Conditions For Assignment Of Burden Or Benefit of Debt.

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Daily Law Tips (Tip 766) by Onyekachi Umah, Esq., LL.M,
ACIArb(UK)

Introduction:
Debt is generally any amount of money owed. Managing debt and
debtors can be frustrating, especially in a country with poor
access to justice and no dependable database. Both the burden of a
debtor to repay debt and the benefit of a creditor to recover debt
can be assigned and transferred to a third party. However, there
are conditions that must be observed for an assignment of debt to
be valid. The conditions and are considered below.

Transfer of Burden or Benefit of Debt:
In every debt, there must be at least a debtor and a creditor.
While the debtor has an obligation to repay debt, a creditor has a
right to demand and recover debt. There could be transactions
seeking to transfer and assign the responsibilities of a debtor or
creditor. For such assignment to be lawful and effective, there are
basic conditions that must be fulfilled, according to the Supreme
Court of Nigeria.

1. The Supreme Court of Nigeria in the case of
FERDINAND GEORGE v. UNITED BANK FOR AFRICA LIMITED (1972)
LPELR-1321(SC), where the court held that;
“Obviously, where the burden of a debt is being assigned, the
creditor must consent or the assignment could be used as a simple
means of avoiding liability. When the benefit of a debt is assigned
the debtor does not need to consent. He still owes the money which
he previously borrowed, and so long as he knows whom to pay in
order to get an effective receipt and discharge he has no cause to
be consulted over the assignment.” Per FATAYI-WILLIAMS ,J.S.C (Pp.
9 paras. A)

2. The Court of Appeal in the case of JULIUS BERGER
NIGERIA PLC & ANOR v. TOKI RAINBOW COMMUNITY BANK LTD (2009)
LPELR-4381(CA)
“Under the common law, a debt or other legal thing in action
includes the benefit of a contract or a debt arising out of
contract from which payment was to be made at a future date. Such
debt is capable of being assigned under section 136 of the Law of
property Act 1925. See BRICE V. BANNISTER (178) 3 Q. B.D. 569,
JAMES V. HUMPHREYS (1908) 1 KB. 10, CONTRAST LAW V. COBURN (1972) 1
WLR 1238. Furthermore is was held that the benefit of a contract is
only assignable in cases where it can make no difference to the
person on whom the obligation lies to which of two persons he is to
discharge it. TOLTURST V. ASSOC PORTLAND CEMENT MANUFACTURERS LTD
(1902) 2 K.B. 660 at 668, (1903) A.C. 414. A party to a contract
can in equity also assign a contractual right in one of two ways
(a) he can inform the assignee that he transfers the chose to him
or (b) he can instruct the debtor to discharges the Obligation by
payment to or performance for, the assignee. Thus an agreement by
traders or merchants with a Bank that payment for goods sold by
them should be remitted direct by the purchasers to the Bank has
been held to, constitute a valid equitable assignment of the amount
to the Bank. BRANDTS SONS & CO. V. DUNLOP RUBBERCO. (1905) A.C.
454. Generally however, a mere direction by a creditor to his
debtor to pay money to a third party is not necessarily an
assignment unless the instructions can be said in their context
text, to amount to an irrevocable mandate to the debtor. See CURRAN
V. NEWPARK UNEMAS LTD (1957) 1 ALL E.R. 295, BRITISH EAGLE INT’L
AIRLINES LTD V. CIE NATIONAL AIR FRANCE (1973) 1 LIOYD’S REP.414 AT
427. Another principle of the common law on assignment in that an
assignment made by letter is complete as soon as the letter is
posted to the assignee as was held in the case of ALEXANDER V.
STENHARDTWAKER & CO. 0903) 2 K.B. 208 The above general positions
of the common law on assignment are to guilde a determination of
the issue. whether indeed, fact and law, there was an assignment of
the benefits of the contracts between the company and the 1st
Appellant to the Respondent.” Per MOHAMMED LAWAL GARBA ,JCA (Pp.
27-29, paras. C-B)

