Sydney Law Review
In recent years, a line of decisions has recognised the legitimacy of prohibitions on assignment. Moreover, and despite holding that the effect of such prohibitions depends on construction, generally, it would appear that whatever words are used, the effect of a prohibition will be to render the attempted assignment ineffective. Nevertheless, it has never been fully explained how such provisions operate at a doctrinal level, that is, how a contractual provision inhibits a person dealing with their right of property. This paper suggests that the explanation lies with the ability of contracting parties to fashion the characteristics of the contractual rights they bring into existence not just in their character as contractual rights but also as choses in action.
* Faculty of Law, University of Sydney, Associate Editor, Journal of Contract Law, Editor, Commercial Law Quarterly.
The assignment of contractual rights is an important but difficult area of the law. It forms a sub-group of the assignment of choses in action. The idea behind an assignment of a chose in action is simple: namely, a chose in action forms part of the property of the person in whom it is vested and that person may transfer it to another. The word ‘assign’ in this context simply means to transfer or convey. The person transferring the chose is the assignor and the person to whom it is transferred is the assignee. In the case of a contractual right, the other party to the contract with the assignor, who must now account to the assignee, is either the debtor in the case of an assigned contractual debt, or the obligor in the case of an assignment of some other right to performance.
Unfortunately, in the case of contractual rights, this is where simplicity ends. The efficacy of an assignment of a contractual right is governed by numerous rules which have never been the subject of any detailed analysis. These rules include, the assignee is to be no better off than the assignor, it is only possible to assign rights and not duties and personal contractual rights may not be assigned. It is not the purpose of this paper to set out, explain or resolve all the problems that exist within the rules governing the assignment of contractual rights. The paper has a narrow focus: namely, given that the current Anglo-Australian model of assignment is property-based, that is, it is concerned with transferring rights of property, to what extent can the parties to the contract, that is, the assignor and obligor, control the transferability of a right? It has been held that an express contractual provision may allow for the assignment of a right which otherwise may have been construed as being personal and not assignable. This is an application of the rule that the personal nature of a contractual right is a question of construction. Usually, however, contractual provisions attempt to limit or prohibit assignability. What is the effect of an attempted assignment in the face of such a prohibition? There are various possible answers: for example, such prohibitions may be void for being against public policy, they may be valid and the attempted assignment is ineffective or the assignment may be effective but place the assignor in breach of contract with the obligor. Surprisingly, it is only in recent years that courts have been given the opportunity to address this issue. The current weight of Anglo-Australian authority has recognised that such prohibitions are not against public policy and their effect is to render any assignment ineffective. Despite this authority, it is not clear how such prohibitions operate from a doctrinal perspective.
In this paper, it will be suggested that the answer to this issue of doctrinal efficacy depends on whether such provisions merely operate as a matter of contract or whether they impact on the nature of the relevant contractual right as a chose in action. Once an answer to this question is formulated, it is then possible to investigate two further problematic areas, namely: what the rights of the various parties in the case of a breach of a prohibition are and what the relationship between such provisions and the rule preventing the assignment of personal contractual rights is. In addition, a related issue, namely, who can claim the benefit of such a provision, is also discussed. The paper begins by looking at some of the more fundamental issues relating to the efficacy of such provisions.
Because this is an area of law that has only recently come under the spotlight in Anglo-Australian law, it is necessary to make a number of preliminary points for the purpose of setting the scene before moving on to the discussion of the doctrinal efficacy of prohibitions on assignment.
In England, pursuant to the decision of the House of Lords in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd, full effect will be given to contractual provisions prohibiting assignment. That is, any purported assignment will be ineffective.
In Australia, a majority of the High Court in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd, approved the analysis of the effect of a breach of such a prohibition contained in Don King Productions Inc v Warren and Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd. Don King Productions concerned the application of certain aspects of the Linden Gardens case and the reference to it may suggest a broader acceptance of the approach adopted in Linden Gardens. In Devefi too, the analysis adopted by the Full Federal Court, although handed down prior to Linden Gardens, is in line with Linden Gardens at least to the extent of recognising the validity of such clauses. In addition, there are now a number of decisions of Australian courts that have expressly adopted the reasoning in Linden Gardens and it is reasonably safe to conclude that until the High Court has an opportunity to look at the issue in detail, the reasoning of the House of Lords will be applied by Australian courts.
There is, however, one decision of the High Court of Australia which appears to stand in the way of adopting the approach taken by the House of Lords in Linden Gardens and which requires further analysis before it can be said without question that such provisions are efficacious in Australia as a matter of law. That case is Hall v Busst, and, in particular, the statement made by Dixon CJ to the effect that a contractual restraint on alienation can only give rise to a right to damages. In Caboche v Ramsey, Gummow J said that Dixon CJ’s statement was restricted to restraints involving interests in land and where ‘the restraint is imposed upon dealings with debts or other choses in action, or with the benefit of performance of contracts involving personal skill and confidence, further, and more detailed, principles apply both as to the interpretation and efficacy of such provisions.’ For this proposition he referred to the decisions in Devefi and Linden Gardens. The court in Devefi suggested that Hall v Busst represented a ‘distinct body of principle [dealing] with restraints upon alienation of land’. However, earlier Needham J, in Reuthlinger v MacDonald, said that the doctrine of restraints on alienation applied to both realty and personalty and, moreover, the doctrine applied to mere contractual restraints because the majority of the High Court in Hall v Busst did not limit it to restraints that are conditions of a grant.
Hall v Busst concerned the sale of an island. On the day the sale contract was entered into (but executed after the sale contract), the parties entered into a separate indenture in which the grantor/purchaser agreed not to transfer, assign or lease any part of the island without the consent of the grantee/vendor. In due course, the purchaser agreed to sell the land to a third party and that third party entered into possession. The vendor brought an action for damages for breach of contract. That action failed in a majority decision of the High Court. Dixon CJ began by stating the general principle that where a restraint is made a condition of a grant it is void on the ground of repugnancy. However, to this he added the alternative ground of public policy. This case, however, was different because the restraint was contained in a separate contract and imposed by way of covenant. Dixon CJ posed the question whether such a restraint should be treated differently as there is ‘no fetter upon alienation which does more than sound in damages, that is, unless a doctrine of equity intervenes to make it bind the land.’ In the result he held that the provision in question should not be treated differently because it was nevertheless aimed at securing an indefinite, unqualified prohibition on alienation without consent. It was, in short, as effective as a condition subsequent to the grant would have been. However, he limited the ground upon which it was invalid to that of public policy. Fullagar J agreed but specifically said that the provision was repugnant; he did not expressly add the alternative public policy ground. Menzies J, the last member of the majority, agreed with the reasons given by both Dixon CJ and Fullagar J but added that he thought the provision was as contrary to the public interest as a restraint of marriage.
From the facts of the decision itself, whether or not the view is taken that Hall v Busst must be applied to personalty, it is possible to distinguish it from the prohibitions being dealt with in this paper. As was pointed out by Needham J in Reuthlinger v MacDonald, it appears clear that in Hall v Busst the restraint was not operative until the transfer of the land to the purchaser was completed. There is no doubt that it is repugnant or otherwise against public policy for a prohibition on assignment to attempt to deal with the fruits of a contract once those fruits are in the hands of the assignor. But this (and Hall v Busst in terms of its ratio) says nothing about the situation in which the prohibition seeks to prevent the assignment of existing contractual rights where the enjoyment of those rights is contingent on some event or is conditional upon the assignor performing some obligation, and where the right to some performance has unconditionally accrued but the time for performance has not yet arrived.
The above analysis still leaves the issue as to whether upholding such provisions is at odds with the principle prohibiting restraints on alienation. If it is, then such provisions can have one of two effects: either they are completely without effect or, despite an assignment in the face of such a provision being valid, the promise not to assign may still be recognised, thus putting the assignor in breach of contract with the obligor.
The argument that prohibitions on the assignment of contractual rights constitute an improper restraint on alienation was raised and rejected by the House of Lords in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd. Lord Browne-Wilkinson rejected the argument on the basis of both authority and principle. In terms of authority, he simply referred to the line of cases upholding such clauses. As to principle, he took the view that the restraints doctrine was limited to land because it is a finite resource. He thought that there was no public policy reason overriding a prohibition on the alienation of tangible property and no public need for a market in choses in action.
Lord Browne-Wilkinson’s latter statement is problematic. Firstly, as already noted, it would appear that the restraints doctrine is not necessarily limited to interests in land. Moreover, market economies need credit, and there is a very real need for a market in debts. This market is not necessarily limited to debts in the strict sense of unconditional accrued rights to payment but also encompasses conditionally-accrued rights to payment. Thus, international conventions dealing with factoring and receivables financing have express provisions overriding any such prohibitions. In addition, whatever may have been the historical factual scenario for the operation of the restraints on alienation rule, it is clear that part of the thinking behind these Convention provisions is that such prohibitions would be at odds with the principle against restraints on alienation. Likewise, but to a lesser extent, the restraints rule was one factor influencing the insertion of provisions in the Restatement of Contracts 2d and Uniform Commercial Code, to restrict the effect of such prohibitions. Admittedly, however, it may be that in these instances, although the restraints rule was referred to, what was really in mind was some broader notions of public policy than the more narrow repugnancy principle that has historically underpinned the restraints doctrine.
Perhaps the most powerful statement that the restraints on alienation rule is irrelevant was that of Untermyer J in the New York Court of Appeal in Sacks v Neptune Meter Co. He said:
We think both upon principle and upon authority... a covenant against assignment, which in substance provides that the obligation shall be unenforceable in the hands of the assignee, is available to the obligor as a defense ... In so holding we do not sanction unlimited restraint upon the alienation of property within the accurate definition of that term. There is a perceptible distinction between the right of a contracting party to impose conditions upon the exercise of a contractual right and the imposition on the owner in fee of undue restraint in respect to the alienation of his property. A grantor cannot transfer complete ownership of tangible property and still control its devolution, because such control is repugnant to the absolute character of the grant ... But that rule does not apply where the restraint is upon the alienation of an estate for years and the grantor has received a reversionary interest in the property. Even more conspicuously would the rule seem to be inapplicable where no transfer of title has occurred and the restraint is only of contractual rights.
I have been unable to discover that the rule against restraints on alienation has ever been applied to choses in action .... [W]here the subject-matter is a chose in action, neither public policy nor consistency requires that it be enforceable against the promisor except in accordance with the terms on which his promise was made. The limitation is not so much imposed on the obligee’s right of alienation as on the obligor’s duty to perform. The restraint then becomes a condition of acquisition.
