not to the assignee, whereas if he has notice he does so at his own peril and he may well be required to discharge the obligation a second time to the assignee with no entitlement to recovery from the assignor.
The giving of notice to the debtor has an effect on prior equities. The general rule as regards assignment of choses in action is that an assignee takes subject to the equities that already apply to the property in question. Thus, anyone who has a prior interest (legal or equitable) in an assigned chose is entitled to a higher priority than that of the assignee. The reason for this is that the assignee cannot acquire a better title than that of the assignor. What he essentially gains by virtue of the assignment is a right to continue in the stead of the assignor in respect of that chose and nothing better. 29 Claims of equities that arise after notice of the assignment has been given to the debtor would not affect the assignee, except where the claim is very closely related to the original transaction upon which the chose came into existence. The rule that the assignee takes subject to equities will not apply where the trustee is estopped, either by conduct or deed, from setting up equities against the assignee. It would not also apply where the agreement occasioning the original transaction includes a clause that the assignees of the assignor would take free from all equities. 30
The date of notice establishes the order of priority as between successive assignees. Thus, where there are two or more assignees of the same chose in action, the first to give notice has priority over the other assignees even if they were first in time. 31

Assignment of choses in action provides a veritable avenue for the exchange of contractual rights, especially when the assignor does not have the wherewithal to enforce the right in court. This creates a win-win situation for the assignor and the assignee, as the assignor is immediately able to receive value for his rights and the assignee is able to enforce the right to receive whatever benefit he has contracted for whilst the debtor's position is not adversely affected. The parties, however, need to understand the applicable principles so that they would know the extent of any rights that they acquire in any given transaction.

1 Emmanuel Abasiubong Bassey, Senior Associate in the Dispute Resolution Department of S.P.A. Ajibade & Co., Lagos, Nigeria.

2 Makwe v. Nwukor & Anor (2001) LPELR-1830(SC) (pp 25 - 25 paras D - E).

3 See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors. (2013) LPELR-20870(CA) (pp 62 - 98 paras A - E). It was however, held that the benefit of a contract is only assignable in cases where it can make no difference to the person on whom the obligation lies to which of two persons he is to discharge it. See, Tolhurst v. Associated Portland Cement Manufacturers Ltd (1902) 2 K.B. 660 at 668, (1903) A.C. 414 cited in Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 24 - 25 paras E - C).

4 I. E. Sagay, Nigerian Law of Contract (first published 1985, 2nd Edn, Spectrum Books Limited, Ibadan, 2000) 516.

5 See, https://mcmahonsolicitors.ie/choses-in-action/ [accessed on 14th December 2023.]

7 See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors ( supra ).

8 See, FCMB v. Essien (2022) LPELR-58699(CA) (pp 6 - 6 paras E - F).

9 See, FCMB v. Essien ( supra ).

10 Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 24 - 25 paras E - C).

11 The following choses are however not assignable: (1) Salaries of public officials. This is because it is perceived that if allowed to assign their salaries, they may deprive themselves of their means of sustenance and thereby impair the efficiency which is most desirable for the public service; (2) Alimony- because the money is meant for the maintenance of the spouse and (3) Rights arising out of a contract for personal service.

12 Maintenance occurs when a third-party provides support for litigation without a just cause, by providing, for example, financial assistance. Champerty is an aggravated form of maintenance, where a third-party pays some or all of the litigation costs in return for a share of the proceeds.

13 (36 & 37 Vict.) CHAPTER 66.

14 In Nigeria, a statute of general application refers to refers to statutes which were in force in England on the 1st of January, 1900. They were to be applied by the courts in Nigeria as far as local circumstances permit. However, the Western Region is now exempted by virtue of Law of England (Application) Law of 1959. The West African Court of Appeal stated in Young v. Abina that it was not necessary for the statute to be in force in all of the United Kingdom, but it only had to be in force in England. See, https://www.learnnigerianlaw.com/learn/legal-system/englishlaw accessed on 12th December 2023.

15 Section 25 (6) of the Judicature Act i873 which has now been repealed and replaced substantially by Section 136 of the English Law of Property Act, 1925, in England.

16 See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors. ( supra ). It has been held that the benefit of a contract is only assignable in cases where it can make no difference to the person on whom the obligation lies to which of two persons he is to discharge it. See, Tolhurst v. Associated Portland Cement Manufacturers Ltd (1902) 2 K.B. 660 at 668, (1903) A.C. 414 cited in Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 24 - 25 paras E - C).

17 See, https://www.designingbuildings.co.uk/wiki/Legal_and_equitable_assignment [accessed on 14th December 2023].

18 See, Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 25 - 26 paras D - D).

19 See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors ( supra ).

21 See, Bateman v. Hunt, 20 T. L. R. 628.

22 See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors ( supra ).

24 See, Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd ( supra ).

25 See, https://www.designingbuildings.co.uk/wiki/Legal_and_equitable_assignment [accessed on 14th December 2023].

26 See, William Brandt's Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454.

27 If it is incomplete, consideration may be required. Consideration will also be required where the assignment concerns some future chose as the agreement in such instance can only be a contract to assign and all contracts must be backed by consideration. See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors (2013) LPELR-20870(CA) (pp 62 - 98 paras A - E).

28 The notice may be written or oral and the wording of the notice may be informal. A newspaper article may be a sufficient notice to the debtor. See, Lloyd v Banks (1868) LR 3. Ch App 488.

29 Re Knapman (1881) 18 Ch. D 300.

30 https://djetlawyer.com/assignment-of-choses-in-action/#:~:text=An%20assignment%20of%20a%20chose,legal%20(statutory)%20or%20equitable [accessed on 5 December 2023].

31 See, the rule in Dearle v Hall 3 Russell 1, 38 ER 475.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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assignment of choses in action in nigeria

ASSIGNMENT OF CHOSES IN ACTION

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Emmanuel Bassey

INTRODUCTION

As a general rule and based on the doctrine of privity a contract cannot confer rights or impose obligations on any person except the parties to the contract. Accordingly, a contract cannot be enforced by or against a person who is a stranger to it even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. The main reason for this is that it is the parties’ contract, and they are always free to vary or discharge it by agreement. The creation of a third party right would impede this freedom unless an agreement for such third party involvement has been made part of the agreement.

As with every general rule, there is always an exception. One of the exceptions to the doctrine of privity of contract arises in the assignment of choses in action where the owner of a contractual right can transfer same to a third party without the consent of the debtor (the counter-party to the contract), thereby enabling the third party to enforce the right against the debtor. The process of transfer of such a right is known as “assignment” and the types of property which are susceptible to this type of transfer are known as “choses in action.”

This article sets out to trace the evolution, incidence, and the conditions precedent for a valid assignment of choses in action under Nigerian law.

WHAT ARE CHOSES IN ACTION?

Choses in action is a legal expression used to describe all personal rights of property which can only be claimed or enforced by action and not by taking physical possession of them. They are also called “things in action” because they are things which a person is not possessed but has to bring an action in court in order to recover them. Choses in action may be legal or equitable. Legal choses in action are those which could historically only be enforced by an action at common law whilst equitable choses in action are choses in action which could only be enforced in the courts of equity- they arose out of property rights over which the Chancery Court formerly had exclusive jurisdiction. Examples of choses in action include debts, shares, negotiable instruments, policies of insurance, bills of lading, patents, copyrights, rights under trusts and legacies, benefit of a contract for sale of reversionary interest, rights to claim indefinite sums of money, as for compensation under Statute; damages for loss in which the assignee was the assignor’s insurer, a debt or benefit arising out of an existing contract, but payable at a future time and a claim for damages in tort. All these are intangible rights which cannot be physically possessed but only claimed or enforced by an action in court. They are in law permitted to be assigned by the holders (though they can neither be seen nor possessed) to third parties who would be able to enforce the rights against the debtors even though they were not parties to the original contract.

The term “assignment” refers to the act of transferring to another all or part of one’s property, interest, or rights. The term denotes not only the act of transfer, but also the instrument by which it is effected. In Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd the Court of Appeal held that “assignment means to give something to some body for their use or benefit. It also may mean to transfer right, property or title from the persons legally entitled to them to some body else for their benefit.”

ASSIGNMENT AT COMMON LAW

Historically, under common law contractual rights were hitherto not assignable without the consent of both contracting parties since they were things in action as opposed to things in possession. This common law rule stemmed from the difficulty of conceiving of transfer of an intangible, and the desire to avoid maintenance and champerty. The only methods of assigning contractual rights at common law were by novation and by procuring the debtor’s acknowledgment that he held for the assignee, both of which required the consent of the debtor, unless the assignment was done by the king or it involved the assignment of a mercantile chose in action like a negotiable instrument which are transferrable by mere delivery. Accordingly, legal choses in action could only be assigned at law with the consent of the debtor. The assignor was however, required to be joined as a party to any action to enforce the assignment (either as a plaintiff if he consented or as a defendant in the absence of consent) since there was no privity of contract between the debtor and the assignee.

Given the rigors of assignment of legal choses in action under the common law, the courts of equity developed more flexible requirements for the assignment of equitable choses in action. However, the most significant intervention was introduced by the enactment of the English Judicature Act of 1873 which introduced the concept of statutory assignment.

