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  

Written By

ADEWUMI S.S. (ARC/05/5578)

OGUNMAKINDE O.E. (ARC/05/5625)

Submitted To

DEPARTMENT OF ARCHITECTURE FEDERAL UNIVERSITY OF TECHNOLOGY P.M.B 704, AKURE, ONDO STATE.

IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE COURSE – ENVIRONMENTAL CONTROL III (ACOUSTICS & NOISE CONTROL)

COURSE LECTURER

PROF. O.O. OGUNSOTE

NOVEMBER, 2009

1 TABLE OF CONTENTS

Title Page Table of Contents Abstract 1.0 INTRODUCTION 1.1 Definition of terms 2.0 BUILDING CONTRACT 3.0 ASSIGNMENT 3.1 Liabilities 3.1.1 Continuing Liability of Assignor 3.1.2 Liability of Assignee: generally not liable 3.1.3 Warranties of Assignor 3.2 Assignment of Contract Rights 3.2.1 When Assignment Will Be Permitted 3.2.2 Requirements for an Effective Assignment 3.3 Successive Assignments 3.4 Delegation 3.5 Assignment of Property Rights 3.6 Assignment of Partnership Rights 3.7 Assignment of Intellectual Property Rights 3.8 Rights not Assignable 3.9 Involuntary Assignment 4.0 CASES OF ASSIGNMENT 4.1 Dawson Vs Great Northern and City Railway Company [1905] 4.2 Linden Gardens Trust Ltd Vs Lenesta Sludge Disposals Ltd And Others [1992] 4.3 Linden Gardens Trust Ltd Vs Lenesta Sludge Disposals Ltd (Court Of Appeal) 4.4 Darlington Vs Wiltshier 4.5 Alfred Mcalpine Vs Panatown 5.0 CONCLUSION

2 References

ABSTRACT

Assignment in building contracts are often confused with novation. Under English law, 'assignment' is normally used when rights under a contract are transferred, among other things. This is as opposed to 'novation', where both rights and obligations are transferred.

Assignment of contractual rights is often made in the context of, among other things, building contracts, charter parties and ship and shipbuilding financing. An 'assignment' can be defined as a transfer of rights by the assignor in favour of a third party, the assignee.

This write-up identifies the meaning of assignments in building contract, the non voluntary assignments, voluntary assignments and novation which is sometimes mixed up with assignments.

An attempt has been made in this write up to give a general overview of what an assignment in building contract entails and its nitty-gritty with relevant examples.

3 1.0 INTRODUCTION A person can transfer his or her rights, benefits and liabilities under a contract to another person. Where the original contract stays intact and party transfers rights, benefits and liabilities under a contract (the assignor) to a new party (the assignee), this is called an "assignment".

An assignment must be absolute with no contractual strings to remain attached between the assignor and the other original contracting party. Nor does an assignment require the permission of the other original contracting party.

In this context, building contracts and the highlights of assignments in building contracts shall be vividly discussed for the purpose of proper understanding of what assignments in building contract represents.

1.1 Definition of Terms

Assignee: a person to whom a right or liability is legally transferred or a person appointed to act for another.

Assignor: a person who assigns a right or liability to another person

Obligor: a person who is bound to another by contract or other legal procedure.

Deed of Assignment: A deed to assign the benefit of a contract. Notice of Assignment: A notice to be sent to the other party to a contract following the assignment of the benefit of a contract. The notice contains an optional retrospective request for consent to assignment.

Request for consent to assignment: Drafting note to accompany the request for consent to assignment of a contract.

Letter assignment of contract: A letter agreement to assign the benefit of a contract. A drafting note to accompany the letter assigning a contract.

4 Assignment (permitted): A boilerplate clause that allows both parties to a commercial contract to assign or otherwise transfer their rights under the contract, and also to subcontract or transfer their obligations under the contract.

Assignment (prohibited with exceptions): A boilerplate clause that prevents both parties to a commercial contract from assigning or otherwise transferring their rights and obligations under the contract except in certain situations, such as to group companies or for the purpose of providing security in respect of finance for a transaction.

Assignment and other dealings prohibited: A boilerplate clause that prevents both parties to a commercial contract from assigning or otherwise transferring their rights and obligations under the contract without the other party's prior written consent.

