Assignation, Delegation and Novation - Scottish Construction Contracts - page 291

English law in relation to assignation of obligations is misplaced. Strictly speaking, it
is the rights (and perhaps the obligations) under a contract which are assigned, rather
than the contract itself, and so while certain rights and obligations may involve ele-
ments of delectus personae , and are thus not assignable without consent, certain others
may not and so (at least arguably) may be assigned. An express provision in a build-
ing contract that prohibits assignation, or only permits assignation with consent, will
overridethecommonlaw.Inthosecircumstances, delectus personae isofnorelevance.
In view of the uncertainties relating to assignation of obligations, in practice the usual
method adopted for transferring obligations is novation, see Section 12.8.
12.2 Common law
In the absence of any express provision of the contract governing assignation, the
common law will apply.
No particular wording is required to constitute an assignation under Scots law as
long as it effects a transfer, see Carter v. McIntosh (1862). However, the general prin-
ciple is that an assignation of a right must be intimated to the person against whom
therightmaybeenforcedbeforetheassignationisefectiveagainstthatperson.For
example, where a contractor assigns his right to receive payment of retention monies
fromtheemployer,theassignee(i.e.thepartyinwhosefavourtheassignationis
granted) must ensure that such assignation is intimated to the employer. Failure to
intimate assignation may prevent rights being effectively transferred, see Laurence
McIntosh Ltd v. Balfour Beatty Group Ltd (2006), where the resulting relationship was
analysed in terms of ad hoc agency and meant there was no title to sue. It follows that
in the event of competing assignations, these rank in priority of date of intimation,not
date of execution. This reinforces the importance of intimating without delay since,
for example, the insolvency or bankruptcy of the assignor after execution of the assig-
nation but prior to intimation could result in the assignee's rights being defeated by
those of the insolvency practitioner or trustee to whom the rights in question will be
assigned under law.
The assignee of a right is entitled to no greater benefit in respect of that right than
the assignor. This is often expressed by way of the Latin maxim assignatus utitur jure
auctoris (literally, the assignee exercises the right of the grantor), which means that the
assignee can never be in a better position than the assignor. Thus, any defences avail-
abletothedebtorinrespectoftheclaimbytheassignorwillalsobeavailableagainst
a claim by the assignee, see Scottish Widows Fund v. Buist (1876). For example, it is a
complete defence to demonstrate that a debt was settled before the right to sue for that
debt was assigned. An example of this arose in Smiths Gore v. Reilly (2001), where it
washeldthatan'emptyvessel'hadbeenassignedwhichcouldnotgroundameaning-
ful claim. here may be some doubt, however, as to whether in certain circumstances,
a counterclaim available against the assignor can also be pled in defence against the
assignee, see Binstock, Miller & Co v .E.Coia&CoLtd (1957); Alex Lawrie Factors Ltd
v. Mitchell Engineering Ltd (2001).