3. The Court of Appeal in the case of JULIUS BERGER
NIGERIA PLC & ANOR v. TOKI RAINBOW COMMUNITY BANK LTD (2009)
LPELR-4381(CA)
“The question I now ask is what in law are the essential
requirements which make an assignment of such benefits, interests
or title to property effective? Speaking generally, they
include:-(1) ownership of or entitlement to the benefits, interest,
rights or title to property by the assignor; (2) the absolute
transfer in writing of such benefits, interests, rights or title to
property to person/named therein; (3) Where, as in the present
appeal, the benefits, rights and interests are in possession or
custody of 3rd party, there is the requirement that the assignor
should notify that 3rd party in writing of the assignment. See
Chitty on Contracts Vol. 1 Paragraph 19 – 007 at page 1166,
Halbury’s Laws of England, 4th Edition, volume 6 paragraphs 12 at
page 9. It is however to be noted that no particular form or mode
is prescribed or required by law for a legal assignment as long as
the assignor absolutely and unequivocally indicates the transfer of
the benefit, interest or title to the assignee. Once the above
requirements are met, an assignment will be effective in law and
the assignee would be entitled to the subject of the transfer and a
claim thereto.” Per GARBA ,J.C.A ( Pp. 25-26, para. D )

4. The Court of Appeal in the case of BEN ELECTRONIC
CO. (NIG) LTD v. ATS & SONS & ORS (2013)
LPELR-20870(CA)
“It is not in doubt that Professor Sagay in his text Nigerian Law
of Contract, 2nd Edition, Ibadan Spectrum Books Ltd. 2000 at page
516 paragraph 9, had supported the views expressed by the learned
Counsel to the Appellant that in certain circumstances the owner of
a contractual right can transfer same to a third party without the
consent of the debtor, thereby enabling the third party to enforce
the right against the debtor or obligator. The learned Author
following English authorities like Torkington v. Magee (1902) 2
K.B. 42 at page 430, other texts like “Cheshire & Fifoot on Equity
10th Edition” (pages 455 – 475) and Jegede’s “Principles of Equity”
pages 145 – 184, also added that the process of transfer of such a
right is known as “Assignment” and that the types of property which
are susceptible to this type of transfer are known as “Choses in
action.”

“Section 25(6) of Judicature Act now replicated in Section 136
of the Law of Property Act 1925 provides as follows: (1) Any
absolute assignment by writing under the hand of the assignor (not
purporting to be by way of charge only) of any debt or other legal
thing in action, of which express notice in writing has been given
to the debtor, trustee or other person from whom the assignor would
have been entitled to claim such debt or thing in action, is
effectual in law (subject to equities having priority over the
right of the assignee) to pass and transfer from the date of such
notice;- (a) The legal right to such debt or thing in action (b)
All legal and other remedies for the same and (c) The power to give
a good discharge for the same concurrence of the assignor; Provided
that if the debtor, trustee or other person liable in respect of
such debt or thing in action has notice:- i. That the assignment is
disputed by the Assignor or any person under him or; ii. Of any
other opposing or conflicting claim to such debt or thing in
action, he may if he thinks fit either call upon the person making
claim hereto to inter plead concerning the same, or pay the debt or
other in action in Court.”

Conclusion:
Debt is payable, even where the original creditor appoints another
person as its representative or replacement. The consent of a
debtor to such arrangement is not needed. However, a debtor cannot
transfer his obligation to repay debt to a third party, except with
the consent of his creditor. Any such assignment by a debtor
without the approval of his creditor is deemed as a plan to
delay/evade debt. Although no particular writing style or form is
approved for assignment of debt, an assignment of burden of debt or
benefit of debt should be clear and ambiguous at all times.