2.0 BUILDING CONTRACT Contracts are an essential part of the construction industry. A Contract between an Owner of a site and a Building Contractor, setting forth the terms under which construction is to be carried out, the basis of remuneration, the time scale, and the penalties, if any, (for failure to comply with terms of the Contract) is termed as a Building or Construction Contract.

Building Contract may also be defined as an agreement between an owner or lessee and a building contractor, setting forth terms relative to the construction of a proposed structure (www.txtitle.com/sub_glos.htm).

A contract setting forth the terms under which construction is to be undertaken. Price may be based on a flat sum or cost plus a percentage (www.timberlinerealty.net/glossary- b.html)

Common Building Contract Documents The Contract Documents are all documents which, when combined, forms the basis of the Contract. It is recommended that both parties to the Contract execute or endorse complete sets of all Contract documents and these should be preserved intact. A possible list of documents that makeup the Contract Documents include:

5  The Contract or Agreement to be used by the parties.  Conditions of the Contract – these define the legal rights and obligations of the parties; another way of describing the general conditions is as the rules by which each party will operate in performing their obligations as set down under the Contract.  Special conditions of Contract – these are an extension to the general conditions and apply specifically and individually to each project/Contract.  Bill of quantities – it lists quantities of the various items and the material to be included in the Contract. It can also be used as the basis for valuation of variations and assists the preparation of progress claims. The extent to which the Owner warrants the completeness of a bill of quantities or a schedule of rates depends upon the terms of the Contract.  All drawings required in building the structure (contract plans including Architectural and Structural). These include drawings from relevant Consultants.  All Specifications – sets out the technical requirements of the work It describes the project and adds clarity to its drawings; describes the requirements for materials and workmanship.  All other documents considered necessary, for example, Schedule or Annexure to the Contract completed, all technical schedules, all pricing schedules.

3.0 ASSIGNMENT When describing their desire to transfer their rights and obligations under a construction contract to another person, a party will usually say that it wants to ‘assign’ the contract. However, ‘assignment’ actually has quite a limited meaning.

An ‘assignment’ refers to a party to a contract transferring all or part of its rights (but not its obligations or liabilities) under the contract to a third party. In this situation the existing contract remains valid; however, the third party is now entitled to the benefit of the assignor’s rights. The most common example of this is where a contractor assigns a construction contract to a third party. Strictly speaking, in this situation, the new contractor will be entitled to the original contractor’s benefits under the contract

6 (normally the right to payment) but the original contractor will remain liable to discharge its obligations under the contract (normally, the obligation to construct the works).

A person can transfer his or her rights, benefits and liabilities under a contract to another person. Where the original contract stays intact and party transfers rights, benefits and liabilities under a contract (the assignor) to a new party (the assignee), this is called an "assignment". An assignment must be absolute with no contractual strings to remain attached between the assignor and the other original contracting party. Nor does an assignment require the permission of the other original contracting party.

An assignment is a term used with similar meanings in the law of contracts and in the law of real estate. In both instances, it encompasses the transfer of rights held by one party (the assignor) to another party (the assignee). The legal nature of the assignment determines some additional rights and liabilities that accompany the act (www. en.wikipedia.org/wiki/Assignment_(law)

Contract Assignment Definition

The transfer of legal rights under an agreement; for example, where an employer assigns a building contract (or, technically, the benefit of the building contract) to a buyer of the site. Before the assignment can take effect, the buyer must give notice to the contractor. The effect of the assignment (continuing this example) is that the buyer can now sue the contractor under the building contract. The employer can no longer enforce the building contract; but he remains liable to the contractor because the employer can't assign his liability without the contractor's consent (he can only assign his rights or benefit).

Generally, if an agreement contains no prohibition or restriction on assignment, each party may freely assign its benefit in the agreement to whomever it pleases, and assignees may assign further.

Construction rights can be assigned just as any other contractual right. However, special duties and liabilities attach to transfers of the right to possess property. With an assignment, the assignor transfers the complete remainder of the interest to the assignee.