STATUTORY ASSIGNMENT

The enactment of the Judicature Act, 1873 (a statute of general application in Nigeria) created an exception to the doctrine of privity of contract by introducing the concept of trust of a chose in action in section 25(6) of the Act, which provides as follows:

CONDITIONS FOR A VALID ASSIGNMENT OF CHOSES IN ACTION

In order for Section 25(6) of the Judicature Act 1873 to apply, three conditions must be fulfilled:

6.1 The assignment must be absolute and not purport to be by way of charge only

6.2 It must be in writing under the hand of the assignor

6.3 Express notice in writing thereof must be given to the debtor or trustee

This notice is not required to be in a separate document purposely prepared as a notice and described as such. What is needed is that information relative to the assignment shall be conveyed to the debtor, and that it shall be conveyed in writing. A written demand for payment sent by the assignee to the debtor has been held to be sufficient once the notice is unconditional and given to the debtor personally before the assignee commences his action. It has also been held that since a creditor can assign by directing his debtor to pay the assignee, a single written document would suffice to constitute both the Assignment as well as the notice envisaged by the Act. Furthermore, it is not necessary for the notice to the debtor to be given by the assignor or the assignee; it may be given by a third party.

LEGAL EFFECT OF A STATUTORY ASSIGNMENT

Once the above conditions have been fulfilled, certain legal consequences immediately follow:

The assignee can sue the debtor in his own name instead of having to sue in the name of the assignor and perhaps to go to the Court of equity to compel his joinder in the action.
Consideration is not required for the assignment.
The consent of the assignee is not required for the assignment. However, where it is the liabilities or the burdens under a contract that are to be assigned to a debtor, the consent of the assignee is required.
EQUITABLE ASSIGNMENT OF CHOSES IN ACTION

Any words will suffice provided they are unambiguous to the effect that an identifiable debt has been made over by the creditor to some third person. No privity of contract or consideration is required for equitable assignment provided that the assignor has, at the material time, done all that he can to perfect the gift.

An equitable assignment is binding even without notice to the debtor. However, as a matter of practice, notice to the debtor is very important for three reasons:

In the absence of notice the debtor is entitled to discharge his obligations to the assignor and not to the assignee, whereas if he has notice he does so at his own peril and he may well be required to discharge the obligation a second time to the assignee with no entitlement to recovery from the assignor.
The giving of notice to the debtor has an effect on prior equities. The general rule as regards assignment of choses in action is that an assignee takes subject to the equities that already apply to the property in question. Thus, anyone who has a prior interest (legal or equitable) in an assigned chose is entitled to a higher priority than that of the assignee. The reason for this is that the assignee cannot acquire a better title than that of the assignor. What he essentially gains by virtue of the assignment is a right to continue in the stead of the assignor in respect of that chose and nothing better.Claims of equities that arise after notice of the assignment has been given to the debtor would not affect the assignee, except where the claim is very closely related to the original transaction upon which the chose came into existence. The rule that the assignee takes subject to equities will not apply where the trustee is estopped, either by conduct or deed, from setting up equities against the assignee. It would not also apply where the agreement occasioning the original transaction includes a clause that the assignees of the assignor would take free from all equities.
The date of notice establishes the order of priority as between successive assignees. Thus, where there are two or more assignees of the same chose in action, the first to give notice has priority over the other assignees even if they were first in time.

Assignment of choses in action provides a veritable avenue for the exchange of contractual rights, especially when the assignor does not have the wherewithal to enforce the right in court. This creates a win-win situation for the assignor and the assignee, as the assignor is immediately able to receive value for his rights and the assignee is able to enforce the right to receive whatever benefit he has contracted for whilst the debtor’s position is not adversely affected. The parties, however, need to understand the applicable principles so that they would know the extent of any rights that they acquire in any given transaction.

______________________________

For further information on this article and area of law, please contact Emmanuel Bassey at: S. P. A. Ajibade & Co., Lagos by Telephone (+234 1 472 9890), Fax (+234 1 4605092) Mobile (+234.703.805.9736, +234.815.088.2839) Email: [email protected] www.spaajibade.com

Emmanuel Abasiubong Bassey, Senior Associate in the Dispute Resolution Department of S.P.A. Ajibade & Co., Lagos, Nigeria.
Makwe v. Nwukor & Anor (2001) LPELR-1830(SC) (pp 25 – 25 paras D – E). See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors. (2013) LPELR-20870(CA) (pp 62 – 98 paras A – E). It was however, held that the benefit of a contract is only assignable in cases where it can make no difference to the person on whom the obligation lies to which of two persons he is to discharge it. See, Tolhurst v. Associated Portland Cement Manufacturers Ltd (1902) 2 K.B. 660 at 668, (1903) A.C. 414 cited in Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 24 – 25 paras E – C).
I. E. Sagay, Nigerian Law of Contract (first published 1985, 2nd Edn, Spectrum Books Limited, Ibadan, 2000) 516.
See, https://mcmahonsolicitors.ie/choses-in-action/ [accessed on 14th December 2023.] Supra.
See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors (supra).
See, FCMB v. Essien (2022) LPELR-58699(CA) (pp 6 – 6 paras E – F).
See, FCMB v. Essien (supra).
Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 24 – 25 paras E – C).
The following choses are however not assignable: (1) Salaries of public officials. This is because it is perceived that if allowed to assign their salaries, they may deprive themselves of their means of sustenance and thereby impair the efficiency which is most desirable for the public service; (2) Alimony- because the money is meant for the maintenance of the spouse and (3) Rights arising out of a contract for personal service.
Maintenance occurs when a third-party provides support for litigation without a just cause, by providing, for example, financial assistance. Champerty is an aggravated form of maintenance, where a third-party pays some or all of the litigation costs in return for a share of the proceeds.
(36 & 37 Vict.) CHAPTER 66.
In Nigeria, a statute of general application refers to refers to statutes which were in force in England on the 1st of January, 1900. They were to be applied by the courts in Nigeria as far as local circumstances permit. However, the Western Region is now exempted by virtue of Law of England (Application) Law of 1959. The West African Court of Appeal stated in Young v. Abina that it was not necessary for the statute to be in force in all of the United Kingdom, but it only had to be in force in England. See, https://www.learnnigerianlaw.com/learn/legal-system/englishlaw accessed on 12th December 2023.
Section 25 (6) of the Judicature Act i873 which has now been repealed and replaced substantially by Section 136 of the English Law of Property Act, 1925, in England.
See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors. (supra). It has been held that the benefit of a contract is only assignable in cases where it can make no difference to the person on whom the obligation lies to which of two persons he is to discharge it. See, Tolhurst v. Associated Portland Cement Manufacturers Ltd (1902) 2 K.B. 660 at 668, (1903) A.C. 414 cited in Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 24 – 25 paras E – C).
See, https://www.designingbuildings.co.uk/wiki/Legal_and_equitable_assignment [accessed on 14th December 2023].
See, Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (2009) LPELR-4381(CA) (pp 25 – 26 paras D – D).
See, Bateman v. Hunt, 20 T. L. R. 628.
See, Julius Berger (Nig) Plc & Anor v. Toki Rainbow Community Bank Ltd (supra).
See, William Brandt’s Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454.
If it is incomplete, consideration may be required. Consideration will also be required where the assignment concerns some future chose as the agreement in such instance can only be a contract to assign and all contracts must be backed by consideration. See, Ben Electronic Co. (Nig) Ltd v. ATS & Sons & Ors (2013) LPELR-20870(CA) (pp 62 – 98 paras A – E).
The notice may be written or oral and the wording of the notice may be informal. A newspaper article may be a sufficient notice to the debtor. See, Lloyd v Banks (1868) LR 3. Ch App 488.
Re Knapman (1881) 18 Ch. D 300.
https://djetlawyer.com/assignment-of-choses-in-action/#:~:text=An%20assignment%20of%20a%20chose,legal%20(statutory)%20or%20equitable [accessed on 5 December 2023].
See, the rule in Dearle v Hall 3 Russell 1, 38 ER 475.

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Assignment of Choses in Action

Property generally may be realty (real) or personalty (personal). Realty are characterized by geographical fixity(land) while personalty are generally mobile.

Personalty is also classified into tangible/corporeal and intangible/incorporeal. The former is capable of physical handling/possession/manipulation/enjoyment while the latter is incapable of any of these.

Incorporeal property is also called a chose in action which has been defined as a legal expression used to describe all personal rights of property which can only be claimed or enforced by action (in a court) and not by taking physical possession.

A chose generally is a thing capable of being owned. Choses in action may be legal or equitable. Legal choses in action are rights which were enforceable or recoverable only by an action at Common law. This category of choses includes debts, benefits under a contract, insurance policies, copyrights, patents etc.

Equitable choses on the other hand are rights over property which were only enforceable/recoverable/cognizable by the courts of Chancery. It could only be recovered by a suit in Equity and the rights under this category include interests of a beneficiary in a Trust, a legacy/reversionary interest under a will etc.

Choses in action may also be in respect of already existing things/property or things/property to be acquired at a future date but which are not yet in possession. The chose in action may be property in itself and it may also be a propriety right over property.

Assignment is the transfer of something from one person to another such that the assignee obtains rights of a nature that were hitherto exercisable only by the assignor. An assignment of a chose is thus the transfer of a chose in action from the assignor to the assignee such that the assignee obtains and becomes entitled to enjoy rights in respect of that chose, which were hitherto exclusively enjoyed by the assignor.

