What factors in the security document might result in an assignment being held to be equitable rather than legal? Is this an issue for enforcement?

Legal versus equitable assignments

A so-called ‘legal’ assignment (also commonly known as a statutory assignment) derives from a statutory power for a contracting party to assign a chose in action. The most modern iteration of the right is found at section 136 of the Law of Property Act 1925 (LPA 1925). This provides that to take effect as a legal assignment, an assignment of a chose in action:

1. •

   must be absolute and not purport to be by way of charge only, and

2. •

   must be in writing and executed by the assignor

In addition, express notice in writing must be given to the person from whom the assignor would have been entitled to claim the chose in action—eg a debtor (where the chose in action is a debt) or contract counterparty (where the chose in action consists of contractual rights).

For more information on legal assignments, see Practice Note: Assignments