7 The assignor must not retain any sort of reversionary interest in the right to possess. The assignee's interest must abut the interest of the next person to have the right to possession. If any time or interest is reserved by a tenant assignor,

Public Contract - Contractual Rights of the Parties A public contract can be assigned by one contractor to another where the assignment is restricted to funds due under the contract. However, it is not assignable without the consent of the public body with which the contract is made. A contractor and his or her assignee are both bound by the terms of the main contract. The contractor cannot transfer by assignment anything that was not allowed under the main contract. The law can provide that no assignment is valid unless copies of the contract and the assignment are filed with the court administrator in the county where the public works project is located.

A contractor can employ subcontractors to perform certain portions of the work. For example, in the construction of a public building, a contractor will typically hire an electrical and a mechanical subcontractor, along with subcontractors who do cement work, roofing, and painting. A subcontractor enters an agreement with an original contractor to perform part of the work that the contractor has agreed to perform in the original contract.

A public authority has the inherent right to make reasonable and necessary changes or modifications in public contracts, according to a new agreement between the contracting parties. A public contract can also contain a provision governing its cancellation or termination under certain conditions. A public authority generally cannot lawfully rescind its contract without the contractor's consent, except in the case of fraud, mistake, or the invalidity of the contract.

3.1 LIABILITIES 3.1.1 Continuing Liability of Assignor

8 Assignor remains liable unless there is an agreement to the contrary. An agreement must manifest intent to transfer rights, it may not necessarily be in writing, words will do, and the rights assigned must be certain. The effect of a valid assignment is to extinguish privity between the assignor and the obligor and create privity between the obligor and the assignee.

3.1.2 Liability of Assignee: generally not liable Consumer Protection, Defenses and Setoffs

3.1.3 Warranties of Assignor

3.2 ASSIGNMENT OF CONTRACT RIGHTS Assignment of rights under a contract is the complete transfer of the rights to receive the benefits accruing to one of the parties to that contract. For example, if party A contracts with Party B to sell his car to him for N100 party A can later assign the benefits of the contract - the right to be paid N100 - to party C. In this scenario, party A is the obligee/assignor, party B is an obligor, and party C is the assignee. Such an assignment may be donative (essentially given as a gift), or it may be contractually exchanged for consideration. It is important to note, however, that party C is not a third party beneficiary, because the contract itself was not made for the purpose of benefiting party C. However an Assignment only transfers the rights/benefits to a new owner. The obligations remain with the previous owner.

3.2.1 When Assignment Will Be Permitted The common law favours the freedom of assignment, so an assignment will generally be permitted unless there is an express prohibition against assignment in the contract. Where assignment is thus permitted, the assignor need not consult the other party to the contract. 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. For example, if party A contracts to hire an attorney to represent her in a civil case for a fee of $1000, she cannot then assign her contractual right to legal representation to another party. Note however,

9 that party A can assign her right to sue under the same claim she contracted with the attorney to pursue.

3.2.2 Requirements for an Effective Assignment For assignment to be effective, it must occur in the present. No specific language is required to make such an assignment, but the assignor must make some clear statement of intent to assign clearly identified contractual rights to the assignee. A promise to assign in the future has no legal effect. Although this prevents a party from assigning the benefits of a contract that has not yet been made, a court of equity may enforce such an assignment where an established economic relationship between the assignor and the assignee raised an expectation that the assignee would indeed form the appropriate contract in the future.

A contract may contain a non-assignment clause, which prohibits the assignment of specific 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. 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".

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.

Requirement of A Writing

There are certain situations in which the assignment must be in writing.  Assignment of wages  Assignment of any interest in real property  Assignment of choses of action worth over $5,000  Assignment as collateral for a loan or debt

10 ASSIGNMENT OF CONTRACT

FOR VALUE RECEIVED, the undersigned does hereby sell, transfer, assign and set over to ______all his right, title and interest in and to a certain contract dated ______, 20__ by and between the undersigned and ______, a copy of which is annexed hereto.

This assignment is made without warranty, representation and recourse.

Dated: ______

Accepted: ______

Approved: ______

A Drafting Note on Assignment of Contract

3.3 SUCCESSIVE ASSIGNMENTS Occasionally, an unscrupulous assignor will assign the exact same rights to multiple parties (usually for some consideration). In that case, the rights of the assignee depend on the revocability of the assignment, and on the timing of the assignments relative to certain other actions.