Assignment may be legal (statutory) or equitable.

Assignment and Novation

An assignment is quite distinct from a novation. Novation is essentially a legal device by which parties to a contract may legally vary/shift their obligations under the contract to third parties. Thus, A can agree with B, his creditor, that C, who owes him money, will pay that debt to B in full satisfaction of his own (A’s) debt.

Novation is however fundamentally different from assignment in three material aspects:

The consent of the parties is sine qua non since the original contract is rescinded by the novation. There must thus be consensus ad idem. There can be no novation otherwise. This is contrary to the case in assignment where there only need be communication to the assignee, his consent and that of the trustee of the liability are immaterial.
The original debt in novation must be totally extinguished under the new arrangement.

There is no such requirement for assignment to be valid.

For novation to be valid, there must be consideration in all cases as it is essentially a new contract. The requirement for consideration in assignment is much more relaxed.

Assignment and Equities

The general rule as regards assignment of choses in action is that an assignee takes, subject to the equities thar already apply to the chose in action (property) in question. Thus, anyone who has an interest (legal or equitable) in an assigned chose is entitled to a higher priority than that of the assignee.

The logic here is based on a recognition that the assignee cannot acquire a better title than that of the assignor. What he essentially gains by virtue of the assignment is a right to continue in the stead of the assignor in respect of that chose and nothing better.

In Re Knapman (1881) 18 Ch. D 300 the beneficiaries of a will brought an action against the executor seeking to revoke the probate. While the matter was in court, these beneficiaries assigned the right under the will to someone else.

Their action subsequently failed in court, the court ruled that the executor had a right to set off the costs of the suit against the estate. As such, since the right to this had already been assigned, the assignee has to settle this cost since he was assigned a property that had a pre-existing liability.

Claims of equities that arise after notice of the assignment has been given to the trustee would not affect the assignee however, except where the claim is very closely related to the original transaction upon which the chose came into existence.

The rule that the assignee takes subject to equities will not apply where the trustee is estopped, either by conduct or deed, from setting up equities against the assignee. It would not also apply where the agreement occasioning the original transaction includes a clause that the assignees of the assignor would take free from all equities.

Historically, assignment of choses in action was largely unrecognized at Common law. There was the fear that allowing such assignment would bring about Maintenance and even cases of Champerty as well as the risk of encouraging a litany of contentious matters on the same res.

Maintenance arises where a person who has no legal interest in a matter provides assistance by money or otherwise to a party to the suit while Champerty marries the foregoing with the prospect of reward out of the possible spoils of the suit.

Thus, no debt could be assigned at Common law unless the debtor specifically agreed to the assignment. The only exceptions allowed by Common law were in respect of choses in action assigned by or to the King and assignment of negotiable instruments in order to promote trade.

Equity has however always recognized the assignment of choses in action, both equitable and legal. It would not however allow the assignment of bare rights without accompanying interest in property. This was to avoid, as in the case of the Common law, situations that encourage Maintenance.

Assignability

Not all choses in action are assignable. The courts would not give effect to such assignments either on grounds of public policy or on account of the nature of the subject matter of the assignment.

Choses in action that are not assignable include:

Salaries of public officials. This is because it is perceived that if allowed to assign their salaries, they may deprive themselves of their means of sustenance and thereby impair the efficiency which is most desirable for the public service.
Alimony is not assignable on much the same grounds as salaries of public officials as the money is meant for the maintenance of the spouse.
Rights arising out of a contract of a personal nature i.e. contracts that require personal service like employment.
Expectancies (future choses) are not assignable at Common law based on the maxim: Nemo dat quod non habet. They are assignable in Equity although, such assignment must be for value.

Equitable Assignment

An equitable assignment is of a flexible nature. This flexibility makes it quite distinct from legal assignments as they do not require all of the formality required under the law. It may be in respect of a legal or equitable chose. Thus, there may be an equitable assignment of an equitable chose or an equitable assignment of a legal chose.

While there is no strict formality required for equitable assignments, certain criteria are instructive as to whether it would be considered valid or not.

For an equitable assignment to be considered as having been effected, there must be a clear intent to assign. While Equity does not require that the assignment be in writing or made in any particular format, there must be a clearly deducible intent to assign on the part of the assignor.

The intent to assign here will be construed from the words used and the particular circumstances of the case. If what is construed is a mere mandate/authority to hold onto certain property, no intent to assign may be ascribed by the court.

The position that Equity does not require writing for equitable assignments has however been affected by S. 9 of the Statute of Frauds and S. 78(1)(c) of the Property and Conveyancing Law which require that the assignment of any equitable interest or trust must be in writing.

The assignment is also required to be communicated to the assignee. Although, the assignee may still take in certain instances even without communication, subject to the right of the assignee to repudiate the transfer when he becomes aware of it.

The particular chose intended to be assigned must be identified. It is insufficient to give a vague representation of what is sought to be assigned. Such vagueness may impair the court’s construction of an intent to assign in such circumstance.

Consideration in equitable assignment depends on the circumstance. Where the assignment is complete in the sense that there is nothing left for the assignor to do to perfect the assignee’s title, there would be no need for consideration.

If it is incomplete though, consideration may be required. Consideration will also be required where the assignment concerns some future chose as the agreement in such instance can only be a contract to assign and all contracts must be backed by consideration.

No consideration is however required for assignment of existing choses.

There is no real requirement for notice of the equitable assignment to be given to the trustee of the liability. Notice is however useful to the extent that it puts the trustee on guard as to the change of rights affecting the chose and may prevent him from settling in favour of the assignor instead of the assignee.

It also makes the trustee liable to the assignee where he settles in favour of the assignor in spite of the notice given to him. Again, while the assignee generally takes subject to any prior equities affecting the chose, giving notice ensures that he would not be affected by any subsequent equities.

Most importantly, notice allows the assignee to establish the priority of his interest in consequence of the rule in DEARLE v HALL.

An equitable assignment of a chose in action has bearing on the manner in which the rights can be enforced in a court of law. The effect here is largely dependent on whether the chose in question is a legal or equitable chose and if the chose was absolutely assigned or not.

Where the assignment concerns a legal chose, the assignee cannot assert his title over the property in his own name. He must join the name of the assignor either as co-plaintiff, where he agrees, or as a defendant. Where the chose is equitable though, the assignee can sue in his own name.

An assignment is absolute when the assignor transfers his whole interest in the chose to the assignee. It is however non-absolute where it is made subject to some condition at the happening of which it would become inoperable or where only a charge is made on the chose, in favour of the assignee.

In this instance, only a part of the assignor’s interest is transferred. The effect of this is that in situations where the transfer was absolute, the assignee would be able to sue in his own name. Where it is not absolute however, he must join the assignor before he can enforce his rights over the chose.

Where the chose is legal though, it is immaterial whether it is absolute or not, the assignee must join the assignor.

Legal Assignment

The Common law rule against assignment of choses in action was only lifted in 1875 and this was via the provision of the Judicature Acts, particularly S. 25(6) . This provision is impari materia with S. 150(1) Property and Conveyancing Law .

The purport of those provisions is that there can be absolute assignments by writing of any debt or other legal thing in action when express notice in writing has been given to the trustee of the liability. Also, it shall be effectual to transfer the legal right to sue in respect of such thing, along with the legal and other remedies in respect of it and the power to give a good discharge for the chose without the assignor’s permission.

The provisions clearly contain ingredients that would make a legal assignment valid and these include the following:

The assignment must be in writing and signed by the assignor.
It must be in respect of some existing debt or other legal thing in action and this includes equitable choses in action.
It must be absolute.
There must be an express notice in writing given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive the debt or claim the thing in action.

The assignment takes effect from the date that notice is given. Failure to give notice at all or failure to give it in writing or failure to even execute the writing in the first place will not invalidate the assignment.

Rather, it becomes an equitable assignment instead of a legal one. Further, there is no requirement for consideration here.

The position at Common law before the Act amended it was that the assignee had no right independent of the assignor’s and was obligated to sue in the assignor’s name if he wanted to enforce his rights over the chose.

The Acts have however changed this and the assignee no longer needs to sue in the name of the assignor. He can sue all by himself.

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Assignment of choses in action.

As a rule, choses in action are your rights that you must claim. They are not in your actual possession to benefit from them, rather you may lose. To simplify, your money in your hand is a chose in possession, whereas your money in the bank is a chose in action wherein you need an action to possess. Based on this, it was claimed that choses in action are not eligible for assignment. This assumption continues for long time, however, the situation has been changed by law and accordingly, choses in action could legally be assigned. To begin this legal process, the power to assign was first handled by Statute giving insurance policy holders the right to assign the policy, which is a chose in action not possession. The law provides that, this to happen in instances of, an absolute assignment by writing from the assignor of any debt or other legal thing in action (chose), of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action (chose). Moreover, it is effectual in law to pass and transfer from the date of such notice, the legal right to such debt or thing in action, all legal and other remedies from the same and the power to give a good discharge for the same without the concurrence of the assignor. This is effectual in law provided that, if the debtor, trustee or other person liable in respect of debt or thing in action (chose) has notice, that the assignment is disputed by the assignor or any person or under him or of any other opposing or conflicting claims to such debt or action. He may if he thinks fit, either call upon the persons making claim or interplead concerning the same, or pay the debt or thing into Court. However, the assignment must be absolute, must be in writing under the hand of the assignor, consideration is not necessary, express notice in writing must be given to the debtor and the assignment is subject to existing equities. Based on above legal parameters and requirements, choses in action are eligible for assignment. In other words you can either claim your chose in action directly or opt for assignment to benefit from.

