ASSIGNMENT OF CHOSES

IN ACTION
DR. FOLAKEMI AJAGUNNA
2021/2022 SESSION
INTRODUCTION
 What is chose?
 A chose is a piece of personal property (her bag is a chose)

 A chose in action is a personal right in property that can only be

enforced by taking legal proceedings and not by taking physical
possession

 A chose can either be legal or equitable

 A legal chose in action includes rights that can be recovered by

action at common law eg. Action for debt, copyright, insurance
policy,(let the student go back and read up any insurance policy
they can find) company shares, trademarks, patent& designs,
right to action from contract like right to damages from breach
of contract etc
What is an equitable chose?
 An equitable chose in action includes rights that
can only be enforced by proceedings in equity eg.
Interest in a trust fund, legacy under a will(A
legacy is a gift of personal property by will)

 A chose in action can be bought, sold or

transferred just like any other interest in property

 A chose in possession is a movable chattel or

tangible articles that can be passed by physical
delivery
What is an assignment?
 An assignment is the transfer of rights in real or personal
property to another that gives the recipient the rights
that the owner of the property had prior to the transfer
 A chose in action can only be transferred by an assignment
because you cannot handle it physically

 Assignment at common law

 at common law, there could not be an assignment unless
the debtor agreed and gave consent to the assignment

 Assignment was seen as an intrusion of a third party into a

dispute between two parties and therefore unnecessary
 The Chancery courts felt that the application of
non-assignability of choses in action by common
law courts was too absurd and thus gave effect to
assignments
Categories of assignment
 Equity recognized both equitable and legal choses

 There are 4 categories of assignment

 1. Legal assignment of a legal chose
 2. Legal assignment of an equitable chose
 3. Equitable assignment of a legal chose
 4. Equitable assignment of an equitable chose
Legal assignment of a legal/equitable chose
 This form of assignment complies with the
statutory requirements for assignment of a legal
chose

 Legal assignment of an equitable chose

 The subject matter is an equitable chose and its
assignment has followed the requirements of the
law
Equitable assignment of a legal/equitable chose
 The requirements for its assignability have
not been complied with
 The subject matter is either a legal or
equitable chose but what is of uttermost
importance to note is that its assignment
does not follow the laid down procedure
and this qualifies it as an equitable
assignment
Requirements for legal assignment of a
legal/equitable chose
 This is also referred to as statutory
assignment. This implies that there is a law
governing this assignment
 Section 25(6) Judicature Act 1873
 1. the assignment must be in writing and
signed by the assignor
 i.e the assignor must be the author of the
document of assignment.
 It is not necessary for there to be
consideration for the assignment
Requirements for legal assignment of a
legal/equitable chose
 2. the assignment must be absolute and not
expressed to be by way of charge ie. It
must not be assignment of a specific part of
the chose
 In Western Nig Finance v West Coast
Builders Ltd & Ors, the df had some money
owed to it by the Ministry of Finance, the
df sought to assign part of this money to
the pf corporation. The court held that this
assignment operated as an equitable
assignment and not as a legal assignment
Requirements for legal assignment of a
legal/equitable chose
 3. there must be express notice in writing.
 This notice must be given to the debtor,
trustee and it may be given by either the
assignor or the assignee
A notice with an incorrect date or an
incorrect amount may be ineffective
 The notice takes effect from the time it is
received by the debtor or trustee
Effect of statutory assignment

 Ifthe provisions of statute are complied

with, the assignee becomes the owner of
the chose at law
 The debtor has a new creditor thrust upon
him
 The assignee can sue for recovery of the
debt without joining the assignor
Equitable assignment
 An equitable assignment is one that does not comply with
the provisions of statute by one or more requirements for
its assignment
 For such reasons, it takes effect as a valid equitable
assignment
 Requirements of equitable assignment
 1. there must be a definite intention to assign
 The courts will construe the language used to see if it
indicates an intention to assign
 In Thomas v Harris, there was an oral agreement between
the father and his son in which the father asked the son to
erect a tombstone and pay for it out of certain insurance
funds and the father handed over the insurance policies to
his son. The court held that this constituted a valid
assignment in equity
Requirements of an equitable assignment
 No particular form of language is required except
in the case of assignment of an equitable interest
under a trust where S 78(1) of PCL 1959 requires
it to be in writing and signed by the person
assigning it or his agent

