|A word about credit risk mitigation
|The Jolly Contrarian’s Glossary |
The snippy guide to financial services lingo.™
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In a game of legal contract top trumps, a legal assignment marginally beats an equitable assignment, except in the “fewest formalities needed to work” category, because it must meet certain formalities set out in Section 136 of the Law of Property Act 1925:
- Unconditional: it must be absolute (unconditional).
- Not by way of security: it must not not be by way of charge or security only: an assignment by way of security is an equitable and not a legal assignment.
- Wholly ascertainable: The rights assigned must be wholly ascertainable and must relate to the whole of the chose in action. This sounds meaningful and might get you 6 out of 10 in a law exam but God only knows what it means in practice.
- Written: It must be in writing and signed — no deemed acceptance by conduct here, friend.
- On notice: The party whose obligations are being assigned must be given notice of the assignment.
But other than having a right to sue in your own name, it is hard to see the practical advantage of a legal assignment over an equitable one.