Assignment of choses in action

Choses in action are ‘…all personal rights of property which can only be claimed or enforced by action and not by taking physical possession.’ (ref Torkington v Magee). The term includes the benefits arising under a contract and, subject to certain qualifications, rights of action arising by reason of a breach of contract.

A chose in action can be a legal chose, for example an interim payment due under a building contract, or an equitable chose such as a legacy under a will or an interest in a partnership.

Choses in action can be assigned or transferred unilaterally, for example A the employer enters into a construction contract with B the contractor, requiring B to construct a building to a quality set out in the specification. A can, without the consent of, or indeed knowledge of B, transfer the benefit of that contract to a third party C. A is known as the assignor, B the debtor and C the assignee. Only the benefits of a contract can be assigned, not the burdens (see Nokes v Doncaster Amalgamated Collieries). The burden must be novated.

It is important to understand that the right to assign a chose in action is not derived from contract. It is a statutory right, alternatively a right arising from the rules of equity. Express conditions are commonly found in collateral warranties purporting to grant rights of assignment; these conditions are unnecessary and may actually have the effect of restricting the rights to assign.