In a quirk left over from the common law, if the assignment was donative, the last assignee is the true owner of the rights. However, if the assignment was for consideration, the first assignee to actually collect against the assigned contract is the true owner of the rights. Under the modern American rule, now followed in most U.S. jurisdictions, the first assignor with equity (i.e. the first to have paid for the assignment) will have the strongest claim, while remaining assignees may have other remedies. In some countries, the rights of the respective assignees are determined by the old common law rule in Dearle v Hall. Earlier donative assignees for whom the assignment was revocable (because it had not been made irrevocable by any of the means listed above) have no cause of action whatsoever.

11 Earlier donative assignees for whom the assignment was made irrevocable can bring an action for the tort of conversion, because the assignment was technically their property when it was given to a later assignee. Later assignees for consideration have a cause of action for breaches of the implied warranty discussed above.

3.4 DELEGATION A parallel concept to assignment is delegation, which occurs when one party transfers his duties or liabilities under a contract to another. A delegation and an assignment can be accomplished at the same time, although a non-assignment clause also bars delegation.

3.5 ASSIGNMENT OF PROPERTY RIGHTS Real property rights can be assigned just as any other contractual right. However, special duties and liabilities attach to transfers of the right to possess property. With an assignment, the assignor transfers the complete remainder of the interest to the assignee. The assignor must not retain any sort of reversionary interest in the right to possess. The assignee's interest must abut the interest of the next person to have the right to possession. If any time or interest is reserved by a tenant assignor, than the act is not an assignment, but instead is a sublease.

The liability of the assignee depends upon the contract formed when the assignment takes place. However, in general, the assignee has privity of estate with a lessor. With privity of estate comes the duty on the part of the assignee to perform certain obligations under covenant, e.g. pay rent. Similarly, the lessor retains the obligations to perform on covenants to maintain or repair the land.

If the assignor agrees to continue paying rent to the lessor and subsequently defaults, the lessor can sue both the assignor under the original contract signed with the lessor as well as the assignee because by taking possession of the property interest, the assignee has obliged himself to perform duties under covenant such as the payment of rent.

Unlike a Novation where consent of both the lessor and lesse is required for the third party to assume all obligations and liabilities of the original lessee, an assignment does

12 not always need the consent of all parties. If the contract terms state specifically that the lessor's consent is not needed to assign the contract, then the lesee can assign the contract to whomever the lesee wants to.

Absent language to the contrary, a tenant may assign their rights to an assignee without the landlord's consent. In the majority of jurisdictions, when there is a clause that the landlord may withhold consent to an assignment, the general rule is that the landlord may not withhold consent unreasonably unless there is a provision that states specifically that the Landlord may withhold consent at Landlord's sole discretion.

3.6 ASSIGNMENT OF PARTNERSHIP RIGHTS A person can also assign their rights to receive the benefits owed to a partner in a partnership. However, the assignee can not thereby gain any of the assignor's rights with respect to the operation of the partnership. The assignee may not vote on partnership matters, inspect the partnership books, or take possession of partnership property; rather, the assignee can only be given the right to collect distributions of income, unless the remaining partners consent to the assignment of a new general partner with operational, management, and financial interests. If the partnership is dissolved, the assignee can also claim the assignor's share of any distribution accompanying the dissolution.

3.7 ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS Ownership of intellectual property, including patents, copyrights, and trademarks may be assigned, but special conditions attach to the assignment of patents and trademarks. In the United States, assignment of a patent is governed by statute, 35 U.S.C. § 261. Assignment of an interest occurs only by an "instrument in writing". The statute also permits recording an assignment with the United States Patent and Trademark Office, but recording is not required. With respect to a trademark, the owner of the mark may not transfer ownership of the mark without transferring the goodwill associated with the mark. Companies sometimes request from employees that they assign all intellectual property they create while under the employment of the company. This is typically done within an Employment Agreement, but is sometimes done through a specific agreement called Proprietary Information and Inventions Agreement (PIIA).

13 3.8 RIGHTS NOT ASSIGNABLE An assignment is not possible where the services or the consideration was linked to the person of the party which wants to assign the contract. For example, if you hire a special performer, the performer cannot assign the contract to another performer. If an assignment creates a new or special burden to the other original contracting party, it may also be prohibited. Special provincial laws may exist to alter the common law with regards to assignments, such as "judicature acts". The following rights are also not assignable:

1. A contract containing a personal element e.g. A agrees to work for B, A cannot assign the labour to C.

2. Public policy forbids assignment of certain rights

a. Salaries of public officers.

b. Wives cannot assign maintenance awarded to them by the Court.

c. Fruits of litigations where the assignment reflects financial help given to the assignor to bring his action with a view to being rewarded from the award of damages.