Dr. AbdelGadir Warsama LEGAL COUNSEL Email: [email protected]

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Daily Law Tips With Onyekachi Umah, Esq

Conditions For Assignment Of Burden Or Benefit of Debt.

Daily Law Tips (Tip 766) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)

Introduction: Debt is generally any amount of money owed. Managing debt and debtors can be frustrating, especially in a country with poor access to justice and no dependable database. Both the burden of a debtor to repay debt and the benefit of a creditor to recover debt can be assigned and transferred to a third party. However, there are conditions that must be observed for an assignment of debt to be valid. The conditions and are considered below.

Transfer of Burden or Benefit of Debt: In every debt, there must be at least a debtor and a creditor. While the debtor has an obligation to repay debt, a creditor has a right to demand and recover debt. There could be transactions seeking to transfer and assign the responsibilities of a debtor or creditor. For such assignment to be lawful and effective, there are basic conditions that must be fulfilled, according to the Supreme Court of Nigeria.

1. The Supreme Court of Nigeria in the case of FERDINAND GEORGE v. UNITED BANK FOR AFRICA LIMITED (1972) LPELR-1321(SC) , where the court held that; “Obviously, where the burden of a debt is being assigned, the creditor must consent or the assignment could be used as a simple means of avoiding liability. When the benefit of a debt is assigned the debtor does not need to consent. He still owes the money which he previously borrowed, and so long as he knows whom to pay in order to get an effective receipt and discharge he has no cause to be consulted over the assignment.” Per FATAYI-WILLIAMS ,J.S.C (Pp. 9 paras. A)

2. The Court of Appeal in the case of JULIUS BERGER NIGERIA PLC & ANOR v. TOKI RAINBOW COMMUNITY BANK LTD (2009) LPELR-4381(CA) “Under the common law, a debt or other legal thing in action includes the benefit of a contract or a debt arising out of contract from which payment was to be made at a future date. Such debt is capable of being assigned under section 136 of the Law of property Act 1925. See BRICE V. BANNISTER (178) 3 Q. B.D. 569, JAMES V. HUMPHREYS (1908) 1 KB. 10, CONTRAST LAW V. COBURN (1972) 1 WLR 1238. Furthermore is was held that the benefit of a contract is only assignable in cases where it can make no difference to the person on whom the obligation lies to which of two persons he is to discharge it. TOLTURST V. ASSOC PORTLAND CEMENT MANUFACTURERS LTD (1902) 2 K.B. 660 at 668, (1903) A.C. 414. A party to a contract can in equity also assign a contractual right in one of two ways (a) he can inform the assignee that he transfers the chose to him or (b) he can instruct the debtor to discharges the Obligation by payment to or performance for, the assignee. Thus an agreement by traders or merchants with a Bank that payment for goods sold by them should be remitted direct by the purchasers to the Bank has been held to, constitute a valid equitable assignment of the amount to the Bank. BRANDTS SONS & CO. V. DUNLOP RUBBERCO. (1905) A.C. 454. Generally however, a mere direction by a creditor to his debtor to pay money to a third party is not necessarily an assignment unless the instructions can be said in their context text, to amount to an irrevocable mandate to the debtor. See CURRAN V. NEWPARK UNEMAS LTD (1957) 1 ALL E.R. 295, BRITISH EAGLE INT’L AIRLINES LTD V. CIE NATIONAL AIR FRANCE (1973) 1 LIOYD’S REP.414 AT 427. Another principle of the common law on assignment in that an assignment made by letter is complete as soon as the letter is posted to the assignee as was held in the case of ALEXANDER V. STENHARDTWAKER & CO. 0903) 2 K.B. 208 The above general positions of the common law on assignment are to guilde a determination of the issue. whether indeed, fact and law, there was an assignment of the benefits of the contracts between the company and the 1st Appellant to the Respondent.” Per MOHAMMED LAWAL GARBA ,JCA (Pp. 27-29, paras. C-B)

3. The Court of Appeal in the case of JULIUS BERGER NIGERIA PLC & ANOR v. TOKI RAINBOW COMMUNITY BANK LTD (2009) LPELR-4381(CA) “The question I now ask is what in law are the essential requirements which make an assignment of such benefits, interests or title to property effective? Speaking generally, they include:-(1) ownership of or entitlement to the benefits, interest, rights or title to property by the assignor; (2) the absolute transfer in writing of such benefits, interests, rights or title to property to person/named therein; (3) Where, as in the present appeal, the benefits, rights and interests are in possession or custody of 3rd party, there is the requirement that the assignor should notify that 3rd party in writing of the assignment. See Chitty on Contracts Vol. 1 Paragraph 19 – 007 at page 1166, Halbury’s Laws of England, 4th Edition, volume 6 paragraphs 12 at page 9. It is however to be noted that no particular form or mode is prescribed or required by law for a legal assignment as long as the assignor absolutely and unequivocally indicates the transfer of the benefit, interest or title to the assignee. Once the above requirements are met, an assignment will be effective in law and the assignee would be entitled to the subject of the transfer and a claim thereto.” Per GARBA ,J.C.A ( Pp. 25-26, para. D )

4. The Court of Appeal in the case of BEN ELECTRONIC CO. (NIG) LTD v. ATS & SONS & ORS (2013) LPELR-20870(CA) “It is not in doubt that Professor Sagay in his text Nigerian Law of Contract, 2nd Edition, Ibadan Spectrum Books Ltd. 2000 at page 516 paragraph 9, had supported the views expressed by the learned Counsel to the Appellant that in certain circumstances the owner of a contractual right can transfer same to a third party without the consent of the debtor, thereby enabling the third party to enforce the right against the debtor or obligator. The learned Author following English authorities like Torkington v. Magee (1902) 2 K.B. 42 at page 430, other texts like “Cheshire & Fifoot on Equity 10th Edition” (pages 455 – 475) and Jegede’s “Principles of Equity” pages 145 – 184, also added that the process of transfer of such a right is known as “Assignment” and that the types of property which are susceptible to this type of transfer are known as “Choses in action.”

“Section 25(6) of Judicature Act now replicated in Section 136 of the Law of Property Act 1925 provides as follows: (1) Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice;- (a) The legal right to such debt or thing in action (b) All legal and other remedies for the same and (c) The power to give a good discharge for the same concurrence of the assignor; Provided that if the debtor, trustee or other person liable in respect of such debt or thing in action has notice:- i. That the assignment is disputed by the Assignor or any person under him or; ii. Of any other opposing or conflicting claim to such debt or thing in action, he may if he thinks fit either call upon the person making claim hereto to inter plead concerning the same, or pay the debt or other in action in Court.”

Conclusion: Debt is payable, even where the original creditor appoints another person as its representative or replacement. The consent of a debtor to such arrangement is not needed. However, a debtor cannot transfer his obligation to repay debt to a third party, except with the consent of his creditor. Any such assignment by a debtor without the approval of his creditor is deemed as a plan to delay/evade debt. Although no particular writing style or form is approved for assignment of debt, an assignment of burden of debt or benefit of debt should be clear and ambiguous at all times.

My authorities, are:

1. Sections 1, 2, 3, 4, 5 and 6 of the Constitution of the Federal Republic of Nigeria, 1999. 2. Judgement of the Supreme Court of Nigeria in the case of FERDINAND GEORGE v. UNITED BANK FOR AFRICA LIMITED (1972) LPELR-1321(SC) 3. Judgment of the Court of Appeal in the case of JULIUS BERGER NIGERIA PLC & ANOR v. TOKI RAINBOW COMMUNITY BANK LTD (2009) LPELR-4381(CA) 4. Judgment of the Court of Appeal in the case of BEN ELECTRONIC CO. (NIG) LTD v. ATS & SONS & ORS (2013) LPELR-20870(CA) 5. Onyekachi Umah, “Creditors, Debtors And The Covid-19 Lockdown?” (LearnNigerianLaws.com, 21 April 2020) < https://learnnigerianlaws.com/creditors-debtors-and-the-covid-19-lockdown-daily-law-tips-tip-552-by-onyekachi-umah-esq-llm-aciarbuk/ > accessed 28 March 2021 6. Onyekachi Umah, “Owing Debts And Refusing To Pay Is Not An Offence In Nigeria” (LearnNigerianLaws.com, 14 December 2019) < https://learnnigerianlaws.com/owing-debts-and-refusing-to-pay-is-not-an-offence-in-nigeria-daily-law-tips-tip-478-by-onyekachi-umah-esq-llm-aciarb-uk/ > accessed 28 March 2021 7. Onyekachi Umah, “The Supreme Court Has Warned Efcc And Police Against Recovering Debts And Investigating Disputes From Civil Transactions” (LearnNigerianLaws.com, 26 October 2019) < https://learnnigerianlaws.com/the-supreme-court-has-warned-efcc-and-police-against-recovering-debts-and-investigating-disputes-from-civil-transactions-daily-law-tips-tip-444-by-onyekachi-umah-esq-llm-aciarb-uk/ > accessed 28 March 2021 8. Onyekachi Umah, “When, Why And How Can A Guarantor/Surety Be Held Liable For Debt Guaranteed” (LearnNigerianLaws.com, 25 July 2019) < https://learnnigerianlaws.com/when-why-and-how-can-a-guarantor-surety-be-held-liable-for-debt-guaranteed-daily-law-tips-tip-380-by-onyekachi-umah-esq-llm-aciarb-uk/ > accessed 28 March 2021 9. Onyekachi Umah, “How To Be Exempted From Electricity Disconnection In Any Part Of Nigeria Even When Owing Debt For Consumed Electricity.” (LearnNigerianLaws.com, 29 June 2019) < https://learnnigerianlaws.com/how-to-be-exempted-from-electricity-disconnection-in-any-part-of-nigeria-even-when-owing-debt-for-consumed-electricity-daily-law-tips-tip-361-by-onyekachi-umah-esq-llm-aciarb-uk/ > accessed 28 March 2019 10. Onyekachi Umah, “You Cannot Be Arrested For Breach Of Contract/Refusal To Pay Debt” (LearnNigerianLaws.com, 15 October 2018) < https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-205-you-cannot-be-arrested-for-breach-of-contract-refusal-to-pay-debt/ > accessed 28 March 2021 11. Onyekachi Umah, “It Is An Offence For Hospitals/Creditors To Detain Patients/Debtors For Debts” (LearnNigerianLaws.com, 26 July 2018) < https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-150-it-is-an-offence-for-hospitals-creditors-to-detain-patients-debtors-for-debts/ > accessed 28 March 2021 12. Onyekachi Umah, “EFCC Cannot Recover Debts” (LearnNigerianLaws.com, 25 July 2018) < https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-149-efcc-cannot-recover-debts/ > accessed 28 March 2021 13. Onyekachi Umah, “It Is Not a Crime to Be a Debtor In Nigeria” (LearnNigerianLaws.com, 20 June 2018) <https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-124-it-is-not-a-crime-to-be-a-debtor-in-nigeria/> accessed 28 March 2021 14. Onyekachi Umah, “Nigerian Police Cannot Be Used For or Be Part for Debt Recovery” (LearnNigerianLaws.com, 28 May 2018) < https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-110-nigerian-police-cannot-be-used-for-or-be-part-for-debt-recovery/ > accessed 28 March 2021 15. Onyekachi Umah, “Tips On Recovery of Debt’ (LearnNigerianLaws.com, 10 March 2016) <https://learnnigerianlaws.com/tips-on-recovery-of-debt/> accessed 28 March 2021 16. Onyekachi Umah, “How to Recover Property Wrongly Seized by Court” (LearnNigerianLaws.com, 9 March 2021) < https://learnnigerianlaws.com/how-to-recover-property-wrongly-seized-by-court/ > accessed 28 March 2021 17. Onyekachi Umah, “Should Landlord Stop Rent-Owing Tenants from Moving Out?” (LearnNigerianLaws.com, 26 August 2020) < https://learnnigerianlaws.com/should-landlord-stop-rent-owing-tenants-from-moving-out/ > accessed 28 March 2021 18. Onyekachi Umah, “Should A Landlord Remove Roof Of A Tenant For Failure To Pay Rent/Pack Out?” (LearnNigerianLaws.com, 3 August 2020) < https://learnnigerianlaws.com/should-a-landlord-remove-roof-of-a-tenant-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-624-by-onyekachi-umah-esq-ll-m-aciarbuk/ > accessed 28 March 2021 19. Onyekachi Umah, “Should A Landlord Lock Gates/Doors Of A Tenant For Failure To Pay Rent/Pack Out?” (LearnNigerianLaws.com, 29 July 2020) < https://learnnigerianlaws.com/should-a-landlord-lock-gates-doors-of-a-tenant-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-620-by-onyekachi-umah-esq-ll-m-aciarbuk/ > accessed 28 March 2021 20. Onyekachi Umah, “Should A Landlord Cut-Off Tenant From Water/Electricity Supply For Failure To Pay Rent/Pack Out?” (LearnNigerianLaws.com, 17 July 2020) < https://learnnigerianlaws.com/should-a-landlord-cut-off-tenant-from-water-electricity-supply-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-612-by-onyekachi-umah-esq-ll-m-aciarbuk/ > accessed 23 March 2021 21. Onyekachi Umah, “Does Police Have Powers To Settle Civil Disputes In Nigeria?” (LearnNigerianLaws.com, 13 May 2020) <Does Police Have Powers To Settle Civil Disputes In Nigeria?> accessed 28 March 2021 22. Onyekachi Umah, “A Guarantor/ Surety And A Witness Are Not Same” (LearnNigeriansLaws.com, 12 May 2020) < https://learnnigerianlaws.com/a-guarantor-surety-and-a-witness-are-not-same-daily-law-tips-tip-567-by-onyekachi-umah-esq-llm-aciarbuk/ > accessed 28 March 2021 23. Onyekachi Umah, “Minimum Period For Defence Of Undefended List Case In Abuja” (LearnNigerianLaws.com, 25 February 2020) < https://learnnigerianlaws.com/minimum-period-for-defence-of-undefended-list-case-in-abuja-daily-law-tips-tip-512-by-onyekachi-umah-esq-llm-aciarbuk/ > accessed 28 March 2021 24. Onyekachi Umah, “Bounced Or Dud Cheque And Its Legal Consequence In Nigeria.” (LearnNigerianLaws.com, 5 March 2016) < https://learnnigerianlaws.com/bounced-or-dud-cheque-and-its-legal-consequence/ > accessed 28 March 2021

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Sealy and Hooley's Commercial Law: Text, Cases, and Materials (6th edn)

Note: The Effect of Brexit
Preface to the sixth Edition
New to this Edition
Acknowledgements
Table of cases
Table of legislation
1. An introduction to commercial law
2. Basic concepts of personal property
3. Bailment
4. Introduction
5. Creation of agency, and the authority of the agent
6. Relations with third parties
7. Relations between principal and agent
8. Introduction and definitions
9. Passing of the property in the goods as between seller and buyer
10. Transfer of title
11. Seller’s obligations as to quality
12. Performance of the contract
13. Remedies of the seller
14. Remedies of the buyer
15. International sales
16. Modern payment systems
17. Payment cards and electronic money
18. Negotiable instruments
19. Bills of exchange
20. Cheques and miscellaneous payment instruments
21. The financing of international trade
22. Assignment of choses in action
23. Receivables financing
24. Introduction
25. Possessory security
26. Non-possessory security
27. Insurance
28. Insolvency

p. 787 22. Assignment of choses in action

D Fox , D Fox Professor of Common Law, University of Edinburgh
RJC Munday , RJC Munday Reader Emeritus in Law, University of Cambridge
B Soyer , B Soyer Professor of Commercial and Maritime Law, Institute of International Shipping and Trade Law, Swansea University
AM Tettenborn AM Tettenborn Chair in Law, Swansea University
and PG Turner PG Turner Visiting Senior Fellow of the Melbourne Law School
https://doi.org/10.1093/he/9780198842149.003.0022
Published in print: 13 July 2020
Published online: September 2020

This chapter deals with the general law of assignment of choses in action. Beginning with the historically based difference between equitable and statutory assignment, it then explains what ‘chose in action’ and ‘assignment’ are before discussing the requirement that there be an existing and assignable chose in action or right as well as the requirement that a person who holds an existing assignable chose in action intends to assign it. It also examines whether and when a rule of legal formality requires writing to be made; whether and when notice of the assignment is required; and obstacles to the enforcement of an assigned chose in action.

chose in action
law of assignment
legal formality
enforcement

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Part II The Transfer of Intangible Property, 13 Equitable Assignment of Choses in Action

From: the law of assignment (3rd edition), marcus smith, nico leslie.

This chapter studies the requirements that are necessary for an effective assignment of choses in action. In order to effect the assignment or a chose in action: the assignor must have manifested an intention to transfer the chose; the thing being assigned must be a chose in action, in present existence, certain or capable of being ascertained; the identity of the assignee must be clear; and the appropriate forms and formalities must have been satisfied. These requirements apply both to legal and equitable assignments. However, since legal assignments can only be affected by statute, the forms and formalities required for a legal assignment are those set out in the relevant legislation, and addressed elsewhere.

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Law of Equity and Trusts

LAW OF EQUITY AND TRUSTS PART I AND II

TABLE OF CONTENTS

LAW OF EQUITY PART 1

DEFINITION OF EQUITY.

NATURE, ORIGIN AND RECEPTION OF EQUITY.

THE MAXIMS AND PRINCIPLES OF EQUITY

NATURE OF EQUITABLE INTEREST AND THE DOCTRINE OF NOTICE.9

EQUITABLE INTEREST AND LEGAL ESTATES

THE DOCTRINE OF NOTICE.

PARTICULAR EQUITABLE INTERESTS.

ASSIGNMENT OF CHOSES IN ACTION.

DISTINCTION BETWEEN NOVATION AND ASSIGNMENT.

