Paul MacMahon

The effect of restrictions on assignment on attempts to grant charges

It remains unclear whether and how a no-assignment clause affects the grant of a charge over a contractual right. This article examines the issue as a question of contractual construction, arguing that a no-assignment clause should not be read to prevent the grant of a charge, but should be understood to protect the debtor from enforcement actions by the chargee. The article cautions courts against strained constructions of contractual language now that legislation has addressed the perceived need to protect receivables financing. Courts should, moreover, adopt a standardised approach to interpretation of restrictions on assignment rather than look too closely at the particular context of each clause.