 2. There must be an identified chose

 The assignment must identify the chose to be
assigned or part of the chose to be assigned
Requirements of an equitable assignment
 3. Notice to debtor
 In an equitable assignment, notice or absence of
it does not affect the validity of the assignment
but notice is important for three reasons
 - to ensure payment to the assignee before the
debtor pays the assignor
 -to protect against new rights arising between the
debtor and assignor
 - to preserve priority in the assignee’s favour
(what happens in instances where the assignor has
assigned the chose to two or more people
Class activity
 Ade creates an assignment of N100 debt
owed to him by Yinka on 18 January 1998 in
favour of Segun. Yinka does not receive
notice of the assignment until 6 June 1998
by which time Yinka has received a right of
set-off of N30 against Ade.
 Discuss what options are available to Segun
in view of the circumstances
 Segun can only be entitled to N70 only
from Yinka
Effect of equitable assignment
 The effect of an equitable assignment is that the assignee
has become the owner of the entire or part of the chose
 The assignee can sue in his own name without making the
assignor a party in instances where the whole chose is
assigned to the assignee

 Where a part of the chose is assigned, the effect of an

equitable assignment is that the assignee cannot sue for
the chose without making the assignor, the debtor and any
other person concerned a party to the proceeding
 Take home assignment

 Highlightand discuss the similarities

and differences between a statutory
assignment and an equitable
assignment
Maintenance, assignment and champerty
 Reluctance of common law in recognising the transferability of
choses in action due to the fear that dubious persons may use it
as a device to disturb the courts with unnecessary litigation
over matters in which they had no genuine interest
 Any assignment tainted with maintenance and champerty was
void
 Maintenance is said to occur when an undesirable person seeks
to maintain a claim for a party when he has no genuine interest
in the result of the litigation/ the support or promotion of
another person’s suit initiated by intermeddling for personal
gain
 Champerty is the process whereby one person bargains with a
party to a lawsuit to obtain a share in the proceeds of the
lawsuit
Unassignable choses
 Some choses are unassignable in law and equity on the
grounds of public policy

 These include salaries and pensions of public officers,

alimony, a bare right that is not coupled with any interest
in property eg a right to sue for libel

 Why is this so?

 Public servants should not suffer from financial

embarrassment
Novation
 Novation is the act of either replacing a party in a contract with
another or replacing one contractual obligation with another requiring
the consent of all parties involved
 Novation is the replacement of one of the parties in an agreement
between two parties with the agreement of all three parties involved
 It is a contract that substitutes one party to a preexisting contract for
a party who was not in the original contract
Novation and assignment
 In a novation, the original contract is extinguished and is replaced by
a new one in which a third party takes up rights and obligations that
duplicate those of one of the original parties to the contract
 Novation entails replacement of an old obligation with a new one

 Novation is only possible with the consent of the original contracting

parties as well as the new party, and consideration must be provided
for this new contract

 Like assignment, novation transfers the benefits under the contract,

but unlike assignment novation transfers the burden under the
contract as well
Novation examples
 Bayo enters into a contract with Segun for Bayo to
paint Segun’s house for N100,000. Bayo then enters
into another contract with Daniel and Segun for
Daniel to paint Segun’s house and discharge duties
owed by Bayo to Segun
 Identify the original parties
 Identify the new party
 Identify the original contract
 Identify the new contract
 Novation examples
 The seller of a business enterprises transfers the contracts
with his customers and suppliers to the buyer. A novation
agreement should be used to transfer each contract

 A design and build contractor in the construction industry

transfers a construction contract to a new substitute
contractor. This can be done by novation

 In a change of membership of a partnership firm, the

creditors of the old firm will usually be deemed to have
the new firm as their debtor by trading with the new firm
as if it were identical with the old
Assignment of expectancies
 An expectancy denotes property that is not yet acquired
but hoped to be acquired in the near future eg copyright
in books, future royalties, lease of land that is yet to be
acquired

 At common law, assignment of expectancies was invalid

because one could not assign what he was yet to have

 However in equity such an assignment is regarded as a

contract to assign and a decree of specific performance
could be made if the contract is made for valuable
consideration
Priority of successive assignments
 Also referred to as the rule in Dearle v Hall
 This rule in Dearle v Hall is a common law rule to
determine priority between competing equitable claims to
the same asset
 The rule provides that where the owner of an equitable
interest in pure personalty creates more than one
encumbrance on it, the priority of the encumbrances does
not depend on the dates of creation of the encumbrance
but on the dates on which the trustees received notice of
the encumbrances, subject to the qualification that a
later encumbrancer who had notice of an earlier
encumbrance at the date of taking his security cannot
obtain priority by being the first to give notice to the
trustees
 Priority will depend on the order in which notices about
dealings was received by the person entitled to receive it
but where the notices are received simultaneously, then
priority will be based on the order in which they were
created

 Notice required to be given under the rule need not be

formal so long as it is clear and unambiguous

 The notice should be given to all the trustees and not just
one of them

 If notice is given to only one of them, the notice will lapse

on the death/retirement of the trustee
Questions?????
The End