Despite approval in Devefi, the last two sentences in this citation are problematic and are discussed further later in this paper. However, at the end of the first paragraph Untermyer J does point out an important factual distinction. Arguably, the focus of the repugnancy principle is the situation where A absolutely transfers property to B and in that transfer there is a condition aimed at preventing B from transferring the property to a third party. Here, after the transfer to B, A drops out of the picture (it being an absolute transfer) and there are therefore good reasons why A should have no say in what B does with the property. In the case of an assignment of a contractual right, the person in the position of A, that is, the obligor, remains in the picture and therefore does have a vested interest in the identity of the person for whom it performs. Moreover, in the case of a contract, it is only at a very theoretical level that it can be said that formation occurs by one party transferring its promise to the other party. At a doctrinal level, such a view could have undesirable results. It follows that there is no initial grant to the assignor which is made the subject of a condition restraining alienation. The only time such a transfer occurs is where one party actually receives the fruits of the contract. Prior to this point, as between the parties to the contract, there only exist personal rights and obligations, albeit that those rights may be considered choses in action for the purposes of transfer. Therefore, the subject matter being dealt with is not the same as that to which the repugnancy principle applies.
Before moving on, it is still necessary to determine whether the decision in Hall v Busst is nevertheless at odds with the above argument. It will be recalled that in Reuthlinger v MacDonald, Needham J suggested that the High Court in Hall v Busst did not limit the restraints rule to restraints that are conditional upon a grant but extended it to restraints imposed by way of covenant. Ultimately, however, the most authoritative interpretation of Hall v Busst is that of Brennan J in Nullagine Investments Pty Ltd v The Western Australian Club Inc, viz:
In this country a court may hold invalid restraints on alienation imposed not only by conditions annexed to a gift or grant of an estate in land but also by covenants and agreements. But the grounds on which a condition subsequent to the gift or grant of an estate of freehold may be held invalid are not necessarily the same as the grounds on which invalidity strikes a covenant or agreement in an instrument which does not itself give or grant the estate the alienation of which is restrained. In the former case, as Dixon CJ said in Hall v Busst, “[t]he invalidity may be put on the ground of repugnancy to the grant or upon public policy or for that matter it may conceivably be attributed to an indirect effect of Quia Emptores.” In the latter case, the only basis for holding the covenant or agreement invalid is public policy.
>From this we are only left with the argument that, although not repugnant, such provisions may be against public policy. That is, although a contract creates rights between the parties and these rights may be choses in action, those rights are not created by gift, grant or transfer and the issue falls within the ‘latter case’.
Turning then to public policy, from what was said earlier, there would appear to be an argument that such prohibitions should not be upheld when they relate to debts or at least certain types of debts. It is also no doubt at odds with public policy to uphold a provision that seeks to control the power of a promisee to deal with the fruits of a contract once they are in the hands of that promisee.
More problematic, in terms of public policy, is the efficacy of a clause that seeks to prohibit the assignment of accrued rights under a contract, that is, where at the time of the assignment the obligation to perform has accrued (conditionally or unconditionally) but where the performance has not been tendered to the assignor. The situation may be that the assignor has paid the full contract price and now wishes to assign the right to counter-performance. In some cases, the actual assignment may be entered into before the counter-performance has accrued or been earned. Nonetheless, it is arguable that the prohibition should have no effect once the counter-performance (the right to which is the subject of the assignment) has been earned. However, perhaps the better view is that in such a case the prohibition should not be effective if its only purpose was to secure that performance which has now been received. Moreover, clearly, where the obligation to perform involves a payment of money and where that obligation unconditionally accrues, the right to payment is then a debt and any prohibition on the assignment of that debt would be rendered ineffective by reason of the public policy limitations already outlined. Outside of these cases, there may be good reasons for the obligor still wanting to prohibit the assignment even where the assignor has a conditional or unconditional right to the obligor’s counter performance.
Beyond the above points, it is difficult to come to any firm conclusions. However, if the view were adopted that such clauses are completely at odds with public policy and therefore ineffective, this would appear to be inconsistent with the position that personal contractual rights are not assignable when it is clear law that the distinction between personal and non-personal contractual rights depends on the intention of the parties. That is, Anglo-Australian law has not adopted a position that a right should be considered assignable despite the express personalisation of the right by the parties if there is either no material detriment to the obligor or if no reasonable person in the position of the obligor would object to the assignment. Therefore, if prohibitions are not enforceable, this rule could be circumvented by simply stating in the contract that the right in question is personal. Perhaps the better view is that the great weight of public policy limitations relate to debts, perhaps broadly defined, rather than other rights to performance under a contract. In this way it may be possible to maintain consistency with the personal rights rule which generally applies to obligations to perform acts other than the payment of money. Moreover, it may be that in Linden Gardens, Lord Browne-Wilkinson intended his comment that there was no market in choses in action to be limited to the type of transaction before him, namely, an assignment of a right to performance.
It needs to be kept in mind that an effective prohibition can at most merely render the assignment invalid as between the obligor and assignee. There is still a valid agreement between the assignor and assignee. Where the assignor cannot perform that agreement it will be in breach of contract. Moreover, a prohibition against assignment may not prevent the assignor from declaring itself a trustee of the benefit of the contract.
In addition, prior to determining the legal effect of a prohibition, it is necessary to determine its extent. This is part of the process of determining its meaning. For example, on construction a prohibition may only prohibit legal assignments, thus still allowing an equitable assignment. However, unless expressly stated, such a construction is likely to be rare. In practice an important issue has been whether the prohibition is directed only to future rights and not accrued rights, or perhaps only prohibits outright assignments and not assignments by way of security. In some instances a prohibition against assignment may, on construction, only prohibit subcontracting. Another possibility was suggested in British Gas Trading Ltd v Eastern Electricity plc, where Leggatt LJ said of a clause which stated that ‘neither party shall transfer or assign its rights or obligations hereunder without the prior approval of the other party’, that the concern of the clause was not with assignment but with novation. However, ultimately the meaning of such a clause is a question of construction and the point being made here is simply, if, in terms of meaning, the clause does not extend to the transaction in question there is no need to go on to look at its legal effect.
Another aspect of the meaning of a prohibition concerns its form. Prohibitions against assignment come in three principal forms and more than one may be used in any particular contract. Firstly, the parties may promise that they will not assign their rights under the contract (or only assign them to a limited group). This is usually expressed as the parties ‘shall not assign’ or the parties ‘shall not assign without the consent of the other party’ or ‘this contract is not to be assigned’. Secondly, a prohibition may be drafted to negate the power to assign. These may be expressed in terms that the parties ‘cannot assign’ or contract rights are ‘not assignable’ or ‘any assignment is void’ or the parties ‘shall not be entitled to assign’. Clearly there may be some fine lines between these first two groups and often a provision may combine them. Moreover, even if the words of promise are used, when read in the context of the contract as a whole the provision may amount to a prohibition. Third, a provision may simply state that in the event of any assignment the other party has a right to ‘terminate’ the contract. These may be coupled with a forfeiture provision. Where the assigned right is not an unconditionally accrued right, such a clause effectively gives power to the innocent party to stop the assignment by electing to terminate the contract. The forfeiture provision seeks to deal with any unconditionally accrued rights. Such provisions may be drafted in a form that suggests that contractual rights are automatically forfeited upon assignment. However, it is suggested, that the better construction is that the assignment merely gives the obligor a right to elect to terminate the contract (or to elect to forfeit), otherwise, the law would have provided the assignor (in the case of a termination) with a method of getting out of the contract by taking advantage of its own wrong.
Finally, a prohibition may not wholly prohibit assignment but merely require the consent of the obligor. Usually such consent is expressed in terms that it is not to be unreasonably withheld or such a condition may be specified by legislation in some instances. Generally, where the clause states that there is to be no assignment without consent with no reference to consent not being unreasonably withheld, the effect of the attempted assignment without consent will be the same as if the clause was a simple prohibition on assignment. There may be an exception if, on construction, it may be said that the obligor’s intention was to allow assignment subject to the right in the obligor to later elect to refuse to recognise the assignment. That is, where consent is meant to operate as a condition subsequent to the assignment rather than a condition precedent. Where consent is not to be unreasonably withheld and the assignor fails to seek consent in circumstances where the obligor could reasonably withhold that consent, the assignment will be ineffective as between the assignee and obligor. Where the assignor fails to seek consent in circumstances where the obligor could not have reasonably withheld that consent, it was suggested by Evans LJ in Hendry v Chartsearch Ltd, that the assignment may be effective. He distinguished the position with respect to leases of land where the view is taken that consent cannot be considered to be withheld if it is not asked for. Millett LJ on the other hand was prepared to follow the line of authority dealing with leases although he distinguished a commercial contract from a lease on the basis that as between the parties such a contract is not generally viewed as property but obligation. In his view it was ‘wrong in principle to entertain the hypothetical question whether the defendants could have objected to the assignment if they had been asked for it’. Henry LJ also took a different view to that of Evans LJ. He suggested that ‘prior consent never applied for is never withheld or refused (whether reasonably or otherwise)’.
If the conclusion made above that prohibitions on the assignment of contractual rights to performance are efficacious in the sense of being legally valid, then, like the meaning of such a provision, its legal effect must be determined by construction. In any given case, an attempted assignment in the face of a prohibition on assignment may give rise to the following effects:
1. The clause may invalidate the assignment but the agreement to immediately assign may still be valid so that the assignor is liable to the assignee for breach of contract in failing in its promise to immediately assign. In addition, the assignor may or may not be in breach of contract with the obligor.
2. The assignment may be valid but the assignor will be liable to pay damages for breach of contract to the obligor.
3. The clause may invalidate the assignment and in the circumstances of the case the agreement to immediately assign may also be invalid so that the assignor is not liable to the assignee for breach of contract in failing in its promise to immediately assign. In addition, the assignor may or may not be in breach of contract with the obligor.
4. The attempted assignment may amount to a breach of contract or repudiation giving the obligor the right to terminate performance and thus defeat an assignment even if the assignment were otherwise valid.
At present, although prohibitions on assignment have cropped up in a number of cases over time, the legal effect of such clauses has not been the subject of much detailed judicial analysis. Nevertheless, there is a history of such clauses being upheld in the sense of rendering a purported assignment ineffective. Moreover, it is suggested that the presumed intention of the parties in most cases is likely to be reflected in legal effect one and most of the following discussion focuses on that effect. This was the result in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd. The assignment in that case concerned the assignment of certain rights to performance under a contract. The relevant clause stated:
The employer shall not without the written consent of the contractor assign this contract ... [and] the contractor shall not without the written consent of the employer assign this contract, and shall not without the written consent of the architect ... sublet any portion of the works.