Exceptions

1. It is possible to bring a tort action in the name of deceased person. A tort in law is a wrongful act, other than breach of contract, for which a civil action for damages may be brought. Specific torts in building include negligence, trespass, nuisance and defamation.

2. The Doctrine of Subrogation. By this doctrine, the insurer who has agreed to indemnify the insured will on making good the loss be entitled to succeed to all the ways and means by which the insured might have protected himself or reimbursed himself for the loss.

14 3. It is possible for the original contract to prohibit any assignment under the contract.

4. Certain liabilities are not assignable e.g. obligations under a contract. However, by way of novation a new contract can be substituted for the original one.

3.9 INVOLUNTARY ASSIGNMENT Sometimes assignment operates under law such as in the case of a bankruptcy where a trustee comes in and takes over all the contracts between the bankrupt and the creditors. Another example of legal assignment is upon death, where the executor assumes the position of the deceased and to whom all contracts of the deceased are assigned.

4.0 CASES OF ASSIGNMENT

4.1 DAWSON Vs GREAT NORTHERN AND CITY RAILWAY COMPANY [1905] In Dawson v Great Northern and City Railway Company [1905] 1 KB 260 (CA), Great Northern and City had carried out underground tunnelling operations, under statutory powers, that caused structural damage to houses leased to the claimant for her drapery business. The freehold owner was entitled to compensation for damage caused under the Regulation of Railways Act 1868. This non-contractual right had been assigned to the claimant. Part of the claimant’s claim related to trade stock damaged by the works. However, the freeholder’s statutory right to compensation did not cover such losses. As such, the claimant was not entitled to claim for those losses: the assignee could not recover more than the assignor would have done.

4.2 TECHNOTRADE Vs LARKSTORE In November 1998, Starglade Ltd, the owner of a sloping site in Kent, engaged Technotrade Ltd to prepare a site investigation report to assess whether the site was suitable for residential development (the report). Starglade sold the land to Larkstore in June 1999, with planning permission for eight residential units. Starglade provided the purchaser with a copy of Technotrade’s report dated 14 December 1998.

15 Larkstore appointed Bess Ltd to carry out works at the site, incorporating a copy of the report into the contact documentation. Larkstore used the Technotrade report to satisfy a planning permission condition for further development of the site (phase II). In September 2001, it sold part of phase II to a third party. In October 2001, a landslip occurred during excavation works by Bess, and parties owning nearby properties alleged that this had damaged their properties. They issued proceedings against Larkstore and Bess (which by this time was insolvent) in March 2003. The report did not prohibit the assignment of its benefit to a third party and, in February 2004, Starglade assigned its benefit and interest in the report to Larkstore. In October 2004, Larkstore joined Technotrade as a Part 20 defendant to the proceedings, relying on the rights assigned to it to claim, amongst other things, breach of contract leading to the landslip The Court of Appeal heard a number of preliminary issues relating to this issue. One of these was whether Larkstore had a claim against Technotrade because the assignor of the report (Starglade) had suffered no loss. At the time of the sale, Starglade had not suffered any loss. The loss had been suffered by Larkstore before the benefit of the report was assigned. Technotrade argued that the assignor had suffered no loss and that the principle from Dawson v Great Northern and City Railway should apply. However, Mummery LJ’s view, which Smith J agreed with, was that what had been assigned to Larkstore was not the loss that Starglade would otherwise have suffered, but instead Starglade’s cause of action against Technotrade (and the resultant remedy). Accordingly, whether Starglade (or Larkstore) suffered the loss suffered at or after the date of the cause of action arising was irrelevant. Mummery LJ expressly followed Staughton LJ in the Court of Appeal in Linden Gardens. As Mummery LJ commented, Technotrade’s increased exposure for damages was not caused by the assignment but by the landslip. His concern was that the contract-breaker should not be able to benefit (by avoiding liability to any person) by virtue of the fact that an assignment had taken place.