My authorities, are:

1. Sections 1, 2, 3, 4, 5 and 6 of the Constitution of the
Federal Republic of Nigeria, 1999.
2. Judgement of the Supreme Court of Nigeria in the case of
FERDINAND GEORGE v. UNITED BANK FOR AFRICA LIMITED (1972)
LPELR-1321(SC)
3. Judgment of the Court of Appeal in the case of JULIUS BERGER
NIGERIA PLC & ANOR v. TOKI RAINBOW COMMUNITY BANK LTD (2009)
LPELR-4381(CA)
4. Judgment of the Court of Appeal in the case of BEN ELECTRONIC
CO. (NIG) LTD v. ATS & SONS & ORS (2013) LPELR-20870(CA)
5. Onyekachi Umah, “Creditors, Debtors And The Covid-19 Lockdown?”
(LearnNigerianLaws.com, 21 April 2020) <https://learnnigerianlaws.com/creditors-debtors-and-the-covid-19-lockdown-daily-law-tips-tip-552-by-onyekachi-umah-esq-llm-aciarbuk/^[1]> accessed 28 March
2021
6. Onyekachi Umah, “Owing Debts And Refusing To Pay Is Not An
Offence In Nigeria” (LearnNigerianLaws.com, 14 December 2019)
<https://learnnigerianlaws.com/owing-debts-and-refusing-to-pay-is-not-an-offence-in-nigeria-daily-law-tips-tip-478-by-onyekachi-umah-esq-llm-aciarb-uk/^[2]> accessed 28 March
2021
7. Onyekachi Umah, “The Supreme Court Has Warned Efcc And Police
Against Recovering Debts And Investigating Disputes From Civil
Transactions” (LearnNigerianLaws.com, 26 October 2019) <https://learnnigerianlaws.com/the-supreme-court-has-warned-efcc-and-police-against-recovering-debts-and-investigating-disputes-from-civil-transactions-daily-law-tips-tip-444-by-onyekachi-umah-esq-llm-aciarb-uk/^[3]> accessed 28 March
2021
8. Onyekachi Umah, “When, Why And How Can A Guarantor/Surety Be
Held Liable For Debt Guaranteed” (LearnNigerianLaws.com, 25 July
2019) <https://learnnigerianlaws.com/when-why-and-how-can-a-guarantor-surety-be-held-liable-for-debt-guaranteed-daily-law-tips-tip-380-by-onyekachi-umah-esq-llm-aciarb-uk/^[4]> accessed 28 March
2021
9. Onyekachi Umah, “How To Be Exempted From Electricity
Disconnection In Any Part Of Nigeria Even When Owing Debt For
Consumed Electricity.” (LearnNigerianLaws.com, 29 June 2019)
<https://learnnigerianlaws.com/how-to-be-exempted-from-electricity-disconnection-in-any-part-of-nigeria-even-when-owing-debt-for-consumed-electricity-daily-law-tips-tip-361-by-onyekachi-umah-esq-llm-aciarb-uk/^[5]> accessed 28 March
2019
10. Onyekachi Umah, “You Cannot Be Arrested For Breach Of
Contract/Refusal To Pay Debt” (LearnNigerianLaws.com, 15 October
2018) <https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-205-you-cannot-be-arrested-for-breach-of-contract-refusal-to-pay-debt/^[6]> accessed 28 March
2021
11. Onyekachi Umah, “It Is An Offence For Hospitals/Creditors To
Detain Patients/Debtors For Debts” (LearnNigerianLaws.com, 26 July
2018) <https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-150-it-is-an-offence-for-hospitals-creditors-to-detain-patients-debtors-for-debts/^[7]> accessed 28 March
2021
12. Onyekachi Umah, “EFCC Cannot Recover Debts”
(LearnNigerianLaws.com, 25 July 2018) <https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-149-efcc-cannot-recover-debts/^[8]> accessed 28 March
2021
13. Onyekachi Umah, “It Is Not a Crime to Be a Debtor In Nigeria”
(LearnNigerianLaws.com, 20 June 2018)
<https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-124-it-is-not-a-crime-to-be-a-debtor-in-nigeria/>
accessed 28 March 2021
14. Onyekachi Umah, “Nigerian Police Cannot Be Used For or Be Part
