Legal assignment: the three s.136 conditions
A legal assignment under section 136 of the Law of Property Act 1925 needs three things at once: the assignment must be absolute (not by way of charge only), it must be in writing signed by the assignor, and express written notice must be given to the debtor. Get all three and the assignee can enforce the assigned right directly against the debtor, in its own name, without involving the assignor.
On notice, an email can be valid written notice: in Bedford Investments Ltd v Sellman [2021] EWHC 799 (Comm), an email sufficed because it identified the assignee and what was assigned. And priority between competing assignments follows the rule in Dearle v Hall (1828) - priority runs from the order in which the debtor receives notice, not the order in which the assignments were made, so prompt notice is a commercial imperative in receivables financing.
Equitable assignment: the join-the-assignor trap
If any s.136 condition is missing - no writing, no notice, or a partial rather than absolute assignment - the assignment can still be effective in equity, but with a critical limitation: the equitable assignee cannot sue the debtor alone. It must join the assignor as a party to any enforcement proceedings.
That is a practical dead end where the assignor is insolvent, dissolved, or simply uncooperative: the assigned right may be valid in theory but unenforceable in practice. So the difference between legal and equitable assignment is about who can sue, and when - not a technicality.
The formality trap: Frischmann
Formalities catch sophisticated parties. In Frischmann v Vaxeal Holdings SA [2023] EWHC 2698 (Ch), an assignment signed by an attorney under a lasting power of attorney for an individual assignor did not satisfy s.136's requirement of writing under the hand of the assignor - so it took effect only in equity, not as a legal assignment. The City of London Law Society later issued guidance distinguishing corporate assignors (where execution by an authorised agent likely satisfies s.136, since a company can only act through agents) from individuals.
The lesson is to get the execution right: for an individual assignor, signature by an attorney may not be enough for a legal assignment.
Only the benefit, not the burden
The fundamental rule is that you can assign the benefit of a contract but not the burden - confirmed by the House of Lords in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85. You cannot offload your obligations by assignment; for that you need novation (or a subcontract, which delegates performance but leaves you liable).
There is a narrow conditional-benefit exception (Halsall v Brizell [1957] Ch 169), but it is tightly confined. Davies v Jones [2009] EWCA Civ 1164 sets three prerequisites: the benefit and burden must arise in the same transaction, there must be a genuine correlation between the benefit enjoyed and the burden imposed, and the party must have a real chance to elect between taking both or rejecting both. Outside that, the benefit-only rule holds.
Drafting and using assignment
When assigning, satisfy all three s.136 conditions and give prompt written notice - it secures direct enforcement and priority. When taking an assignment as security, remember a charge is not absolute, so it takes effect in equity; convert it to a legal assignment by absolute assignment plus notice where you need direct enforcement.
And do not try to shed obligations by assignment - it does not work. If the deal requires the incoming party to take on the obligations, use novation (see the novation guide), and remember that an anti-assignment clause in the contract may restrict or prevent assignment altogether (see the anti-assignment guide).
Use at the desk
Practical checklist
- For a legal assignment, satisfy all three s.136 conditions: absolute, in writing signed by the assignor, and written notice to the debtor.
- Give prompt written notice - it enables direct enforcement and fixes priority (Dearle v Hall; Bedford v Sellman [2021] EWHC 799 (Comm)).
- Remember an equitable assignee must join the assignor to sue - risky if the assignor may be insolvent.
- Get execution right - an attorney's signature for an individual may give only an equitable assignment (Frischmann [2023] EWHC 2698 (Ch)).
- Do not try to assign the burden - only the benefit is assignable (Linden Gardens [1994] 1 AC 85); use novation for obligations.
- Check for an anti-assignment clause before assigning (see the anti-assignment guide).
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
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