THE DOCTRINE OF CONVERSION

THE DOCTRINE OF SATISFACTION.

THE DOCTRINE OF PERFORMANCE

THE DOCTRINE OF ELECTION.

THE REMEDY OF INJUNCTION.

SPECIFIC PERFORMANCE.

THE REMEDY OF RESCISSION.

RECTIFICATION.

DEFENCES AVAILABLE TO EQUITABLE REMEDIES.

EQUITY PART II/LAW OF TRUSTS.

DEFINITION OF TRUST.

TRUST DISTINGUISHED FROM OTHER LEGAL CONCEPTIONS.

CLASSIFICATION OF TRUST

EXPRESS PRIVATE TRUST

ESSENTIALS OF A TRUST… THE THREE CERTAINTIES.

COMPLETELY AND INCOMPLETELY CONSTITUTED TRUST

TRUST OF IMPERFECT OBLIGATION.

RESULTING AND CONSTRUCTIVE TRUSTS.

CHARITABLE TRUSTS.

TRUSTEES. APPOINTMENT, QUALIFICATION, DUTIES, POWERS, DETERMINATION, REMEDIES FOR BREACH OF TRUST, ETC.

THE EQUITABLE REMEDY OF TRACING.

PERPETUITIES AND ACCUMULATION.

Solutions, V. (2021). Law of Equity and Trusts. Afribary . Retrieved from https://afribary.com/works/law-of-equity-and-trusts-isochukwu

Solutions, Vite "Law of Equity and Trusts" Afribary . Afribary, 06 Jan. 2021, https://afribary.com/works/law-of-equity-and-trusts-isochukwu. Accessed 06 Apr. 2024.

Solutions, Vite . "Law of Equity and Trusts". Afribary , Afribary, 06 Jan. 2021. Web. 06 Apr. 2024. .

Solutions, Vite . "Law of Equity and Trusts" Afribary (2021). Accessed April 06, 2024. https://afribary.com/works/law-of-equity-and-trusts-isochukwu

Document Details

Related works, analysis of the various schools of thought in relation to the meaning of law, critical analysis of corroboration under the nigerian law of evidence, a holistic appraisal of the concept of trust under the nigerian jurisprudence, applicability of natural law principles to the law of negligence in nigeria, roles of legislature in impeachment procedings under the 1999 constitution, provocation as a defence to criminal liabilty, an appraisal of international crimes and the operations of the international criminal court, the nigerian copyright commission and administration of copyright in nigeria (an appraisal), justification for and the abolition of capital punishment under human rights law, a critical appraisal of election laws in nigeria.

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BANKING 1.8 NEGOTIABLE INSTRUMENTS

Negotiable instruments..

Are simply documents capable of discharging debts.

Historically trade was by barter it was later replaced with money. As foreign territories interacted, trade and commerce began to boom. Negotiable instruments were issued for commercial expediency and convenience. Inter-state transportation of gold and silver coins was unattractive therefore, negotiable instruments were utilised especially where the merchant had a debtor in the target country. He could just order his debtor to pay the merchant who resides in the same foreign country.

A Negotiable Instrument:

Is a written order/promise to pay money.
Is negotiable: meaning that it is an assignable [1] chose in action [2] . Ordinarily, a chose in action could not be assigned (this was the common law position) however, equity allows assignment of a chose in action provided that prior notice has been given to the debtor. Unlike an assignment, Negotiable instruments do not require a deed of assignment to be executed.
Is freely transferrable by mere delivery to a bona fide [3] holder for value free from equities [4] .
Passes full legal title to the transferee who can sue in his own name.
Value [5] is generally presumed to have been given for the negotiable instrument. By Section 27 of the Bill of Exchange Act, an antecedent debt or liability is valuable consideration [6] .

The following are NOT negotiable instruments:

Bill of Lading: is a document showing that particular goods have been loaded on the ship. Although it is freely transferrable without need for notice and, transferee can sue in his own name, it is taken subject to equities [7] .
Share Certificate: a document certifying that the shareholder named therein is the registered holder of the shares. Not freely transferrable . Unlike a share warrant [8] which is a negotiable instrument as it is transferrable by mere delivery. This distinction was noted in Webb Hale V Alexander Water .
IOU: is a mere written acknowledgment of a debt. Mr A agrees in writing that he owes Mr B. It is not a negotiable instrument.

The Bill of Exchange Act 1917 codifies the following as negotiable instruments:

Bill of Exchange.
Promissory notes.

This notwithstanding, the court in Webb hale and co V Alexander Water ltd noted that the existence and evolution of other negotiable instruments has not been inhibited. Other negotiable instruments include: Share Warrants, Treasury Bills, traveller cheques, bearer bonds and debentures [9] , and so on. We take them one by one.

BILL OF EXCHANGE.

Section 3(1) of the Bill of Exchange Act defines it as:

An unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a determinable future time, a sum certain in money or to the order of a specified person or a bearer. Anything else is not a bill of exchange.

By Section 4, an inland bill is drawn and payable within the country or upon a person resident therein.

By Section 3 (1) (2) and (3), for a document/bill to qualify as a bill of exchange:

The bill must be an order : a mere request, plea or petition may not suffice. In Little V Slackford , a bill couching the request with the phrase, “ as you will much oblige your humble servant ” was held not to be a bill of exchange. But in Ruff V Webb “ will much oblige ” was accepted as a request.
The instrument must be in writing : it does not have to be exclusively in English. For example; In Arab Bank Ltd V Ross , the court accepted a combination of Arabic and English writing.
The instrument must be signed by the drawer: or his authorised agent. An initial, stamp or signature may suffice- Bennette V Brumfit . In Goodman V Eban , a rubber stamp was accepted [10] .
The order must be unconditional : not subject to the performance of an act or occurrence of an event or availability of money in a fund- Section 3(2 and 3). Certainty is the watchword.
The order must be addressed by the drawer [11] to an identified drawee [12] . In Mason V Lack , bill was invalidated as “pay to my order…” did not sufficiently indicate the drawee.
The payee [13] must be named or indicated with reasonable certainty : where the bill is not payable to the bearer. In NSIC ltd V National Provincial Bank it was held that an instrument made payable to “ cash” or “ order” could not be considered a specified person, “ wages ” has also been refused. Where the bill is payable to a non-existing person, the bill would be treated as payable to the bearer- Section 7 BOEXAct.
The order must be for a sum certain in money : whether payable with interest, by instalment or exchange – Section 9. In Smith V Nightingal , a promise to pay E45 and all other sums which may be due to him was not certain. What happens where (for example) the words say one hundred thousand and the figures say N1,000,000? Section 9(2) provides that the words prevail over figures in the event of inconsistency with figures.
The bill must be payable on demand or at a fixed determinable future time : by Section 10, a bill is payable on demand where it expresses to be payable on demand or where no time of payment is prescribed. By Section 11, a bill is payable at a determinable future time where it is expressed to be payable at a fixed period after date or sight or after the occurrence of a specified and inevitable In Williamson V Rider , a note payable “on or before” a given date was invalidated. A bill is not invalidated by the mere fact that it is not dated [14] or that it does not specify place where it is drawn or payable. Section 3(4).

PARTIES TO A BILL.

The drawer : the person who draws an instrument and gives the order to pay. Once the bill has been drawn and signed, he is implied to have undertaken to compensate the payee if the bill is dishonoured.

The Drawee : the person legally obliged to honour the order to pay.

The payee : the person in whose favour the bill is drawn. The person who receives payment. It has been noted earlier that the payee must be identified with certainty where the bill is not payable to the bearer. If the payee is fictitious, the bill is treated as payable to the bearer- Section 7(3).

E.g. if by writing, Mr Chinueke properly instructs Chime (who owes him #500,000) to give Tayo #200,000. Chinueke is the drawer, Chime is the Drawee and Tayo is the Payee.

The person who approves a bill is the endorser while the endorsee is the person to whom it is endorsed. Endorsement of bills : Endorsement entails confirming the authority of the issuer. By endorsing it, the endorser is assuring that on due presentation, it shall be paid. Where it is not paid, the payee should be compensated. By endorsing, the endorser is also precluded from denying the genuineness or regularity of the drawer’s signature… he is also precluded from denying or questioning his endorsement- Section 55. Endorsement can be conditional, restrictive or prohibitive. Where an endorsement prohibits transfer, it is valid but not negotiable.

Holder : Section 2 defines a holder as the payee or endorsee in possession of the bill note or the bearer thereof. Meaning that to be a holder, the payee or endorsee must also be in possession of the bill. Where it is a bearer bill, any person in possession of the bearer bill is the holder. A holder for value is one who gives valuable consideration for a bill or has a lien thereon… one whose signature appears on the bill. By Section 29, a holder in due course is one: who takes a bill, complete and regular on the face of it provided:

He took the bill before it was overdue. (3 days grace is provided after fixed date).
He took the bill in good faith and for value without notice of the defect in title- Section 29(2).

Section 38 provides that a holder can sue in his own name.

Consideration for a bill.

By Section 30 and 27, consideration is presumed to exist where;

Value has at anytime been given for the bill.
The holder has a lien over the bill.
There is an antecedent debt or liability.
Where the party in question has his signature on the bill.