for Debt Recovery” (LearnNigerianLaws.com, 28 May 2018) <https://learnnigerianlaws.com/daily-law-tips-by-onyekachi-umah-esq-tip-110-nigerian-police-cannot-be-used-for-or-be-part-for-debt-recovery/^[9]> accessed 28 March
2021
15. Onyekachi Umah, “Tips On Recovery of Debt’
(LearnNigerianLaws.com, 10 March 2016)
<https://learnnigerianlaws.com/tips-on-recovery-of-debt/>
accessed 28 March 2021
16. Onyekachi Umah, “How to Recover Property Wrongly Seized by
Court” (LearnNigerianLaws.com, 9 March 2021) <https://learnnigerianlaws.com/how-to-recover-property-wrongly-seized-by-court/^[10]> accessed 28 March
2021
17. Onyekachi Umah, “Should Landlord Stop Rent-Owing Tenants from
Moving Out?” (LearnNigerianLaws.com, 26 August 2020) <https://learnnigerianlaws.com/should-landlord-stop-rent-owing-tenants-from-moving-out/^[11]> accessed 28 March
2021
18. Onyekachi Umah, “Should A Landlord Remove Roof Of A Tenant For
Failure To Pay Rent/Pack Out?” (LearnNigerianLaws.com, 3 August
2020) <https://learnnigerianlaws.com/should-a-landlord-remove-roof-of-a-tenant-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-624-by-onyekachi-umah-esq-ll-m-aciarbuk/^[12]> accessed 28 March
2021
19. Onyekachi Umah, “Should A Landlord Lock Gates/Doors Of A Tenant
For Failure To Pay Rent/Pack Out?” (LearnNigerianLaws.com, 29 July
2020) <https://learnnigerianlaws.com/should-a-landlord-lock-gates-doors-of-a-tenant-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-620-by-onyekachi-umah-esq-ll-m-aciarbuk/^[13]> accessed 28 March
2021
20. Onyekachi Umah, “Should A Landlord Cut-Off Tenant From
Water/Electricity Supply For Failure To Pay Rent/Pack Out?”
(LearnNigerianLaws.com, 17 July 2020) <https://learnnigerianlaws.com/should-a-landlord-cut-off-tenant-from-water-electricity-supply-for-failure-to-pay-rent-pack-out-daily-law-tips-tip-612-by-onyekachi-umah-esq-ll-m-aciarbuk/^[14]> accessed 23 March
2021
21. Onyekachi Umah, “Does Police Have Powers To Settle Civil
Disputes In Nigeria?” (LearnNigerianLaws.com, 13 May 2020) <Does
Police Have Powers To Settle Civil Disputes In Nigeria?>
accessed 28 March 2021
22. Onyekachi Umah, “A Guarantor/ Surety And A Witness Are Not
Same” (LearnNigeriansLaws.com, 12 May 2020) <https://learnnigerianlaws.com/a-guarantor-surety-and-a-witness-are-not-same-daily-law-tips-tip-567-by-onyekachi-umah-esq-llm-aciarbuk/^[15]> accessed 28 March
2021
23. Onyekachi Umah, “Minimum Period For Defence Of Undefended List
Case In Abuja” (LearnNigerianLaws.com, 25 February 2020)
<https://learnnigerianlaws.com/minimum-period-for-defence-of-undefended-list-case-in-abuja-daily-law-tips-tip-512-by-onyekachi-umah-esq-llm-aciarbuk/^[16]> accessed 28 March
2021
24. Onyekachi Umah, “Bounced Or Dud Cheque And Its Legal
Consequence In Nigeria.” (LearnNigerianLaws.com, 5 March 2016)
<https://learnnigerianlaws.com/bounced-or-dud-cheque-and-its-legal-consequence/^[17]> accessed 28 March
2021

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Daily Law Tips (Tip 766) by Onyekachi Umah, Esq., LL.M,
ACIArb(UK)

My authorities, are:

Sabi Law Projects:
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#SabiElectionLaws
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#SabiLawOnBeatFm
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#SabiLawVideoChallenge

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Conditions For Assignment Of Burden Or Benefit of Debt.

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