It was argued that the clause had the legal effect set out in two above. This was rejected in favour of legal effect one. Lord Browne-Wilkinson (with whom the other Law Lords agreed) said:
[A] prohibition on assignment normally only invalidates the assignment as against the other party to the contract so as to prevent the transfer of the chose in action: in the absence of the clearest words it cannot operate to invalidate the contract as between the assignor and the assignee and even then it may be ineffective on the grounds of public policy .... [T]he existing authorities establish that an attempted assignment of contractual rights in breach of a contractual prohibition is ineffective to transfer such contractual rights .... If the law were otherwise, it would defeat the legitimate commercial reason for inserting the contractual prohibition, viz to ensure that the original parties to the contract are not brought into direct contractual relations with third parties.
The result in the case was that the prohibition was intended to invalidate any tripartite assignment, that is, an assignment that does not only create a relationship between the assignor and assignee but also a relationship between the assignor, assignee and obligor. However, the contract between the assignor and assignee was valid and breached because the assignor had failed to perform its promise to immediately assign. Finally, despite Lord Browne-Wilkinson’s reference to clear words being necessary to invalidate the contract between the assignor and assignee, it is difficult to see how the transaction between the assignor and obligor can in any way impact upon the efficacy of the contract between the assignor and assignee except where some public policy issue renders the contract of assignment unenforceable or otherwise illegal. However, Lord Browne-Wilkinson did note that even with clear words such a provision could be against public policy.
What remains unclear from the decision in Linden Gardens is that Lord Browne-Wilkinson made no statement as to whether the assignor was liable to the obligor for breach of contract in attempting to assign its rights under the contract other than what may be implied from his statement that legal effects two and four are unlikely to ever represent the intention of the parties. In practice, of course, clauses can be drafted to ensure that a purported assignment in the face of such a prohibition is a breach of contract, however, there is a real issue as to the position where that is not the case. As regards leases, the position appears to be clear, an assignment will amount to a breach of contract. However, in the case of a lease the assignment is effective. This issue was addressed by Millett LJ in Hendry v Chartsearch Ltd. That case concerned a clause stating that the relevant party shall not be ‘entitled’ to assign. It was not like the clause in Linden Gardens that was in the form of a promise not to assign. Millett LJ said that a clause must take effect according to its tenor. He thought the assignment was effective as between the assignor and assignee but was ineffective to create a breach of contract between the assignor and obligor. As between assignor and obligor it was simply without effect. It followed that there was no tripartite assignment binding the obligor. Earlier in R v Chester and North Wales Legal Aid Area Office (No 12), a case involving a prohibition in the form that the relevant party ‘shall not assign’, (a promise not to assign) Millett LJ said, in concluding that the prohibition also prevented equitable assignments, that ‘equity will not enforce the performance of an obligation [that is, a promise to assign] which constitutes a breach of a prior contract with a third party [that is, the obligor]’. It is clear that Millett LJ was alive to the distinction between a promise not to assign and a clause that negated any power to assign. In Hendry, he noted that a prohibition need not take the form of a convenant not to assign or reserve a power to treat an assignment without consent as a repudiatory breach of contract. It was sufficient, he thought, if the clause was in a form that disentitled a party from assigning. However, ultimately it would appear that he was of the view that no matter what form a clause takes its effect is to render any assignment ineffective.
If the clause states that a party ‘shall not assign’ its rights, that is, a promise not to assign, and if it is thought that such a clause prevents any attempted assignment from being efficacious (as was held in Linden Gardens), then how can it be said the assignor has breached its obligation to the obligor, because the end result is that it has not assigned the contract? However, perhaps the more logical result is that an attempted assignment in the face of a ‘promise not to assign’ would be a valid assignment but would put the assignor in breach of contract with the obligor. On the other hand, an attempted assignment in the face of a clause stating that the assignor ‘cannot assign’ would render the attempted assignment ineffective, but would not create a breach of contract between the obligor and assignor as there is no breach of promise. The distinction here may be that a clause stating that a party ‘cannot assign’ renders the contractual right personal and not capable of assignment, whereas a mere ‘promise not to assign’ amounts to a personal assumption of obligation not to do that which one would otherwise be empowered to do.
An issue which then arises is whether the law should draw such a fine doctrinal distinction between a ‘promise not to assign’ and a clause preventing assignment, that is, a true prohibition on assignment. Arguably, if the legal effect of a provision is dependent on construction, then the distinction is a real one and may represent the intention of the parties. It is this distinction that in fact would allow for the different legal effects set out in legal effects one and two above. In addition, as noted above, whether or not a right is personal is a matter of intention and arguably there is not much difference between the designation of a right as personal and an express provision negating the power to assign. The designation of a right as personal is not, however, analogous to a promise not to assign. Moreover, there does not appear to be any authoritative decision which has held that an attempted assignment of a right, which was in turn determined to be personal, resulted in the assignor being liable to pay damages to the obligor for breach of contract by reason of the attempted assignment. Thus, arguably, this distinction is in fact already being drawn.
In addition, it is not possible to characterise a chose in action in the form of a contractual right to performance without taking into account the intention of the parties. The terms of the contract mould the characteristics of the chose in action. Therefore, if the parties state that a right is personal or incapable of assignment, then such provisions define the chose in action so that its non-transferability flows from an inherent flaw in the chose. Thus, although it is no doubt correct to suggest that contract operates through promises, it arguably does not follow that any prohibition on assignment, no matter how it is drafted, must amount to a mere promise not to assign. This would no doubt be the case if a prohibition only operated as a matter of contract, but arguably, it is not the case where the prohibition is intended to characterises the chose.
This is an important point which can easily be overlooked. For example, in Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd, the court approved a statement from Untermyer J in Sacks v Neptune Meter Co, where he suggested that prohibitions on the assignment of contractual rights did not impeach the rule against restraints on alienation because such provisions merely condition the obligation to perform rather than the right itself. That is, because the contractual restraint conditions the obligation to perform it does not affect the alienability of the right. The result of this analysis would appear to be that the right may continue to be assigned but the obligor has a right to elect to continue to perform to the assignor.
One can see the logic in this explanation from a contract perspective. However, what appears to lie at the heart of this explanation is the view that it is possible to characterise a contractual right divorced from its correlative obligation, and that contract may be used to inhibit transferability as a matter of contract law but cannot change the inherent characteristics of a right of property as a matter of property. Thus, if a right of property has the characteristic of being inherently transferable, the parties to the contract may inhibit that as between themselves as a matter of contract, but this does not change the fact that the right has this inherent characteristic. It is suggested that this explanation cannot be sustained for the reasons that follow. However, before turning to those reasons, it should be noted that the court in Devefi, although citing the decision of Untermyer J, did not appear to follow that analysis through to its logical conclusion as stated above because in the end they concluded that the assignment was ineffective because ‘there was no subject matter to which the purported assignment ... could attach’. This would appear to recognise that the prohibition there robbed the subject right of its transferability.
Turning then to the reasons for the above conclusion: Firstly, as to the right and its correlative obligation, it is not possible to characterise the right to some contractual obligation divorced from the obligation itself. The fact that the personal nature of a right depends upon the construction of its correlative obligation (taken in the context of the contract as a whole) shows that there is a relationship between the right and the obligation that cannot be separated. That is, whether or not a right is personal depends upon whether the obligor intended to perform the obligation only for the benefit of the other party to the contract. This was in fact admitted by Untermyer J when, after stating that the restriction is imposed on the duty to perform, said that the ‘restriction then becomes a condition of the acquisition’.
Secondly, as to intention and the characterisation of rights as choses in action, although the issue as to whether or not a right is property is a matter to be determined by those principles and policies that determine the existence of property, it does not follow that the intention of the parties to a contract is irrelevant as regards the characteristics of that right so far as its nature as a chose in action is concerned. When a right owes its existence to an agreement between parties, it must be correct that the contract itself can define the characteristics of that right both in terms of contract and property. Therefore, it is not only impossible to divorce a contractual right from its correlative obligation, it is also not possible to divorce the alienability of that right from the correlative obligation.
This can be demonstrated by looking at the genesis of the rule that prevents the assignment of personal contractual rights. If the institution of the assignment of choses in action was in part driven by the needs of commercial people, then why have a rule preventing the assignment of personal contractual rights, and why base the characterisation of a right as personal on the intention of the parties? Clearly, greater assignability would have been promoted by a rule that determined assignability by reference to whether or not a reasonable person in the position of the obligor would object to the assignment, and this in turn could be tested by reference to any material change in the circumstances of the obligor by reason of the assignment. It may be that originally, the commercial needs driving assignment were limited to debts which were not considered personal, thus leaving contractual rights to performance in the ‘too personal’ basket. At that time though, the notion that a right was ‘personal’ was different to the notion that we have today that prevents the assignment of a personal contractual right. Historically, attaching the label ‘personal’ to contractual rights was seen as part of the inherent nature of such rights rather than as a matter that falls to be determined by the construction of the contract. It is therefore suggested that the explanation for the personal rights rule does not flow from some vague notion of upholding party autonomy or freedom of contract. The result flows from the institution of assignment itself. An assignment involves a transfer of property. Legal transfers are governed by the nemo dat rule. The reason why a contractual right designated as personal under a contract cannot be assigned is because the result would be that the assignor would be assigning a right different to the one that he or she possesses, which is at odds with the nemo dat rule. That is, the intention of the parties as expressed in the contract is not merely shaping contractual rights in their character as personal rights, but also in their character as choses in action. The legal notion of transfer, which is the essence of an assignment of a chose in action, dictates the existence of the personal rights rule with the result that the parties can rob a right of its transferable character.
It may be that the point Untermyer J was really expressing was no more than that, although the parties to a contract may render a right incapable of transfer, this does not prevent the ‘assignor’ dealing with the subject matter of the contract once it is in the hands of the assignor as the assignor would then be transacting in new and different rights.
Finally, a further problem with this explanation is that it appears to suggest that the presence of a prohibition allows the assignor to transfer title to the right to performance without transferring the actual right to performance, that is, the chose or thing as distinct from the title to the chose or thing. This result can be achieved as between the assignor and assignee as a matter of contract, but it cannot be achieved from the perspective of personal property because unlike tangibles, where title and possession can be vested in different people, the nature of contractual rights as choses in action does not allow a transfer of title without a transfer of the actual right to performance. Moreover, if it was possible to separate the title from the thing or chose, then arguably the rule that prevents the assignment of personal rights is misconceived. That is, the existence of a personal contractual right would not prevent the assignor assigning the title to that right, because in all instances he or she could argue that the obligation to perform remained an obligation to the assignor. An assignment of a contractual right involves a transfer of both the title and the thing or chose and this is why an assignee can call for performance. In the case of personal rights to performance, what may be assigned, subject to overriding public policy concerns, is the future secondary right to damages, which is a distinct chose in action. When a right is personal it is simply inalienable and the doctrinal inability to separate the title from the chose cannot be drafted around even by the assignor and obligor.
