Re Union of London and Smith's Bank Ltd [1933] Ch 611

Facts

• The case involved an examination by the Chancery Division of the High Court of Justice into the principles of express assignment and the transfer of rights under a contract.
• The court considered the validity and enforceability of assignments of contractual rights, focusing on statutory and equitable assignments.
• Key areas scrutinized included the necessity of absolute transfer, formal requirements for assignment, and the effect and notice required to the debtor or obligor.
• The implications of partial assignments versus absolute assignments were also assessed.

Issues

1. Whether an assignment of contractual rights must be absolute and unconditional to qualify as a statutory assignment under Section 136 of the Law of Property Act 1925.
2. Whether assignments not meeting statutory requirements may still be valid under equitable principles.
3. What formalities, including written documentation and notice, are required for the effective transfer and enforcement of contractual rights by an assignee.
4. The enforceability and implications of partial assignments as compared to absolute assignments.

Decision

• The court held that, under Section 136 of the Law of Property Act 1925, statutory assignments must be absolute (not by way of charge), in writing, and signed by the assignor.
• Express notice of the assignment to the debtor or obligor is required for enforceability.
• Assignments transferring only part of the assignor’s rights (partial assignments) do not qualify as statutory assignments but may be valid in equity.
• For partial assignments valid in equity, the assignee must join the assignor in legal proceedings to enforce the assigned rights against the debtor.
• The judgment emphasized that clear and unambiguous language is necessary to constitute a valid assignment.

Legal Principles

• Statutory assignments under the Law of Property Act 1925 require the transfer to be absolute, written, and notified expressly to the debtor.
• Assignments failing to meet statutory requirements may still be effective as equitable assignments, but do not afford the same rights of enforcement without procedural limitations.
• Partial assignments do not receive the benefit of statutory enforcement and require the involvement of the assignor for enforcement.
• The difference between statutory and equitable assignments lies primarily in the applicable formalities and the rights conferred on the assignee.

Conclusion

The court in Re Union of London and Smith’s Bank Ltd [1933] Ch 611 established that only absolute and properly documented assignments with express notice can be enforced as statutory assignments, whereas partial or informal assignments may be valid in equity but are subject to significant restrictions in enforcement. The judgment remains influential in clarifying the formalities necessary for the assignment of contractual rights in English law.