Q&As

Is an acknowledgement of assignment an enforceable contract? Can the security agent sue the third party providing the acknowledgement for breach of contract if it does not do the things it has confirmed it will in the acknowledgement (even if the language does not state that the third party ‘undertakes’ to do any of the things it has been instructed to do but rather just ‘confirms’)?

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Published on LexisPSL on 12/02/2019

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • Is an acknowledgement of assignment an enforceable contract? Can the security agent sue the third party providing the acknowledgement for breach of contract if it does not do the things it has confirmed it will in the acknowledgement (even if the language does not state that the third party ‘undertakes’ to do any of the things it has been instructed to do but rather just ‘confirms’)?

For information in general on assignments by way of security and taking security over contractual rights, see Practice Notes:

  1. Assignments by way of security, and

  2. Taking security over contractual rights

Under section 136 of the Law of Property Act 1925 (LPA 1925), an absolute assignment made in writing of any debt or other legal thing in action, of which express notice in writing has been given to the debtor has the effect in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice the power to give a good discharge for the same without the concurrence of the assignor.

This means that once notice of an assignment has been served in accordance with LPA 1925, s 136, the debtor must pay the assignee to obtain a good discharge of the debt. Payment made to the assignor will not discharge the debt.

Acknowledgements of notices of assignment by way of security are not required for the

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