The above distinction between promises and prohibitions provides an analytical way forward. Clauses that negate the power to assign and contracts that on construction (express or implied) contain personal rights have the effect of robbing the chose of its characteristic of transferability. Clauses in the form of promises not to assign operate merely at the level of contract, leaving the obligor with a remedy of damages if the other party to the contract assigns the subject right.
There are, however, arguments that a distinction between promises not to assign and true prohibitions on assignment should not be drawn. Unless very well advised, contractual parties themselves are unlikely to appreciate this distinction for it to represent their presumed intentions. In addition, in many cases the language of promise and the language of prohibition may be difficult to distinguish and both may appear in a provision. As already noted, in Devefi, where the court clearly recognised the distinction between promises and prohibitions, a clause that on its face encapsulated a promise not to assign appeared to be construed by the court, when read in light of the contract as a whole, as a prohibition. Moreover, the issue here is analogous to that arising in the case of options. An option may be explicable either on the basis of an offer coupled with a contract not to revoke or as a conditional contract. Logically, a revocation of an option under the irrevocable offer theory would still be effective (as there is only a promise not to revoke), but would amount to a breach of contract not to revoke, whereas such a revocation under the conditional contract theory would be totally ineffective and would not amount to a breach of contract. However, in Goldsbrough Mort v Quinn Isaacs J, who appeared to prefer the irrevocable offer theory, said that a revocation was nevertheless ineffective and in any case, the court could order specific performance. In his view, the revocation was ineffective at law. However, at another point, he did state that what was sold was the option and not merely the promise to give an option, that is, the subject matter of the contract and not merely the contractual right. O’Connor J was also of the view that no matter what theory was used, the court could order specific performance. That is, in his view, whether or not the revocation was valid at law giving rise merely to a right to damages, equity would still order specific performance making the revocation ineffective. This would suggest that fine distinctions, which may be drawn from the express language of a contract, will not be drawn if they would defeat the purpose of the transaction or provision.
Another example, but pointing in the opposite direction, is the decision in Cowell v Rosehill Racecourse Co Ltd. In this case, on the accepted evidence that a contractual licence contained a promise not to revoke, it was held that a revocation was nevertheless effective as the licence was not coupled with a grant. The result was that the licensor was liable in damages for breach of contract. It is unlikely that the High Court would have come to a different conclusion if the licence was expressed as ‘irrevocable’. Again, however, as with options, this result is informed by the context of the subject matter. Thus, no one would argue that the ratio of Cowell’s case necessarily applies to documentary credits so as to make an irrevocable documentary credit (which is simply stated to be irrevocable) revocable upon the petition of the buyer.
Finally, it may be noted that the court in Linden Gardens, which was a case involving a promise not to assign, did not appear to draw the distinction between a promise and a prohibition. This must represent the position in England for the time being, and although it is at this point that the decision in Linden Gardens appears to differ from the decision in Devefi, where the distinction was recognised, the result in Defevi shows that in practice it is a distinction that will rarely be drawn as it will rarely represent the intention of the parties. That is, unless there are clear words to the contrary, the intention behind such a provision is to invalidate any attempted assignment. In short, such provisions, whether drafted as promises or true prohibitions, are intended to characterise the contractual right as a chose in action and to rob it of its transferability.
Two questions then arise. Firstly, is it the case that no matter how a prohibition is drafted, from a contractual perspective will it be sufficiently promissory to give rise to a breach of contract by the assignor vis-à-vis the obligor by reason of the attempted assignment? Secondly, if the answer to the first question is in the affirmative, then how is it possible to distinguish prohibitions on assignment from personal contractual rights given that an attempted assignment of the latter does not appear to result in a breach of contract giving rise to an obligation to pay damages? A delegation of a personal obligation is of course different, as that would amount to a defective performance and might evidence a repudiation. Often, attempts to assign personal rights arise in the context of the assignor selling a business or otherwise ceasing to exist with the result that the obligor is excused from performance. Any breach or repudiation flows from the assignor’s conduct in no longer performing its obligations under the contract. If these obligations are fully performed the obligor is simply excused from further performance by reason of the assignor having no further interest in the contract.
In the case of a promise not to assign, it will not be difficult to imply an obligation that the parties will not attempt to assign. This would simply flow from a co-operative construction of the promise. If that is right, then the attempt to assign gives rise to a breach of contract, making the assignor liable in damages, to the obligor. Such damages will be nominal because, as the weight of authority suggests, the assignment will be ineffective so that the obligor has suffered no substantial loss.
There may also be an argument that a clause in the form that the parties ‘cannot assign’ (a prohibition) may still imply a promise not to attempt to assign giving rise to an action for breach if such an attempt is made. If that is not the case then the law is straightforward: an attempted assignment in the face of such a prohibition or in the face of a contract containing personal rights is ineffective and does not give rise to a breach of contract.
If this is not the position then a distinction needs to be drawn between such prohibitions and personal contractual rights. That is, if an attempted assignment in the face of a prohibition gives rise to a breach of contract, this needs to be distinguished from an attempted assignment of a right that is construed to be personal, as the latter does not appear to give rise to a breach of contract. It may be that a difference arises in the fact that a right is generally found to be personal by virtue of construing the entire contract. That is, the personal nature of the right is usually implied by construction rather than being found in an express provision. Moreover, it should be noted that this process of construction determines whether the right is personal rather than whether it is intended to be assignable. This may dictate that any attempted assignment of such a right would not amount to a breach of contract as it is difficult to imply from this a promise not to attempt to assign.
What then of an express provision making a right personal? On one view, this should be subject to the same analysis above as regards personal rights implied by construction, because it addresses the personal nature of the right rather than expressly addressing assignability. However, perhaps when an express personal rights provision is incorporated into a contract, it is reasonable to conclude that the contracting parties would see the relationship between this and a true prohibition. What other reason could there be for making a right expressly personal? In fact, often a clause will state that rights are personal and then go on to state that rights are not assignable. If that is right, then where the right is made personal by reason of an express provision, then a right to damages should flow from an attempted assignment, if such a right to damages also flows from an attempted assignment in the face of a true prohibition. If it is possible to imply a promise not to attempt to assign in the latter, it must also be possible to similarly imply it in the former.
Strictly, however, there is no distinction between the effect of non-compliance with an obligation that is express and one that is implied. That is, even if the existence of an obligation is implied by construction, its existence as a contractual obligation must be because it is a term of the contract which gives rise to a right to damages upon breach. Thus, whether a right is personal by reason of an express provision or implied by construction, the results that flow from an attempted assignment should be the same. If there is to be a difference in the way such personal rights are to be treated, it must ultimately lie in adopting the position that it is easier to imply an obligation not to attempt to assign where the personal nature of the right is the subject of an express term than where the personal nature of a right is implied by construction. In any case, since the assignment is ineffective, the damages of the obligor are only going to be nominal and, in fact, it would be difficult in most cases to identify any loss.
Finally, something must be said about effects two to four. At the outset, since the legal effect of such provisions depends on construction, it is possible to have any number of possible effects. Nevertheless, as regards legal effect two, it would be rare for a simple prohibition to be intended to have this effect — that is, because it would need to both prohibit assignment and at the same time envisage it. Legal effect two generally requires the courts to place much more emphasis on the distinction between prohibitions and promises not to assign than is currently the case. Perhaps one instance where this might occur is where the clause merely prohibits assignment without consent, and where the purposes of the obligor are best served by recognising the initial transferability of the chose subject to a right in the obligor to later elect to deny the assignee the relevant benefit. However, if that is the correct construction — that is, if the reference to ‘consent’ in the prohibition is really just a right to elect to not recognise the right vested in the assignee — then the initial attempted assignment could not amount to a breach of contract. To achieve legal effect two, the contract would need to allow for assignment but at the same time state that certain assignments, though valid, would nevertheless amount to a breach of contract. Another way legal effect two could come about is if a clause merely gives the obligor a right to terminate the contract upon assignment and it does not do so. Here the assignment may be valid but there may still be a breach of contract by the assignor. A similar result may flow from a peculiar fact scenario. For example, if the owner of land upon which there exists an ice works enters into a contract with a neighbour to supply ice for a period of years, there is no doubt that the owner of the land still has a right to sell his or her land. The contract for the supply of ice does not act as a prohibition on such a sale (assignment). However, the effect of the sale may be to repudiate the supply contract, making the owner liable in damages for breach of contract.
Not much needs to be said about legal effect three as most of the issues raised by it have been dealt with above. The only outstanding issue is the efficacy of the contract between the assignor and assignee, and all that needs to be said about that is that in any given case the assignor may be protected from an action in breach of contract if the contract between the assignor and assignee is unenforceable, or if the assignor only promised to assign to the extent that he or she was capable of doing so.
As regards legal effect four, whether or not an attempted assignment may give rise to a breach of contract even though the assignment itself is ineffective has already been covered. However, it may be noted that both Lord Browne-Wilkinson in Linden Gardens and Millett LJ in Hendry v Chartsearch Ltd, suggested that an assignment or attempted assignment in the face of a prohibition (whether promisory or prohibitory) will not of itself amount to a repudiatory breach of contract. There is some strength in the suggestion that if the assignment is not valid there cannot be a repudiatory breach. Moreover, the fact that damages will always be nominal would point to the conclusion that any breach is not a breach of condition, a sufficiently serious breach of an intermediate term or a repudiation. In addition, it would be difficult to identify a repudiation when the assignor is merely dealing with its rights. Nevertheless, since the issue of repudiation is dependent upon the facts of each case, and given that the terms of a clause may state that an attempted assignment will amount to a repudiation, then this possible effect cannot be simply written off. Finally, the possibility of a court finding a repudiation must be increased if the right in question is one of those rare instances where the burden is also transferred, because here there would be evidence that the assignor was, by its conduct, evincing an intention to be no longer bound by the contract.
A refinement of this issue has been suggested by the authors of Meagher, Gummow and Lehane’s Equity Doctrines and Remedies. The authors suggest that in determining the effect of a prohibition it may be important to determine whether the prohibition amounts to a condition, warranty or intermediate term. The argument put forward is that if a prohibition merely amounts to a warranty, then although the assignor would be liable in damages for breach of contract to the obligor, this construction would evidence that the obligor did not place sufficient importance on the clause to prevent the assignment itself being upheld. In addition, even where the clause is construed as a condition, the efficacy of the assignment will only be impaired if the obligor elects to terminate its contract with the assignor for the breach. With respect, the flaw in this reasoning is simply that the tripartite classification of terms is only relevant in determining whether or not there exists a right to terminate. It has nothing to do with the efficacy of the assignment except to the extent, as noted above, that an election by the obligor to terminate its contract with the assignor for breach or repudiation may extinguish the assignee’s rights if those rights have not unconditionally accrued by the time of discharge. It follows that the tripartite classification would be important to an obligor if a mere promise not to assign did not of itself prevent the assignment and perhaps this is the context in which the authors intended their remarks to operate.
