Do you know what is legal and equitable assignment? In banking, an actionable claim is the subject of the assignment. It is permissible under Section 130 and 136 of the Transfer of Property Act, 1882 to assign “actionable claims” to anyone except to a judge, a legal practitioner, or an officer of the Court of Justice.
Section 3 of the Transfer of Property Act 1882 defines an actionable claim.
“Actionable claim means a claim to any debt other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property or to any beneficial interest in movable property not in the possession either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing conditional or contingent”.
What is legal and equitable assignment
Legal Assignment
In order to be legal and assignment of an actionable claim must be in writing and signed by the assignor. It must not be by way of charge only. It is to be absolute.
A written notice of assignment containing the name and address of the assignee is to be sent by the assignor the debtor or the borrower that the debt has been assigned to him (banker) asking for his acknowledgment of the notice and for confirmation of the balance due.
Equitable Assignment
If an assignment does not fulfill any of the requirements of a legal assignment, it is an equitable assignment. For example, where a debtor issues an order in favor of his creditor, on his debtor asking him to pay such funds to his creditors, it will result in the creation of an equitable charge of the creditors, it will result in the creation of an equitable charge of the creditors over such funds.
In the case of a legal assignment, the assignee can sue in his own name but not so if it is an equitable assignment. A legal assignee can also give a valid discharge for the debt without the concurrence of the assignor but the assignee of an equitable assignment cannot do so.
Hope you can understand what is legal and equitable assignment. Otherwise please feel free to comment below.
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