That which is assigned takes with it for its use the rights of the assignor.
An assignee has all the rights of his assignor.
The assignee of a chattel or other property or right assigned, has all the rights incident to such chattel, or property, or right, which the assignor had at the time of the assignment.
This maxim applies generally to all property, real and personal, and refers to assigns by act of the parties, as where the assignment is by deed ; and to assigns by operation of law, as in the case of an executor. All rights of the assignor in the thing assigned must pass from him to the assignee by virtue of the assignment, for “Duo non possunt in solido unam rem possidere ” — Two persons cannot possess one thing in its entirety.
An assignor may, of course, assign less than he possesses, as part of his estate, whether of freehold or leasehold, by grant with conditions, or by way of demise, or sub-demise ; or of goods and chattels, the right of property apart from the property itself, as in the case of mortgage or pledge. But he cannot effectually assign more, or give to his assignee any greater right than he himself possesses at the time of the assignment, unless it be that he subsequently acquire the right which he did not then possess ; as, where a lessor mortgages by assignment and then demises, the legal estate not being in him ; on his subsequently acquiring the legal estate, the interest of the lessee therein will at once accrue. And in such case it is said, that if the lease be made in such form as to create between the lessor and lessee an estoppel to deny that the lessor had a reversion, the assignee of the lessor may thereby establish his title by estoppel. And, whenever an estate by estoppel becomes a vested interest by the lessor's subsequently acquiring the estate, the lessee and assignee have the same rights and liabilities as if the estate had been at the first an interest in possession. Where, however, the deed does not operate as an estoppel, as where it appears that the lessor had only an equitable interest, the benefit and burden of the covenants do not pass to the assignee.
Covenants running with the land may be given as a familiar instance of the application of this ; as where a lessor or lessee covenants to repair, this and other like covenants pass with the estate granted, during its continuance, into the hands of assignees, who will have the same rights respecting them as the lessor or lessee himself had. So the assignee takes the burden of all breaches of covenant by him during his holding, and his liability upon the covenants continues until by assignment he destroys the priority of estate existing between him and the lessor. A sub-lessee does not, however, take any liability in respect of the covenants in the original lease, there being no privity of estate between him and the original lessor.
The law favours commercial transactions, and for the sake of commerce it sometimes permits a man to assign to another a greater right than he himself possesses ; as in sales in market overt ; in the negotiation of bills of exchange, bills of lading, etc, in which cases the bona fide purchaser or assignee for value, without notice of fraud or illegality, acquires a perfect title in the thing purchased or assigned, notwithstanding any imperfection in the title of the assignor.
It must be observed, also, that the thing assigned takes with it all the liabilities attached to it in the hands of the assignor at the time of assignment, as in the case of an assignment of a lease before mentioned, except in such cases as those just mentioned for the encouragement of commerce.
Assignment of contract means the transfer of rights and liabilities under the contract to a third party with or without the consent of the other party to the contract.
The Supreme Court in the case of Khared and Co. Ltd v Ramon and Co. Pvt. Ltd has held that, as a rule, obligations under a contract cannot be assigned except with the consent of the promisee. Where such consent is obtained, it will be considered as a deemed novation, resulting in the substitution of liabilities and obligations to the assignee.
Assignment of actionable claim is done under section 130 of Transfer of Property Act, 1882. It requires a written document which is duly signed.Section 132 of TPA deals with liability of transferee of actionable claim
The transferee of an actionable claim shall take it subject to all the liabilities and equities to which the transferor was subject in respect thereof at the date of the transfer.
Defective title of the instrument affects the assignee. Negotiable instruments are also actionable claims, and hence can be assigned.But transfer of negotiable instruments can also be done by negotiation in which case it confers on the holder in due course a better title.
Order 22, Rule 10, Civil Procedure Code, 1908 speaks of cases of an assignment, creation or devolution of any interest during the pendency of a suit and the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved. This provision has been elaborately discussed in 1955 KHC 370.
Similarly O.21 r.16 deals with assignment of a decree and section 49 which reads :-
Every transferee of a decree shall hold the same subject to the equities (if any) which the judgment-debtor might have enforced against the original decree-holder.
explicitly gives the maxim Assignatus utitur jure auctoris a statutory force.