Where void/illegal consideration is furnished, no right of action lies except it is transferred to a third party holder for value without notice- Section 30(2).

The bearer : Section 2 of the act: is the holder of a bill payable to the bearer or a holder of a bill which last endorsement is in blank. Such bills can be negotiated by mere delivery. The bearer is not liable under the bill because his signature does not appear on the bill. Except he has transferred the bill for valuable consideration or the bill is found to be a forgery.

Negotiability of bills : The ability to transfer free of equities. By Section 31 and Section 32, a bill is negotiated when it is transferred from one person to another. A bill payable to the bearer is negotiated by mere delivery. Where payable to order, in addition to delivery of the bill, there must be a written and signed endorsement of the whole bill for it to be negotiated.

Inchoate instruments: are incomplete instruments. Lacking any of the following; date of payment, specific value, or place where it is drawn or payable… provided that it does not lack the signature of the drawer. By Section 3(4) this does not invalidate the instrument. The person in possession of the bill can honestly and reasonably fill up such omissions – Section 20. Where a wrong value is inserted fraudulently, the drawer is discharged of liability except the bill comes into the hands of a holder in due course who has no notice of unauthorised filling. Inchoate bills are commonly found in blank cheques.

Acceptance : by Section 17, is a written assent on the bill signed by the drawee, agreeing to pay the specified money. Acceptance may be general , conditional [15] , partial [16] or local [17] . Acceptance compels the drawee to pay without challenging the existence, capacity or authority of the drawer or the genuineness of his signature- Section 54.

Dishonour occurs where the bill is not accepted on presentation. The holder can then sue the drawer or endorser.

DISCHARGE OF A BILL.

A bill may be discharged in the following circumstances:

Payment in due course/ on presentation: by the drawee in good faith and without notice of any defect in the bill. Where payment is by drawer, the bill is not discharged.
Where the bill is negotiated to the acceptor. I.e. where the acceptor becomes the holder of the bill in his own right rather than on trust.
Where the holder waives the bill in writing.
Where there is material alteration of the bill without the consent of the parties liable to it. Although the bill would still be valid against any of the parties that assented the alteration.
Where the bill is cancelled.

By Section 73 of the BOEXA, a cheque is a bill of exchange drawn on a banker and payable on demand.

Unlike a bill of exchange, a cheque must be payable on demand, and drawn on the banker. Since the cheque is payable on demand, it does not need acceptance. The drawer of a cheque is meant to exercise reasonable care in drawing it unlike in a bill. The bank, unlike the drawee of an ordinary bill is protected against forged or unauthorised endorsement.

A cheque is an unconditional order in writing, signed by the drawer requiring a bank to pay a certain sum in money to the person to whom it is drawn or the order…

Flowing from the implications of the banker-customer relationship, a bank is to honour cheques drawn on it and the customer is to execute his order with due care- Joachinson V Swiss Bank Corporation . A wrongful dishonour of cheque can give rise to an action for breach. Damages presumed where the customer is a trader in other cases; nominal damages.

Types of cheques.

Open cheque : payable over the counter of the drawee bank after ascertaining the identity of the payee.
Crossed cheque : two transverse lines run across the face of the cheque. Crossed cheques are payable only into the account of the payee. A crossed cheque is advantageous in the sense that it forestall fraud as it is paid into account of intended payee. Also, fraudulent proceeds can be traced to the recipient’s account (This facilitates the Know Your Customer directive of the CBN). Also since it takes a longer time to clear, the bank has ample time to detect fraud and stop payment. The disadvantage of a crossed cheque is that it takes a longer time to clear and the payee is required to have an account.

Types of Crossing:

General crossing : by Section 78(1) in addition to the two transverse lines, the words; “and company” may be included.
Special crossing : by Section 78(2) an addition of the name of the banker with or without the words “not negotiable”. It is a cheque payable only to the banker specified in the crossing.
Not negotiable crossing : Section 83, meaning the holder gets it subject to equities- Great Western Railway V London and County Banking Co . Protects the true owner from any subsequent transfer occasioned by loss or theft. Meaning he can recover the money even from a holder for value without notice.
Account payee : that the money must be paid only into the account of the named payee (identified in the cheque). Payment into another account could make the bank liable in negligence and conversion- Abimbola V Bank of America as “account payee” puts the banker on inquiry and caution.

Duties of the paying bank same as the banker-customer relationship duties noted above.

Forged Signatures.

Forgery entails making a false document or writing with the intent that it may be acted upon as genuine…Forgery is a criminal offence punishable under Section 465 of the Criminal Code. The court noted in ACB V Victor Ndoma that a cheque is forged where there is an unauthorised alteration of the amount, date, a fabrication of the signature(s) and other features of the cheque. Section 24 BOEXACT provides that such forged instruments are inoperative except the customer (drawer) is precluded from alleging forgery. For example in the case of Greenwood V Martins Bank , the customer became aware of the forgeries by his wife but kept quiet for 8 months. The court held that his silence gave rise to estoppel. At common-law, a banker who pays on a forged cheque can be liable to the true owner for conversion. However, Section 60 and 77 of the Bill of Exchange Act protects an innocent banker who pays on demand in good faith and in the ordinary course of business .

THE COLLECTING BANKER.

A collecting bank is a bank which receives a cheque on behalf of its customer for clearing and collection before placing the value on customer’s account. In Gordon V Capital and Counties Bank Ltd the court likened such function to a situation where a customer gives his clerk a cheque to cash on his behalf.

For example, a Mr A Draws a First Bank Cheque payable to Mr B who has a UBA account. Mr B presents the cheque to UBA (his bank). UBA takes the cheque to First Bank and receives the money on behalf of Mr B. This money is then credited (by UBA) into Mr B’s UBA account. Section 77(2) protects a collecting banker from liability (in the event of fraud or defective title) provided the collecting banker acted in good faith and without negligence. “ Good faith ” by Section 92 is where the act was done honestly. The whole transaction must have been done in good faith- Gordon V Capital and Counties Bank Ltd.

The duty of care required in handling cheques : owed to the customer. In Taxation Commissioners V English Scottish and Australian Bank , the court held that we must equate to the cashiers and clerks handling the cheque the intelligence of ordinary persons in their position. The bankers have to prove that they were not careless. The banker must ensure that it:

Obtains reference: like driver’s licence, passport, I.D card and so on.
Verifies endorsements .
Acts wisely: for example, the bank should ensure that it pays money for a corporate establishment into the corporation’s account rather than into a private account. It is negligent to collect for a man’s private account, cheques made payable to him in his official capacity. In Midland Bank V Reckitt , notwithstanding that the attorney was authorised to draw without restriction, the court held a bank liable in negligence for collecting a cheque drawn by an attorney from his principal’s account.

PROMISSORY NOTES.

By Section 85 of the Act: A promissory note is:

A written and unconditional [18] promise to pay.
Signed by the person making the promise.
To pay a sum certain in money.
On Demand or at a fixed determinable future date.
To a specified person or to the bearer.

Unlike a bill of exchange that has 3 parties, here there are only two parties. The Promisee and promissor. Also, unlike the Bill of exchange which must be an order, the promissory note is a promise.

An IOU is not a promissory note because it does not specify date of payment nor does it specify the person to be paid. It is a mere acknowledgement of indebtedness in writing.

A promissory note is inchoate until delivered to the payee or bearer- Section 86.

JOINT AND SEVERAL NOTES.

By Section 87 of the act a promissory note can be made by two or more persons jointly and severally. It is made jointly where the note begins with; “we promise to pay” while it is made severally where it begins with “I promise to pay”. It is joint and several where it begins with: “the makers jointly and severally promise” here either of them can be sued and a contribution can be recovered from the other party.

There should be some consideration passing from the promissee to the promissor for him to succeed in a suit- Gbebamose V Mbadire .

REFERENCES.

Goldface-Irokalibe, I. J. Law of Banking in Nigeria. (Malthouse Press Limited, Lagos). 2007.

Layi Afolabi – Law and Practice of Banking.

Commercial Law in Nigeria. Akanki.

National Open University: Law of Banking and Insurance.

[1] Assignment involves a transfer of right from one person to another.

[2] A chose in action is a right that is enforceable by legal action rather than by taking possession. E.g. recovery of debts, shares, and so on.

[3] a person who takes the instrument for value in good faith without notice of defect in title.

[4] Notwithstanding that the transferor has a defective title.

[5] Anything of value like; money, goods or services.

[6] I.e. where the transferor owes the transferee some money.

[7] Where the transferor has a defective title, the right of the holder is vitiated.

[8] Which states that the bearer is entitled to the shares stated therein

[9] Issued by a company acknowledging its indebtedness to the holder or bearer

[10] Although Lord Denning dissented in this case stating that a rubber stamp lacks the uniqueness of a hand written signature

[11] The person making the bill…. The person giving the order.

[12] The debtor… the person that is to pay the bill.

[13] The person in whose favour the bill is drawn… The person to receive the money.

[14] Like “ this bill is drawn on the 25 th December, 2015”.

[15] Subject to the performance of act or qualified as to time.

[16] Accept to pay only a part of the amount.

[17] To pay at a particular place and nowhere else.

[18] Not subject to conditions or contingencies which may or may not occur.