The general position appears to be that a prohibition exists for the benefit of the obligor and neither the assignor (or, anyone claiming through the assignor) nor arguably an assignee can raise it to defeat an assignment. The former is uncontroversial. Clearly the assignor and anyone claiming through the assignor cannot raise the prohibition to defeat the assignment because of the valid agreement between the assignor and assignee. The latter, that is, that one assignee cannot raise the presence of the prohibition against another assignee, is more problematic.
Before moving on, it should be noted that the issue here does not concern the efficacy of the assignment as between the assignee and obligor. Clearly, the weight of current authority dictates that an assignment in the face of a prohibition is of no effect as between the assignee and obligor. Unless there are clear words to the contrary, this result is not dependent on the obligor electing to avoid the assignment; the result flows automatically from the prohibition. This is its intended effect. It should then follow that generally there can be no true priority dispute between an assignee who takes an assignment with the consent of the obligor and one who takes an assignment in breach of a prohibition, as the latter gets no proprietary interest vis-à-vis the obligor and therefore cannot give a valid notice to the obligor. Even if an analysis allows for an assignee, who takes in breach of a prohibition, to obtain an interest under the contract which would therefore allow it to give notice, this will not be worth much if the obligor is not under any obligation to that assignee. The issue that is the concern of this section is one of accounting as between assignees; and the real practical issue arises where an assignee taking with the consent of the obligor is paid by the obligor, and an assignee who has taken in breach of a prohibition wants to claim part of that payment from the first assignee.
There are perhaps three ways to approach giving an answer to this issue. The first is to view a prohibition as purely contractual so that only the party to the contract, for whose benefit the provision is provided, can enforce the provision. This explanation can only be accepted if a prohibition, no matter how it is drafted, only operates as a matter of contract. This was rejected above. However, if this explanation were correct then the answer must be that no assignee can raise the prohibition to defeat another assignee.
Secondly, and related to the first explanation, is that being merely contractual, it characterises the obligation to perform and does not impact on the character of the assignor’s contractual right as a piece of property having the characteristic of being transferable. Therefore, the right remains transferable as a chose in action but gives the obligor a right to elect not to perform for the benefit of the assignee. This explanation of prohibitions was also rejected above. However, if correct, the result as between assignees must again be that each assignment is effective and the prohibition cannot be raised by one assignee against another.
The third explanation, and it is suggested the best explanation, is that the intention of the parties as expressed in the contract can define contractual rights in their character as choses in action; and in most cases the obligor is only concerned to deal with assignability as between itself and the assignor, so as to prevent any relationship being formed between the obligor and an assignee without the consent of the obligor. In such a case, if the right would inherently carry the characteristic of being transferable, it will continue to do so for other purposes and therefore cannot be raised by competing assignees. However, in any given case the obligor may intend to rob the right of transferability for all purposes, in which case it can be raised by competing assignees. These two results cannot be accommodated within a contractual analysis of prohibitions.
There is no reason to see assignability as an all or nothing issue. Such a result is a far too simplistic analysis of property rights. It is suggested that the non-assignability of a chose in action (that would normally be transferable) only goes so far as is intended. This is why a prohibition may only limit assignment for some purposes, or may limit assignment only while the assignor has not earned the relevant counter-performance, or may limit equitable assignments but not legal assignments or vice versa, or may limit assignment without consent.
One important authority which, it is suggested, clearly reflects the third explanation and shows the weakness in the other explanations is the decision in Burck v Taylor. A much simplified version of the facts in this case is that a construction contract (for a new capital building in Texas) contained a promise not to assign without consent. The assignor, with consent, assigned an interest in the contract to an assignee and later, without consent, assigned an interest to a second assignee. The first assignee took over the burden of the contract and completed the work and was paid the contract price. The second assignee then claimed against the first assignee for a part of the contract price. The Court held that the assignor could not assign any right without the consent of the obligor and all the second assignee obtained was a right against the assignor. Thus, only the first assignment was valid and, on completion of the work by the assignee, it alone was entitled to the contract price even though the obligor made no complaint about the second assignment. It is suggested that the contract based explanations cannot explain this result. If the prohibition was only for the benefit of the obligor and the obligor made no protest, the subject right must have been assigned for the purposes of relations between the assignees.
Later in Fortunato v Patten, another case involving a promise not to assign without consent, it was held that such a provision is solely for the benefit of the obligor and cannot be raised by competing assignees. The decision in Burck was distinguished on the basis that:
[It] dealt with a contract made by an individual with the state of Texas, which contained an absolute, unqualified covenant that it should not be assigned .... [whereas in the present case] the covenant is that, if the contract, or any of the moneys due under it, are assigned without consent, no claim can be asserted by virtue thereof .... [Here] no absolute assignment has been made of the contract, but all transfers were of moneys due thereunder as collateral to secure the payment of a debt. There is a wide difference between assigning moneys due under a contract, and an absolute assignment of the contract itself, as the latter act disturbs that relation of personal confidence which exists between one desiring work done that requires a high order of skill and intelligence and the contractor he may have selected as possessing these necessary qualifications.
On one view this passage draws a distinction between the assignment of a right to performance and an assignment of the fruits of a contract, and in the case of the latter the prohibition cannot be raised by competing assignees. However, in both cases the right assigned was a right to a payment under the contract and it was assigned prior to it being earned. Thus, both cases concerned the assignment of rights to performance, the only difference being that the above passage from the decision in Fortunato addresses assignments by way of security. Neither case concerned the issue of a prohibition seeking to deal with the fruits of the contract once those fruits are in the hands of the assignor, nor an assignment of only unconditionally accrued rights to payment.
On another view the decision in Fortunato appears to suggest that in Burck, the first ‘assignee’ was taking over the contract, in the sense of taking over the assignor’s obligations to the State and not the assignor’s obligations to any other ‘assignees’. Thus, what was probably intended was a novation. It would follow that if the contract was novated to the first assignee, then clearly the second assignee could have no interest in that contract as the assignor had no interest to give the second assignee and therefore it did not matter that the obligor did not protest the second assignment.
The facts in Burck were that the original ‘assignment’ to the first assignee was only a three-quarter interest in the contract, and the second assignee was intended to take the one quarter interest left vested with the assignor. The Court made the point that the second assignee may have had a claim against the assignor for any monies it had earned under the contract; but, as it was the first assignee who in fact did all the work and earned the entire contract price, the assignor earned nothing against which the second assignee could make a claim. The decision of the Court on this point seems akin to the position of a trustee in bankruptcy taking over the contract and appears to be based on principles of assignment rather than novation. The Court stated that:
[W]hen the contract, being wholly executory, is transferred to a third party, who is accepted by the promisor in lieu of the original contractor, such third party enters upon the performance of the contract free from any disposition of the profits made by the original contract before the substitution.
It is difficult to see how the Court could have had novation in mind if the effect of the transaction was that only three-quarters of the rights in the contract were ‘transferred’ to the first ‘assignee’ but 100% of the burden, and yet at the same time take the view that if the assignor performed then the second assignee may have a right to payment in respect of that performance. If 100% of the burden was novated to the first assignee, then any act of the assignor could not be an act in performance of the contract. In the result, if full effect is to be given to all the statements made in the judgment then assignment and not novation appears to be a better explanation.
More importantly, the Court in Burck expressly dealt with the submission that the prohibition was only for the benefit of the obligor and found, on the facts, that that was not the case because the clause in question did not merely involve a promise not to assign, but rather it dealt with the effects of such an assignment and stated that such a transfer shall ‘annul the contract’. Thus, what really occurred in Burck was, putting aside the assignment of burdens point, that the prohibition which was incorporated into the contract sought to completely characterise the relevant right both as a matter of contract and as a chose in action, so that unless consent was obtained it did not have its inherent characteristic of transferability, so that an ‘assignee’ could not (as against another assignee) claim it was transferable even where the obligor made no formal objection to the transfer. Here the obligor did not intend to characterise its obligation (and the correlative right) only as between the obligor and assignor. It intended to maintain that character even as between competing assignees, whereas this was not the intention in Fortunato. This is not, however, a case of the obligor crossing the line and seeking to regulate relations between an assignor and any assignees. The obligor was merely seeking to regulate the position between it and any assignees. It is difficult to see how these variations can be achieved by adopting the view that prohibitions merely operate through contract. Contract has a limited ability to benefit or burden third parties, and where this is required or is the result, then property is a legal concept better suited to explain such results.
This paper has sought to elucidate three main points. Firstly, that there is no general principle of public policy that would inhibit the general efficacy of prohibitions on assignment when the right assigned concerns a right to the performance of a contract. However, legal practitioners should be wary of placing too much reliance on prohibitions when the subject matter relates to debts and particularly trade related debts.
Secondly, it would appear to be the position that prohibitions, whether expressed as true prohibitions or promises not to assign, will usually be construed as intended to prevent the assignment occurring. If parties wish only to contract for a mere promise not to assign they should state this clearly.
Third, it has been suggested that the doctrinal efficacy of these prohibitions lies in recognising the role of the intention of parties as expressed in a contract to shape contract rights as choses in action and rob them of their inherent transferability.
 See Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225 at 235.
 For a discussion of the reasons why parties may want to prohibit or promote assignment; see Andrew McKnight, ‘Contractual Restrictions on a Creditor’s Right to Alienate Debts: Part 1’ (2003) 18 JIBL 1 at 3; Richard Epstein ‘Why Restrain Alienation?’ (1985) 85 Columbia L Rev 970 at 982.
 Although not discussed in this paper, generally, a contractual prohibition on assignment cannot stop the relevant property of a bankrupt vesting in the trustee in bankruptcy; see Krasner v Dennison  Ch 76 at 99 (Chadwick LJ). See further Grover Grismore, ‘The Effect of a Restriction on Assignment in a Contract’ (1933) 31 Michigan L Rev 299 at 311 and see Norglen Ltd v Reeds Rains Prudential Ltd  2 AC 1 and Gathercole v Smith  UKLawRpCh 61; (1881) 17 Ch D 1.
 Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd  1 AC 85.
 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 at 601. See also Broadcast Australia v Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (Lands) (2004) 204 ALR 46 at 51 (referring to the decision in Linden Gardens with apparent approval). See further Bruce v Tyley  HCA 34; (1916) 21 CLR 277 at 292 (Isaacs J) (approval of prohibition on sub-letting a contract).
