Section 3 – Transfer of claims
15.This section provides for the transfer of an assigned claim where there is a validly constituted assignation document in accordance with section 1. The person to whom the obligation under the claim must be performed is the “holder” of the claim. The assignee is the person to whom the claim is assigned (who becomes the new holder, in place of the assignor).
16.Subsection (1) provides that a claim is transferred when the four conditions in subsection (2) are all met. The conditions can be met in any order. Subsection (2) has the effect that a claim will transfer when:
the assignor is the holder of the claim,
the assignation is intimated (see section 8(1)), or registered in the Register of Assignations (“RoA”),
the claim is identifiable as a claim to which the assignation document relates, and
any condition to which the assignation is subject is met.
17.It follows that if a claim is not identifiable then the transfer is postponed until it becomes so identifiable.
Example 1
Arthur assigns to Barbara his claim to a current debt of £1,000 owed by Zoe. Barbara registers the assignation in the RoA. The claim transfers on registration because the claim as constituted by the debt exists and is clearly identifiable.
Example 2
Debra assigns to Excellent Factors claims in respect of customer invoices to be issued by her as described in schedules to be sent from time to time to the factors. Excellent Factors registers the assignation in advance of any such schedule being sent. There is no transfer at the date of registration as no claim can be identified (and might not exist). The claims listed in the first such schedule transfer when that schedule is issued as they exist and can be identified at that time.
18.Subsection (3) provides that any rule of law as to accretion is to be disregarded in determining any matter which relates to the transfer of such claims as are mentioned in section 1(4) of the Act (assignation of a claim not yet held by the assignor). A person cannot convey property which that person does not own. However, as a general principle, accretion may operate where a person has purported to do that and then subsequently acquires the property. The effect of accretion would be to cure the defect in the title of the assignee. It is, however, not clear that accretion applies where “future” claims are assigned, so subsection (3) clarifies that it does not, with the effect that the measures in the Act replace any common law rule.
19.Subsection (4) provides that although registration of an assignation document can be one of the elements which allows a claim to transfer, it is only effective registration that counts (see section 27).
20.Subsections (5) and (6) make provision for the situation where there are competing assignation documents in relation to the same claim. In most cases, the claim will transfer to whichever assignee first registered or intimated the assignation document, because that will usually be the final requirement to be met under subsection (2) and so will give rise to the transfer. However, if the assignor is not the holder of the claim at the time of granting the competing assignation documents, them becoming so might be the final requirement to be met. That would mean that all of the competing documents would meet the requirements of subsection (2) at the same time. Similarly, the competing assignations could be made subject to conditions. Those could be the final requirement to be met under subsection (2), and might all be met at the same time. Alternatively, the claims might not be identifiable initially as claims to which the assignation documents relate. Them becoming so could be the final requirement to be met under subsection (2) and could be met in relation to the competing assignations at the same time. The result of subsection (6) is that in such cases the claim would therefore transfer to whichever of the assignees first meets the requirement as to intimation or registration.
21.Subsection (7) provides that the rule about claims transferring is subject to section 4. That section makes provision about the effect of insolvency on assignations where the claims being assigned are not held by the assignor at the time of granting the assignation document (either because the claim does not exist yet, or because it exists but someone else is the holder).
22.Subsection (8) enables the Scottish Ministers to prescribe certain categories of claim which can only be transferred by registration of the assignation. For example, in some jurisdictions, assignments in respect of invoices that have yet to be paid must be registered to have third party effect. If registration of assignments of so-called trade receivables was to become required in England and Wales then there may be support for this to be the position in Scotland as well.