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A chose in action is essentially the right to sue. It is an intangible personal property right recognized and protected by law, has no existence apart from the recognition given to it by law, and confers no present possession of a tangible object.[i] In Hospital Serv. Corp. v. Pennsylvania Ins. Co. , 101 R.I. 708, 709 (R.I. 1967), the court held that common law forbids assignment of causes of action for personal injuries.

However, in Summers v. Freishtat , 274 Md. 404, 409 (Md. 1975), the court held that “a chose in action in tort is generally assignable, in the absence of a statutory prohibition, if it is a right which would survive the assignor and could be enforced by his personal representative.” Therefore, assignment of choses in action is possible if not expressly prohibited by statutory or contractual provisions.

An assignment of a chose in action will not confer upon the assignee a right of action in his/her own name against the original debtor. But if either the debtor expressly promises to pay the assignee or the assignment is made with the debtor’s assent, then the assignee has the right to action in his own name.[ii] Further in Gillespie v. De Witt, 53 N.C. App. 252, 262 (N.C. Ct. App. 1981), the court held that “an assignment of a chose in action operates as a valid transfer of the title to the chose in action and the assignee becomes the real party in interest who may maintain the action in his or her own name.”

[i] http://en.wikipedia.org/wiki/Chose

[ii] http://chestofbooks.com/business/law/Law-Of-Contracts-Treatise/Assignment-Of-A-Chose-In-Action.html

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Practical law canada glossary 0-621-0054 (approx. 2 pages).

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Nigeria: Assignment Of Choses In Action
ASSIGNMENT OF CHOSES IN ACTION. The term "assignment" refers to the act of transferring to another all or part of one's property, interest, or rights. The term denotes not only the act of transfer, but also the instrument by which it is effected. 9 In Julius Berger (Nig) Plc & Anor v.
ASSIGNMENT OF CHOSES IN ACTION
The process of transfer of such a right is known as "assignment" and the types of property which are susceptible to this type of transfer are known as "choses in action.". This article sets out to trace the evolution, incidence, and the conditions precedent for a valid assignment of choses in action under Nigerian law.
Assignment of Choses in Action
A chose generally is a thing capable of being owned. Choses in action may be legal or equitable. Legal choses in action are rights which were enforceable or recoverable only by an action at Common law. This category of choses includes debts, benefits under a contract, insurance policies, copyrights, patents etc.
EQUITY 1.4 NOVATION AND ASSIGNMENT
A chose in action may be: 2.1 Legal Chose in Action: Recoverable by action at common-law. for example debt, copyright, shares, and so on. 2.2 Equitable Chose in Action: only enforced by proceeding in equity like fund, or legacy under a will. At common-law, only a legal chose could be assigned provided the consent of the debtor was obtained.
ASSIGNMENT OF CHOSES IN ACTION
In other words you can either claim your chose in action directly or opt for assignment to benefit from. Dr. AbdelGadir Warsama. LEGAL COUNSEL. Email: [email protected]. Previous Post. Next Post. As a rule, choses in action are your rights that you must claim. They are not in your actual possession to benefit from them, rather you may lose.
Conditions For Assignment Of Burden Or Benefit of Debt
For such assignment to be lawful and effective, there are basic conditions that must be fulfilled, according to the Supreme Court of Nigeria. 1. The Supreme Court of Nigeria in the case of FERDINAND GEORGE v. UNITED BANK FOR AFRICA LIMITED (1972) LPELR-1321 (SC), where the court held that; "Obviously, where the burden of a debt is being ...
22. Assignment of choses in action
Abstract. This chapter deals with the general law of assignment of choses in action. Beginning with the historically based difference between equitable and statutory assignment, it then explains what 'chose in action' and 'assignment' are before discussing the requirement that there be an existing and assignable chose in action or right as well as the requirement that a person who ...
Debt Assignments and Notice to Debtors by Dr Kubi Udofia :: SSRN
There is a dearth of Nigerian judicial authorities on assignment of choses in action. This exiguity was observed in Julius Berger Nigeria Plc v T.R.C.B. Ltd [2010] 9 NWLR (Pt 1198) 80 at 106C-D. This discourse assesses the significance of notice to debtors in debt assignments. It is certainly not an exhaustive thesis on this issue.
Part II The Transfer of Intangible Property, 13 Equitable Assignment of
This chapter studies the requirements that are necessary for an effective assignment of choses in action. In order to effect the assignment or a chose in action: the assignor must have manifested an intention to transfer the chose; the thing being assigned must be a chose in action, in present existence, certain or capable of being ascertained; the identity of the assignee must be clear; and ...
Equity › Choses in action
NIGERIA. UK (LIMITED) WACA Subject matter Equity Choses in action ; notification_add Follow for updates . Conditions for the assignment of choses in action ... Whether the beneficiary of an assignment of a chose in action needs to furnish any consideration to the debtor
Law of Equity and Trusts
assignment of choses in action. distinction between novation and assignment. the doctrine of conversion. the doctrine of satisfaction. the doctrine of performance . the doctrine of election. the remedy of injunction. specific performance. the remedy of rescission. rectification. defences available to equitable remedies. equity part ii/law of ...
22. Assignment of choses in action
Abstract. This chapter deals with the general law of assignment of choses in action. Beginning with the historically based difference between equitable and statutory assignment, it then explains ...
Nigerian Law of Equity and Trust by Isochukwu
LAW OF EQUITY AND TRUSTS PART I AND II TABLE OF CONTENTS LAW OF EQUITY PART 1 DEFINITION OF EQUITY. NATURE, ORIGIN AND RECEPTION OF EQUITY. THE MAXIMS AND PRINCIPLES OF EQUITY NATURE OF EQUITABLE INTEREST AND THE DOCTRINE OF NOTICE..9 EQUITABLE INTEREST AND LEGAL ESTATES THE DOCTRINE OF NOTICE. PRIORITY. PARTICULAR EQUITABLE INTERESTS. ASSIGNMENT OF CHOSES IN ACTION. DISTINCTION BETWEEN ...
NIGERIAN LAW OF EQUITY AND TRUST
ASSIGNMENT OF CHOSES IN ACTION. DISTINCTION BETWEEN NOVATION AND ASSIGNMENT. THE DOCTRINE OF CONVERSION. THE DOCTRINE OF SATISFACTION. THE DOCTRINE OF PERFORMANCE. ... Equity has been received into Nigeria (first) by Ordinance no. 3 of 1863, Supreme Court Ordinance 1914. The position is that the rules of common-law, doctrines of equity and ...
LAW OF EQUITY: CHOSES IN ACTION
At common law the general rule was that unless the debtor agreed to it, a debt or other chose in action could not be assigned This is because chose...
BANKING 1.8 NEGOTIABLE INSTRUMENTS
Commercial Law in Nigeria. Akanki. National Open University: Law of Banking and Insurance. Assignment involves a transfer of right from one person to another. A chose in action is a right that is enforceable by legal action rather than by taking possession. E.g. recovery of debts, shares, and so on.
The Law of Assignment: The Creation and Transfer of Choses in Action
1. Introduction PART I: CHOSES IN ACTION AND THEIR NATURE 2. Nature and characteristics of choses in action 3. Classification and creation of choses in action 4. Contracts and third parties PART II: THE TRANSFER OF CHOSES IN ACTION 5. Transfer of choses in action: Historical overview 6. Conceptual underpinnings 7. Assignment of choses in action 8. Transfers of choses in action on trust 9 ...
The Assignment of Choses in Action; Rights of Bona Fide Purchaser
ASSIGNMENT OF CHOSES IN ACTION 623. covenantor and debtor"; between the assignment of a contract as such, and the transfer of a debt which has arisen from the con- tract.4 It requires a statute to impair that freedom of transfer, which is part of the concept that a chose in action is really "prop-.
A CALL FOR HARMONIZATION ACROSS COMMON
516 FORDHAM INTERNATIONAL LAW JOURNAL [Vol. 45:3 property in the form of a chose in action.6 And precisely because the law considers that chose in action to be property, property law provides that it can be transferred by assignment to another. 7 Once assigned, the assignee may typically proceed against the defendant
RETHINKING ASSIGNABILITY
1. The other main body of doctrine enabling the transfer of rights created by contract is the law of negotiable instruments, which are uncontroversially transferable. 2. The most comprehensive scholarly treatment of the topic is Tolhurst, G., The Assignment of Contractual Rights, 2nd ed. (Oxford 2016) Google Scholar.
Effect of Domiciliation Arrangement in Banking ...
Choses in action were not originally assignable at Common Law to enable the Assignee sue in his own name, because debts or choses in action were regarded as personal - LAMPET'S CASE (1613) 10 CO-REP 46B, 48. An attempted assignment was seen as an intrusion by a third party, into a dispute between two parties.
Choses in Action
Freishtat, 274 Md. 404, 409 (Md. 1975), the court held that "a chose in action in tort is generally assignable, in the absence of a statutory prohibition, if it is a right which would survive the assignor and could be enforced by his personal representative.". Therefore, assignment of choses in action is possible if not expressly prohibited ...
Chose in Action
Chose in Action. Personal rights of property which can only be claimed or enforced by action and not by taking physical possession (as distinct from choses in possession, things capable of physical possession). Divided into legal and equitable choses in action, depending on whether they can be recovered or enforced by action at law (such as ...