 Don King Productions Inc v Warren  Ch 291 at 319 (affirmed  Ch 291).
 Devefi, above n1 at 234–7.
 Compare page 183.
 See, for example, Minister for Land and Water Conservation v NTL Australia Pty Ltd  NSWCA 149 paras 8, 19–22 (overruled on another point, Broadcast Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (Lands) (2004) 204 ALR 46); Australian Olympic Committee Inc v The Big Fights Inc  FCA 1042 paras 119–120; Westgold Resources NL v St George Bank Ltd (1998) 29 ACSR 396 at 415 (affirmed in Phillips Fox (a firm) v Westgold Resources  WASCA 85); Re Turner Corp Ltd (in liq) (1995) 17 ACSR 761 at 767; International Polymers Pty Ltd (in liq) v Custom Credit Corp Ltd (in liq) (1994) 8 ANZ Insurance Cases 61–234 at 76,634; Caboche v Ramsay  FCA 611; (1993) 119 ALR 215 at 232; Modern Weighbridge and Scale Services Pty Ltd v Australian National Railways Commission (SA Supreme Court, Millhouse J, 6 September 1995). See also Vangale Pty Ltd v Kumagai Gumi Co Ltd  QSC 137 paras 56–67. For an earlier authority see, Specialised Transport Pty Ltd v Dominiak (1989) 16 NSWLR 657.
 Hall v Busst  HCA 84; (1960) 104 CLR 206 at 217. Earlier in The Commissioner of Stamp Duties New South Wales v Yeend  HCA 39; (1929) 43 CLR 235, a case concerning a stamp duty issue, the fact the contract contained a prohibition on assignment was not even mentioned by the Court.
 Caboche, above n9 at 232.
 Devefi, above n1 at 236.
 Reuthlinger v MacDonald  1 NSWLR 88 (affirmed in Reuthlinger v MacDonald (NSW Court of Appeal, Needham J, 20 October 1976)).
 Id (NSWSC) at 97. Compare Caboche, above n9 at 226–28, 231–32 where Gummow J accepts that the restraints on alienation doctrine applies to both realty and personalty but distinguishes it from contractual restraints relating to debts and choses in action.
 Id (NSWSC) at 99–100.
 The minority (Kitto & Windeyer JJ) construed the agreement as only granting a right of pre-emption.
 Hall, above n10 at 217.
 Id at 218. Compare Caldy Manor Estate Ltd v Farrell  1 WLR 1303 (in which the court distinguished a covenant whereby a right of re-entry is provided for upon breach of the covenant so as to destroy the grant from a provision that would not destroy the transfer to the third party but make the covenantor liable to the covenantee in damages; the doctrine of repugnancy applied to the former). For an example of where a restraint was upheld because it was not so indefinite and imposed for a valid collateral purpose; see Reuthlinger (NSWSC), above n13 (affirmed in Reuthlinger (NSWCA), above n13 and see Elton v Cavill (No 2) (1993) 34 NSWLR 289.
 Hall, above n10 at 223, 225.
 Reuthlinger (NSWSC), above n13 at 100 (affirmed in Reuthlinger (NSWCA), above n13.
 The situation is different where the transferor retains title in the subject matter of the contract by way of security or obtains an interest in the subject matter under some other contract. This is more likely to occur, though, in dealings with tangible property.
 Linden Gardens, above n4 at 106–7.
 See n76 below. There is a long history of such clauses being upheld in the context of hire-purchase agreements; see, for example, Wickham Holdings Ltd v Brooke House Motors Ltd  1 WLR 295.
 Linden Gardens, above n4 at 107.
 See Caboche, above n9 at 226, 232 (Gummow J).
 See, for example, UNIDROIT Convention on International Factoring, Article 6; United Nations Convention on Assignment of Receivables in International Finance, Article 11.
 Section 322 and note official comment (a).
 Sections 2–210, 9–406.
 The ‘repugnancy’ principle is not without its critics and it has been argued that the law should acknowledge that public policy underlies it: see Glanville Williams, ‘The Doctrine of Repugnancy’ (1943) 59 LQR 343, (1944) 60 LQR 69, 190; Merrill Schnebly, ‘Restraints Upon the Alienation of Legal Interests’ (1935) 44 Yale LJ 961, 1186, 1380. See further Ken Mackie, ‘Contractual Restraints on Alienation’ (1998) 12 JCL 255. See also Hall, above n10 at 217 (Dixon CJ) and Nullagine Investments Pty Ltd v The Western Australian Club Inc  HCA 45; (1993) 177 CLR 635 at 649 (Brennan J).
 Sacks v Neptune Meter Co 258 NYS 254 (1932).
 Id at 261–62.
 Devefi, above n1 at 234–7.
 The doctrine does not apply where what is given is a determinable interest such as a gift ‘to A until he alienates and then to B’, as opposed to a gift to ‘A but if he alienates then to B’; see Caboche, above n9 at 227 (Gummow J).
 Compare Ernest Weinrib, ‘The Juridical Classification of Obligations’ in Peter Birks (ed), The Classification of Obligations (1997) at 52–3; Peter Benson, ‘The Unity of Contract Law’ in Peter Benson (ed), The Theory of Contract Law: New Essays (2001) ch 4.
 See Yeend, above n10 at 241.
 Nullagine Investments Pty Ltd, above n30 at 649 (Brennan J).
 There may also be an argument that public policy should inhibit the efficacy of such clauses (whether relating to debts or not) when the obligor has no legitimate reason for preventing the assignment. If this is the case, then it should be similarly applied to the personal rights rule and perhaps determined by the rules governing restraints of trade – but query the relevance of that doctrine when the right would not exist but for the agreement of the parties and the assignor is not, by agreeing to the prohibition, giving up some pre-existing freedom. See Oakdale (Richmond) Ltd v National Westminster Bank plc  1 BCLC 63; Australian Rugby Union Ltd v Hospitality Group Pty Ltd  FCA 823; (2000) 173 ALR 702 (affirmed  FCA 1040). At present, no such rule of public policy is applied to provisions which make contractual rights personal.
 Re Turner Corporation Ltd, above n9 at 767. See further Sir Roy Goode, ‘Inalienable Rights?’ (1979) 42 MLR 553. In Linden Gardens, above n4 at 107 Lord Browne-Wilkinson expressed no concluded view on this point, but his statement to the effect that there are no public policy arguments against restrictions on the transfer of tangible property other than land would appear to be against it.
 In the case of a provision that seeks to forfeit accrued rights upon any attempted assignment, it may be that such a provision would attract the jurisdiction of equity to relieve against forfeiture; see Devefi, above n1 at 237. But query the form such relief may take. In some cases, perhaps it could be by way of specific performance whilst still invalidating the attempted assignment. In others, it could be by way of restitution of the payments made which earned the accrued right which is the subject of the forfeiture. However, it is perhaps more problematic where the performance earning the accrued right and which is the subject of the forfeiture is something other than the payment of money. In any case, there is the problem that what is being forfeited are contractual rights which, as between the parties are personal rights and arguably not property for the purposes of relief against forfeiture; see further Bysouth v Shire of Blackburn and Mitcham (No 2)  ArgusLawRp 79;  VLR 562 at 573–75 and compare Hodder & Tolley Ltd v Cornes  NZGazLawRp 20;  NZLR 876. Relief therefore would need to be based on some other head of jurisdiction, particularly if the contract had been terminated; see generally Tanwar Enterprises Pty Ltd v Cauchi  HCA 57; (2003) 201 ALR 359.
 See generally Grismore, above n3 at 306–7.
 See Goode, above n39 at 555 and see Linden Gardens, above n4 at 105–6 (Lord Browne-Wilkinson). The same reasons may not prevent a declaration of trust of such accrued rights because a trust does not generally provide the beneficiary with the same direct rights that an assignee has against the obligor. See also Restatement of Contracts 2d §322(2)(a) which states that unless a different intention is indicated a prohibition does not prohibit the assignment of a right to damages for breach of the whole contract or the assignment of contractual rights arising from the assignor’s complete performance of the contract.
 Fitzroy v Cave  UKLawRpKQB 124;  2 KB 364 at 368 (Collins MR); Tolhurst v The Associated Portland Cement Manufacturers (1900) Ltd  UKLawRpAC 45;  2 KB 660 at 673 (Collins MR); Davies v Collins  1 All ER 247 at 250 (Lord Greene MR). Compare George Keeton & Lionel Sheridan, Equity (3rd ed, 1987) at 229.
 For example, under the United Nations Convention on Assignment of Receivables in International Trade, an amount is fully earned when an invoice is issued; see UNCITRAL Analytical Commentary on the Draft Convention on Assignment of Receivables in International Trade, A/CN.9/489/Add 1, 22 May 2001 at para 27.
 However, many jurisdictions have statutory provisions prohibiting the assignment of certain unearned wages. Thus, even if a broad view is taken of ‘debts’, there will still exist examples of ‘debts’ that cannot be assigned or which may be the subject of a legitimate prohibition on assignment. There are no doubt other examples of unconditional obligations to pay, whether liquidated or unliquidated, and which may or may not constitute debts, where there exist legitimate reasons for prohibiting the assignment of the right to such payments, for example, bank guarantees; compare ICC Uniform Rules for Demand Guarantees Article 4 with the United Nations Convention on Independent Guarantees and Stand-by Letters of Credit Article 10. Therefore, the public policy considerations that limit the effectiveness of prohibitions seeking to stop the assignment of debts are probably limited to those trade debts that are used in receivables financing and perhaps debts used in other financing structures such as securitisation. Statutory provisions may also prohibit the assignment of other rights such as certain tenancies; see Burton v Camden London Borough Council  UKHL 8;  2 AC 399.
 One public policy consideration that may override a prohibition dealing with the assignability of a right to performance is that if the right to performance can in any way be used as security it may be that effect should not be given to the prohibition to the extent that it would prevent a party using that right as security. There appears to be no authoritative decision on this point. However, the current authorities appear to treat this issue as simply one of construction. Thus, a clause prohibiting assignment is likely to also prohibit a mortgage but perhaps less likely to inhibit charging the right. The current cases are collected and discussed in Angela Flannery, ‘Security Over Contractual Rights and Tripartite Agreements’ (2002) 13 JBFLP 179. Anyone wishing to advance this argument would need to keep in mind that a security may need to be enforced and this could result in an absolute assignment of the subject right which would defeat the clause. Moreover, an obliger may have good reasons why it does not want the assignor to use the subject right as security, for example, the obligor may not be set up to deal with such security.
