Assignment

The main contract contains a restriction on the creation of assignment (ie. The Assignor shall not assign the contract benefit to any other party without the prior written consent of the Obligor). Notwithstanding the restriction, the Assignor assigned his contract benefit to the Bank without the Obligor's consent.

Question 1: Is the assignment valid?

• Yes

• No

The main contract contains a restriction on the creation of assignment (ie. The Assignor shall not assign the contract benefit to any other party without the prior written consent of the Obligor). Notwithstanding the restriction, the Assignor assigned his contract benefit to the Bank without the Obligor's consent.

Question 2 : Can the assignee bank claim the contract benefit from the Obligor?

• Yes

• No

The main contract contains a restriction on the creation of assignment (ie. The Assignor shall not assign the contract benefit to any other party without the prior written consent of the Obligor). Notwithstanding the restriction, the Assignor assigned his contract benefit to the Bank without the Obligor's consent.

Question 3: Can the Bank sue the Assignor?

• Yes

• No

The main contract contains a restriction on the creation of assignment (ie. The Assignor shall not assign the contract benefit to any other party without the prior written consent of the Obligor). Notwithstanding the restriction, the Assignor assigned his contract benefit to the Bank without the Obligor's consent.

Question 4 : Can the Obligor continue paying the Assignor directly?

• Yes

• No

The main contract contains a restriction on the creation of assignment (ie. The Assignor shall not assign the contract benefit to any other party without the prior written consent of the Obligor). Notwithstanding the restriction, the Assignor assigned his contract benefit to the Bank without the Obligor's consent.

Question 5 : What should the Bank do before granting the loan to the Assignor?

• The Bank should insist that the Assignor obtains the Obligor's consent and request the Obligor to issue the letter of consent

• The Bank should not do anything

A legal assignment needs to satisfy all the requirements under s.4(3) Civil Law Act 1956.

Question : Is the above statement correct?

• Yes

• No

An equitable assignment exist when one or more of the conditions under s.4(3) of Civil Act 1956 are not satisfied.

Question : Is the above statement correct?

• Yes

• No

The Borrower requested the bank to waive service of the notice of assignment to its obligor since the obligor has informed borrower that they refuse to acknowledge the NOA. The bank instructs the borrower to send a letter of instruction to the obligors.

Question : Does non service of the notice of assignment impact the creation of the legal assignment?

• Yes, non service of NOA negates a legal assignment

• No, there is a valid legal assignment despite non service of the NOA

The Borrower's notice of assignment dated 7 December 2023 was duly acknowledged by the obligor on 11 December 2023.

Question : When is the effective date of the assignment?

• 7 December 2023

• 11 December 2023.

Can the Bank sue the obligor directly if there is an equitable assignment?

• Yes, the Bank can sue the obligor directly

• No, the Bank and the Assignor must sue the obligor jointly