Assignment of a debt

Assignment of a debt

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This document is a template for the assignment of a debt.

This precedent can be used for the assignment of simple contract debts, specialty debts and judgment debts. It can also be adapted and applied to an equitable assignment of part of a debt.

To be effective, it is not necessary for this document to be prepared as a deed. However, in order for any undertakings in the instrument to be enforceable against the assignor, the instrument will need to be a deed or supported by valuable consideration.

Notice of the assignment should be given to the debtor and, where the benefit of a guarantee securing payment of the debt is also being assigned, to the guarantor as soon as possible.

Background

Background A should be amended as necessary to identify clearly the debt which is being assigned. If the debt is a judgment debt, the background should describe the judgment debtor, the proceedings in which the judgment was obtained and the amount of the judgment.

Background B should be used if the assignor has the benefit of a guarantee securing payment of the debt, and the guarantee is to be assigned.

Power of attorney

The power of attorney in clause 3 is desirable where:

  1. part of a debt is being assigned: except in Western Australia, a statutory assignment of part of a debt is not possible with the result that the assignee is unable to sue for the debt in his own name;
  2. a judgment debt is being assigned: while a statutory assignment of a judgment debt carries with it the right to enforce the judgment debt, it does not, of itself, to the assignee the right to control the proceedings relating to any appeal from the judgment giving rise to the judgment debt: Gould v Skinner [1983] Qd R 377 at 389.

Consideration

Consideration is not necessary in the case of a statutory assignment of a debt or an equitable assignment of part of a debt. If there is no consideration the instrument will need to be a deed in order that any undertakings are to be enforceable against the assignor.

It is important to note that unless the assignor is not in fact the beneficial owner, the words “as beneficial owner” in clause 1 import implied covenants as to the right to assign, quiet enjoyment and further assurances in every state and territory except Queensland and the Northern Territory where there is valuable consideration and in New South Wales even where there is no consideration. See:

  • section 78(1)(A) Conveyancing Act 1919 (NSW);
  • section 76 Property Law Act 1958 (Vic);
  • section 42 Law of Property Act 1936 (SA);
  • section 45 Property Law Act 1969 (WA);
  • section 3 Conveyancing Ordinance 1951 (ACT); and
  • section 7(1)(a) Conveyancing and Law of Property Act 1884 (Tas).

There are express covenants to the same effect in clauses 2(b) to 2(d).

Related document

This document should be used in association with the precedent “Notice of assignment”.

This document has been authored for Lexis Nexis by K I N Rose BA, BCom, LLB (Hons) (Sydney) Barrister-At-Law and updated by Megan Sweetlove, Sweetlove Family Law.