 However, if the prohibition in question is one that is unenforceable as being against public policy, it would be necessary to have a rule that also prevents the attempted assignment being a repudiation of the contract because if it were a repudiation then the debtor will have an opportunity to terminate the contract and thus defeat the assignment to the extent that the assignment concerned rights that had only conditionally accrued prior to discharge and thus also defeat the public policy that sought to allow for the assignment.
 Even where the contract involves personal, skill or confidence, it has been said that a party may declare itself a trustee of the proceeds for the benefit of a third party; see Don King Productions, above n6. See also Re Turcan  UKLawRpCh 169; (1888) 40 Ch D 5. See further Spellman v Spellman  1 WLR 921 at 925 (Danckwerts LJ) compare at 928 (Willmer LJ); Pincott v Moorstons Ltd  1 All ER 513 at 516; Swift v Dairywise Farms Ltd  1 WLR 1177 at 1184. Ultimately, however, this is an issue of construction. The word ‘assignment’ is a word of wide import and can, in any particular context, be used to refer to any form of alienation; see Norman v FCT  HCA 21; (1963) 109 CLR 9 at 26 (Windeyer J). A prohibition that seeks to prevent such a declaration of trust may also be against public policy if it seeks to control the subject matter of the contract when that subject matter is in the hands of the trustee. Given the limited recourse a beneficiary has against an obligor, the public policy restrictions on such prohobitions may be wider than in the case of prohibitions on assignment.
 Spellman, above n48 at 925 (Danckwerts LJ), compare at 928 (Willmer LJ).
 See R v Chester and North Wales Legal Aid Area Office (No 12)  1 WLR 1496. Anyone taking the view that an equitable assignment only operates between the assignor and assignee is, however, more likely to find such a construction; see Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 at 11,518 (Sheller JA) and compare Gregory Tolhurst, ‘Equitable Assignment of Legal Rights: A Resolution to a Conundrum’ (2002) 118 LQR 98. The position as regards leases is different as prohibitions on the assignment in leases have a history of being restrictively construed; see Peter Butt, Land Law (4th ed, 2001) at para 1592 and most recently Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd  WASCA 11.
 See Linden Gardens, above n4 at 106 (Lord Browne-Wilkinson). See also R v Chester, above n50; Circuit Systems Ltd v Zuken-Redac (UK) Ltd  1 WLR 721 (affirmed on another point  2 AC 1); Herkules Piling Ltd v Tilbury Construction Ltd (1992) 61 BLR 107; Yeandle v Wynn Realisations Ltd (1995) 47 Con LR 1; Flood v Shand Construction Ltd (1996) 54 Con LR 125. See further ANC Ltd v Clark, The Times, 31 May 2000; Foamcrete (UK) Ltd v Thrust Engineering Ltd  BCC 221. Compare City of Omaha v Standard Oil Co (1898) 75 NW 895 at 896.
 Inter-Southern Life Insurance Co v Humphrey (1919) 84 So 625; Aetna Insurance Co v Smith, McKinnon & Son (1918) 78 So 289; Stokes v Liverpool & London & Globe Insurance Co (1925) 126 SE 649. As noted above there may be public policy considerations that deny efficacy to provisions that attempt to stop a person using their choses in action as security. See also Uniform Commercial Code §9–318(4). As to restrictive clauses in floating charges which are designed to secure priority, see William Gough, Company Charges (2nd ed, 1996) at ch 10.
 Such a construction is unlikely where there exists a separate provision dealing with sub-contracting; see Linden Gardens, above n4 at 103 (Lord Browne-Wilkinson); Helstan Securities Ltd v Hertforshire County Council  3 All ER 262. See also Re Griffin  UKLawRpCh 162;  1 Ch 408 (here the words ‘this receipt is not transferable’ on a deposit receipt did not prevent the fund from being the subject of an equitable assignment) and Anning v Anning  HCA 13; (1907) 4 CLR 1049 at 1067 (Isaacs J). See, further, Restatement of Contracts 2nd §322; Uniform Commercial Code §2–210(3).
 Unreported, English Court of Appeal, 18 December 1996.
 Given that a novation requires the consent of the obligor it is doubtful that one would usually need such a clause to provide protection against a novation.
 Often this limitation results from the nature of the subject right, for example, Tolhurst v Associated Portland Cement Manufacturers, above n43.
 See, for example, Linden Gardens, above n4; United Dominions Trust (Commercial) Ltd v Parkway Motors Ltd  1 WLR 719 (the result in this case was overruled in Wickham Holdings, above n25); Belize Motor Supply Company v Cox  UKLawRpKQB 189;  1 KB 244. See also Burck v Taylor  USSC 122; (1894) 152 US 634; Portuguese-American Bank of San Francisco v Welles  USSC 203; (1916) 242 US 7; Fortunato v Patten (1895) 41 NE 572; City of Omaha, above n51.
 See, for example, Wickham Holdings, above n24; Hendry v Chartsearch Ltd, The Times, September 16, 1998; Allhusen v Caristo Construction Corp (1952) 103 NE 2d 891.
 See, for example, Wickham Holdings, above n24.
 See, for example, in Devefi, above n1, the prohibition was in the form of a promise not to assign but in the context of the contract which involved the performance of various personal obligations, the court (at 237, 239) appeared to conclude that it had the effect of a true prohibition because earlier in their judgment (at 236) the court distinguished between a true prohibition and a promise not to assign. This distinction is discussed further below.
 See, for example, Hodder & Tolley, above n40 (combination of a promise not to assign and a forfeiture provision).
 See also Australian Rugby Union Ltd, above n38 at 735 (affirmed sub nom Hosptiality Group Pty Ltd v Australian Rugby Union Ltd  FCA 1040); Hodder & Tolley, above n40. See, further, Attwood & Reid Ltd v Stephens Excavators Ltd  NZGazLawRp 163;  NZLR 1332.
 See, for example, Hospital for Sick Children (Board of Governors) v Walt Disney Productions Inc  1 WLR 1055.
 See, for example, Cathedral Place Pty Ltd v Hyatt Australia Ltd  VSC 385.
 See Linden Gardens, above n4; New Zealand Payroll Software Systems Ltd v Advanced Management Systems Ltd  NZCA 316;  3 NZLR 1.
 See Australian Rugby Union Ltd, above n38 at para 100 (affirmed (2001) FCR 157).
 The Times, September 16, 1998.
 See Eastern Telegraph Co Ltd v Dent  UKLawRpKQB 65;  1 QB 835; Barrow v Isaacs & Son  UKLawRpKQB 192;  1 QB 417; McMahon v Docker (1945) 62 WN(NSW) 155. A lease creates an interest in land and it is not possible to wholly deprive the lessee of its ability to assign that property. The lessor may, however, take a covenant against assignment with a right of re-entry for breach. An assignment in breach of the covenant is effective to vest the legal title but that title is defeasible; Old Grovebury Manor Farm Ltd v W Seymour Plant Sales & Hire Ltd (No 2)  EWCA Civ 2;  1 WLR 1397; Williams v Frayne  HCA 16; (1937) 58 CLR 710 at 731 (Dixon J) (citing Williams v Earle (1868) LR 3 QB 739). If the lessor unreasonably refuses consent, the lessee may assign without it.
 Linden Gardens, above n4; Bawejem Ltd v MC Fabrications Ltd  1 All ER (Comm) 377.
 Clearly, a prohibition cannot affect an assignment of a right which occurred prior to the parties agreeing to the prohibition; see Foamcrete (UK) Ltd, above n51. This list also leaves aside the possibility that in any particular case the assignee may be liable in tort for inducing a breach of contract.
 Where damages are available, the normal principles governing damages for breach of contract and restitution for payments made would apply and it will be relevant to determine whether the assignment was by way of sale or security. Moreover, except where the assignee has already exercised a right to terminate the contract or perhaps except where the assignee has recovered damages for breach of contract, there may be a possibility that the contract between the assignor and assignee may still be recognised as an agreement to assign in the sense of a bilateral assignment between the assignor and assignee so that any property which is the subject of the assignment coming into the hands of the assignor is held for the benefit of the assignee; see Devefi, above n1 at 236. compare R v Chester, above n50 (Millett LJ).
 If a prohibition cannot impact on arrangements between the assignor and assignee and if a prohibition generally exists for the benefit of the obligor and may be overridden by consent, then if the obligor chooses to perform to and for the benefit of the assignee then this may amount to an implied consent and prevent the obligor being in breach of contract in not performing to the assignor, and, in the case of a legal assignment, the obligor would receive a good discharge. However, except where a prohibition has an express or implied consent provision incorporated in it, it may be questioned whether mere consent is sufficient. If the right in question is not transferable by reason of the agreement made between the assignor and obligor, then doctrinally, the only way to change this is by a formal renegotiation of the contract. See further Nokes v Doncaster Amalgamated Collieries Ltd  AC 1014 at 1018 (Viscount Simon LC).
 See, for example, Abbott v Philbin  UKHL 1;  AC 352,  1 Ch 27,  2 All ER 270; Siebe Gorman & Co Ltd v Barclays Bank Ltd  2 Lloyd’s Rep 142 at 160 (Slade J); Showa Shoji Australia Pty Ltd v Oceanic Life Ltd (1994) 34 NSWLR 548. See also notes 9 and 24.
 See, for example, In re Turcan  UKLawRpCh 169; (1888) 40 Ch D 5; United Dominions Trust, above n57 (overruled  1 WLR 295); Hospital for Sick Children, above n63; Helstan Securities Ltd, above n53 at 264–65; Reed Publishing Holdings Ltd v Kings Reach Investments Ltd (unreported 25 May 1983 Court of Appeal England); Linden Gardens, above n4. See also Brice v Bannister  3 QB 569 at 580–1 (Bramwell LJ).
 Linden Gardens, above n4.
 Id at 108. See also Burck v Taylor, above n57; City of Omaha, above n51. The principal English case to the contrary, Tom Shaw and Co v Moss Empires Ltd (1908) 25 TLR 190, was explained away as an example of a prohibition not being able to invalidate an accounting between assignor and assignee once the fruits of the contract are in the hands of the assignor – if this explanation was not acceptable Lord Browne-Wilkinson (at 108) said that Tom Shaw was wrongly decided.
 Linden Gardens, above n4 at 104 (Lord Browne-Wilkinson).
 See Bruce v Tyley, above n5. See further, Fidelis Oditah, Legal Aspects of Receivables Financing (1991) at para 8.7 at 260–61 and compare Roderick Meagher, John Dyson Heydon & Mark Leeming, Meagher Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, 2002) at para 6.465.
 Linden Gardens, above n4 at 104. The Restatement of Contracts 2d §322(2)(b) expressly gives the obligor a right to damages but also recognises the efficacy of the assignment.
 See Denham Bros Ltd v W Freestone Leasing Pty Ltd  QSC 307.
