Assignment Of Loan

Assignment Of Loan-69
In other cases, the contract may be a negotiable instrument in which the person receiving the instrument may become a holder in due course, which is similar to an assignee except that issues, such as lack of performance, by the assignor may not be a valid defense for the obligor.As a response, the United States Federal Trade Commission promulgated Rule 433, formally known as the "Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses", which "effectively abolished the [holder in due course] doctrine in consumer credit transactions".

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A contract may contain a non-assignment clause, which prohibits the assignment of specific rights and some various rights, or of the entire contract, to another.

However, such a clause does not necessarily destroy the power of either party to make an assignment.

However, it is possible to assign the lease, but the new party (assignee) will be subject to the lessor’s credit evaluation process and approval.

Even if the assignee is approved, the existing lessee’s (assignor’s) personal guarantee(s), if any, might not be released unless the assignee’s credit stature is extremely strong.

Instead, it merely gives the other party the ability to sue for breach of contract if such an assignment is made.

However, an assignment of a contract containing such a clause will be ineffective if the assignee knows of the non-assignment clause, or if the non-assignment clause specifies that "all assignments are void".

An assignment cannot have any effect on the duties of the other party to the contract, nor can it reduce the possibility of the other party receiving full performance of the same quality.

Certain kinds of performance, therefore, cannot be assigned, because they create a unique relationship between the parties to the contract.

Two other techniques to prevent the assignment of contracts are rescission clauses or clauses creating a condition subsequent.

The former would give the other party to the contract the power to rescind the contract if an assignment is made; the latter would rescind the contract automatically in such circumstances.

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