Week 8 Seminar: Assignment and receivables financing

Legal assignment requirements:

Written notice to debtor that debtor is assigned
Assignor assignee assignment has to be in writing and signed by assignor

Absolute assignment to assignee VS assignment by way of charge to assignee:

> Absolute: assignor is just selling to assignee
> Charge: has to be equitable assignment, cannot be in legal assignment.

Assignment by way of charge, when will they be entitled to enforce that charge?
When assignor owes money and is in default.

Factoring VS Discounting
Similarities: Both involves outright sale to assignee.

Difference:
- Factoring: Assignee will notify the debtor.
- Discounting: no notice

Notification

Defences:
1) Debtors could rely on Set-off against assignee before they get notice.
2) Assignee takes subject to equities

Non-notification

If debtor pays assignor as no notification, money held on trust for assignee.

Most receivable financing is done on this invoice discounting basis.

Only use factoring when they do not trust the suppliers/assignor.

Non-assignment clause/BOA

Most cases involved mentioning declaration of trust. Money will be held on trust for assignee
if went into separate account.

In mo ca e he cla e im l a no a ignmen Wha ha en if cla e a o ma

no a ign and o ma no decla e o e oceed
Courts will say you need to draft clause very clearly to say prevention of trust.

BOA effec on igh o collec a men

Barbados Trust
BOZ [group of banks {BOA] Barbados Trust}
[assignment]
{declaration of trust}
BT was trying to make BOA sue BOZ. Why does this not work?
Clause, no title to sue (like Linen Gardens)

Lord Coopers undermine who purpose of the clause

compare with judgment from Lord Justice Warren

So there is no clear position now.

Unless there is express declaration of trust, probably beneficiary could use that procedure.

Charge is a kind of assignment.

In context of receivable financing (NOT BANK LOANS) in Australia NZ Germany, that sort of
clause is invalid by legislation.