 MacDonald v Robins  HCA 5; (1954) 90 CLR 515 at 520 (Dixon CJ).
 See above n68.
 Hendry v Chartsearch Ltd, above n58.
 R v Chester, above n50.
 Id at 1501. See also Australian Olympic Committee Inc, above n9 at paras 119–120; Australian Rugby Union Ltd, above n38 at para 100 (affirmed (2001) FCR 157). See further New Zealand Payroll Software Systems Ltd, above n65 at para 22, suggesting that a purported assignment in the face of a prohibition was a breach of contract and the only question was whether it should be compensated for in damages or it should simply be held that the assignment never occurred. This is a confusing statement: if it constitutes a breach of contract it must give rise to a right to damages.
 See also Minister for Land and Water Conservation, above n9 at para 29.
 Fortunato v Patten, above n57. See also Hodder & Tolley, above n40; Attwood & Reid Ltd v Stephens Excavators Ltd, above n62 (query whether these two cases may be explained away on the basis that the prohibition only prohibited legal and not equitable assignments). See Specialised Transport Pty Ltd, above n9 at 662 (Young J); Devefi, above n1 at 236. See further MacDonald v Robins, above n81 at 520 (Dixon CJ).
 There is a line of American cases that have held that such a clause does negate the power to assign; see Grismore, above n3 at 305–6 and Sacks v Neptune Meter Co (1932) 258 NYS 254 at 262 (Untermyer J).
 The distinction and its validity are recognised in Devefi, above n1 at 235, but in that case it would appear that the court concluded (at 237) that the clause, which was in the form of a promise not to assign, when read in the context of the contract as a whole was intended to have the effect of a prohibition rendering the assignment ineffective.
 See further page 183.
 Devefi, above n1 at 234–7.
 Sacks v Neptune Meter Co, above n88 at 262 (see above quote).
 Devefi, above n1 at 235. It may be noted that Untermyer J drew a distinction between a provision that seeks to negate the power to assign and a provision containing a promise not to assign. The latter, he held, only gives rise to a right to damages and does not impact upon the efficacy of the assignment. As already noted, the court in Devefi, above n1 at 235, also appear to recognise this distinction.
 Similar reasoning appears to lie behind Millett LJ’s comment in Hendry v Chartsearch Ltd, above n58, that as between the parties to it, an ordinary commercial contract is not property but obligation and therefore there is no objection to making the benefit of the contract non-assignable. Although it is true that a contractual right is only property for certain purposes, there seems to be an underlying belief here that individuals cannot tamper with the characteristics of something the law considers property.
 Devefi, above n1 at 239.
 Sacks v Neptune Meter Co, above n88 at 262.
 For a similar argument but in another context see Richard Nolan, ‘Property in a Fund’ (2004) 120 LQR 108.
 One commentator has argued for the law to move in that direction; see Larry A. DiMatteo ‘Depersonalization of Personal Service Contracts: The Search for a Modern Approach to Assignability’ (1994) 27 Akron L Rev 407.
 See Minister for Land and Water Conservation, above n9 at para 8 (Mason P).
 Compare Allhusen, above n58. See also Grismore, above n3.
 See above page 174.
 See Laybutt v Amoco Australia Pty Ltd  HCA 49; (1974) 132 CLR 57 at 76 (Gibbs J).
 Goldsbrough Mort v Quinn  HCA 20; (1910) 10 CLR 674.
 Id at 690–92.
 Id at 679 (Griffith CJ).
 Id at 691.
 Id at 692.
 Id at 686.
 However, it is quite clear, if a party does not simply attempt to revoke an option but rather sells the legal interest in the subject property to a third party, that third party may, if it does not have notice of the option, get good title and the optionee will be left with an action for damages against the optionor. See Blacktown Municipal Council v Doneo  1 NSWLR 157 at 162 (Taylor AJA). See further, Donald J Farrands, The Law of Options (1992) at 26–34.
 (1937) 56 CLR 605. Compare Forbes v NSW Trotting Club Ltd  HCA 27; (1979) 143 CLR 242.
 This is not the position in England, where it is clearly recognised that equity may grant an injunction to restrain the revocation; see Kevin Gray & Susan Gray Elements of Land Law (3rd ed, 2001) at 181. There has been mention in Australian cases of the possibility of an injunction issuing to prevent revocation: see Bingham v 7–Eleven Stores Pty Ltd  QSC 209; Cathay Developments Pty Ltd v Laser Entertainment Pty Ltd  NSWSC 82. In at least one case the decision in Cowell was explained away on the basis that the result was dictated by the separation existing in 1937 between law and equity in New South Wales; see Leonard George Munday v ACT  SCACT 62 at para 172.
 Compare Barker v Stickney  1 KB 121, where a publisher promised not to assign copyright except subject to the conditions of the contract between the author and publisher. It was held in that case that an assignment of that right was valid and the assignee was not required to pay the author royalties. The point was not taken that this provision amounted to a prohibition, and perhaps this was because everyone assumed it was a mere promise not to assign which could not prevent the transfer.
 For American authorities on this point, see Burck v Taylor, above n57; City of Omaha, above n51. See also Grismore, above n3 at 303. Compare Fortunato v Patten, above n57.
 Compare Australian Olympic Committee Inc, above n9 at paras 119–120, where in answer to a submission that there was an implied term prohibiting assignment, Lindgren J said that if that were correct, then the effect of the prohibition would be to render the subject right personal and any purported assignment would amount to a breach of contract and perhaps a wrongful repudiation. See also Joseph Starke, Assignment of Choses in Action in Australia (1972) at 66, suggesting that in the first instance, it is necessary to determine whether a prohibition rendered the contract personal and if not whether it in any case rendered any assignment inoperative. See further Walter Jaeger (ed), Williston on Contracts (3rd ed, 1993) vol 3 at 46.
 See, for example, Kemp v Baerselman  2 KB 606; Robson v Drummond  EngR 312; (1831) 2 B & AD 303, 109 ER 1156; Dr Jaeger’s Sanitary Woollen System Co Ltd v Walker and Sons (1897) 77 LT 180. In the case of a personal right to insurance, the attempted assignment will simply result in the policy lapsing; see Peters v General Accident & Life Assurance Corp Ltd  4 All ER 628.
 See Nokes v Doncaster, above n72.
 See John Young & Co Kelvinhaugh Ltd v the Rugby Group Plc (Queens Bench Division, HT 00/337, Judge Richard Seymour QC, 19 December 2000) at para 24.
 The reference to ‘implied by construction’ here is used to distinguish the origins of the obligation from one that owes its existence to a specific clause of the contract. Strictly, if an obligation is found by construing the words of a written contract that obligation is an express obligation.
 One reason may be that there is confusion between the ideas of assignment and vicarious performance, and the intention was merely to prohibit vicarious performance.
 See, for example, ANC Ltd v Clark, above n51.
 See Australian Rugby Union Ltd¸ above n38 at paras 23, 29, 100 (affirmed (2001) FCR 157). A condition of a ticket was that is was inter alia not to be resold at a premium or used for advertising without prior consent – a denial of the use of the ticket only attached to an unauthorised sale leaving the normal remedies for breach of contract to flow from an unauthorised use. See also the apparent approval of the possibility of legal effect two in Broadcast Australia Pty Ltd v Minister for Natural Resources (Lands) (2004) 204 ALR 46.
 See Australian Rugby Union Ltd, above n38 at para 100 (affirmed (2001) FCR 157 esp at 182–84).
 Proctor v Union Coal Co (1923) 137 NE 659. See also Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd  NSWSC 473; (1997) 42 NSWLR 462.
 See Bruce v Tyley, above n5. See also Barker v Stickney, above n112.
 This point was left open in Westgold Resources NL, above n9 at 431 (Anderson J) (affirmed  WASCA 85).
 See further p175.
 See, for example, Denham Bros Ltd, above n80.
 See Meagher, Heydon & Leeming, above n78 at 275–278. See also Starke, above n114 at 66–7, para 6.465.
 See Meagher, Heydon & Leeming, id at 275–278, para 6.465.
 Portuguese-American Bank of San Francisco, above n57. However, a prohibition may not necessarily be for the benefit of the obligor; see Restatement of Contracts 2nd (1979) 322, Comment (d).
 Query whether Re Griffin, above n53; Anning v Anning, above n53 and Re Westerton; Public Trustee v Gray  2 Ch 104 are explicable on this ground; see B Allcock, ‘Restrictions on the Assignment of Contractual Rights’ (1983) 42 CLJ 328 at 332–33 also citing Hodder & Tolley, above n40. See further Attwood & Reid Ltd v Stephens Excavators Ltd, above n62.
 Of course in any case the obligor may consent to the assignment, compare above n72.
 It is important to keep this issue distinct from the validity of the bilateral assignments that may exist between the assignor and any assignees that seek to deal with the fruits of the contract. Because of the effect of the prohibition, these contracts are only efficacious as regards those fruits that are in the hands of the assignor. This is an important point because, in respect of equitable assignments of legal property, it is sometimes said (incorrectly it is suggested) that such assignments only operate as between the assignor and assignee; see Tolhurst, above n50.
 This explanation, like some instances of the third explanation to be discussed, would allow an interest to be vested in the assignee, but for the puposes of giving notice to preserve priority that interest it is suggested is worthless.
 Compare International Polymers Pty Ltd v Custom Credit Corporation Ltd, above n9 at 75,631.
 Burck v Taylor, above n57.
 Fortunato v Patten, above n57.
 Id at 573.
 Where there is an assignment of a right to the performance of a contract and that right later unconditionally accrues, the assignee can then call for that performance. This is also the case in the assignment of a right to payment under a contract. That is, where there is an assignment of a conditional right to performance, the assignee can call for payment when the obligation to pay unconditionally accrues. The assignee’s conditional right is replaced with an unconditional right. It does not matter that upon the obligation unconditionally accruing the right to payment becomes a right to a debt which is a distinct chose in action. This is because the obligation to pay is still an obligation constituting the performance of the contract. However, if there was merely an assignment of the right to the performance of a contract (where that performance will involve a payment), and at the time of the assignment there already exists unconditional obligations to make payments under the contract, the assignment of the right to performance will not capture those rights because they are distinct choses in action; see Geroff v CAPD Enterprises Pty Ltd  ACLR 110.
 The Court in Burck at one point do seem to make this determination; see Burck v Taylor, above n57 at 650 (but compare at 651), and this was the understanding of the decision in Portuguese-American Bank of San Francisco, above n57.
 Burck v Taylor, above n57 at 652–53.
 Id at 653.
 See also id at 651 where the Court says the result would be the same without the provision as the right assigned was a personal right which could not be assigned without consent.