4.3 LINDEN GARDENS TRUST LTD Vs LENESTA SLUDGE DISPOSALS LTD (COURT OF APPEAL) In June 1979, Stock Conversion Ltd, the lessee of part of a building, instructed Lenesta Sludge (as prospective sub-contractors) to carry out asbestos removal activities to its

16 premises. Stock Conversion subsequently engaged McLaughlin & Harvey plc as main contractor for the asbestos removal. The works were performed negligently and some asbestos remained. In February 1985, Stock Conversion appointed Ashwell Construction Ltd to remove further asbestos and in July the same year issued proceedings against Lenesta Sludge for breach of contract as a result of failing to remove all the asbestos originally. Stock Conversion later assigned the lease to Linden Gardens at full market value. Subsequently, it purported to assign to Linden Gardens its rights of action under the contracts with McLaughlin & Harvey and Ashwell. Linden Gardens took over Stock Conversion’s claim against Lenesta Sludge (against whom the case was dropped before judgment in the first instance case) and McLaughlin & Harvey and Ashwell were joined as second and third defendants. Linden Gardens pursued the second and third defendants for the cost of StockConversion’s remedial works in 1985. Lenesta Sludge argued that, because Stock Conversion Ltd had received full market value prior to the assignment, Stock Conversion had suffered no loss and therefore Linden gardens (as assignee) could not recover substantial damages. Its argument failed. The Court of Appeal decided that, if the contracts had been validly assigned, Linden Gardens would be able to claim for substantial damages against the contractors. The Court of Appeal also decided that the purported assignment was valid.

4.4 DARLINGTON Vs WILTSHIER Darlington Borough Council (Council) required a new recreation centre to be built at a site it owned. Due to restrictions on local authority borrowing, it made an arrangement with a finance company, Morgan Grenfell (Local Authorities) Ltd (Morgan Grenfell), which involved splitting construction of the centre into two phases. Morgan Grenfell entered into two building contracts, as employer, with Wiltshier Northern Ltd (Wiltshier) (then known as Leslie and Company Ltd) as principal, not as an agent of the Council. In turn, the Council indemnified Morgan Grenfell for its liabilities under the building contracts. Morgan Grenfell had no liabilities to the Council, but entered into a tripartite agreement with the Council and Wiltshier to ensure that any liquidated damages for delay were

17 payable to the Council, who would suffer the consequences of a delay. Morgan Grenfell’s role in the project was similar to a developer’s, where a landowner commissions a developer to procure the construction of a development for the landowner’s benefit. However, Morgan Grenfell did not have any liability to the Council for construction defects. After completion, Morgan Grenfell assigned the benefit of the building contracts to the Council (the Council could call for that assignment under its contracts with Morgan Grenfell). The Council discovered substantial defects in the completed development and sued Wiltshier for breach of contract pursuant to the assigned building contracts. Wiltshier contended that because Morgan Grenfell (the assignor) had suffered no loss, and despite the fact that the building contracts were to carry out works for the benefit of the Council, the Council should only be entitled to nominal damages.

4.5 ALFRED MCALPINE Vs PANATOWN Panatown had employed Alfred McAlpine under a building contract to design and construct an office building and multistory car park in Cambridge. Panatown claimed damages from Alfred McAlpine for alleged defects in the works. Panatown was the employer under the building contract and one of its sister companies, Unex Investment Properties Ltd (Unex), owned the site of the works. Panatown had no contractual liabilities towards Unex in respect of any defects and was the employer for tax reasons. Panatown did not have a proprietary interest in the works that would have led to it suffering loss. Unex was not a party to the building contract. It did have the benefit of a duty of care deed (in effect, a collateral warranty) but this was drafted in terms of “reasonable skill and care” and was less favourable to Unex than the building contract, if Unex was entitled to benefit under it. As a preliminary issue, the House of Lords was asked to determine whether Alfred McAlpine would be liable to Panatown for substantial defects in the works, which were alleged to have resulted from the Alfred McAlpine’s breach of contract. Alfred McAlpine did not dispute that there were substantial defects in the works. However, it contended that Panatown itself had suffered no loss and should consequently only be entitled to claim nominal damages. A three to two majority of the House of Lords agreed with Alfred McAlpine’s argument.

18 THE EFFECT OF THE CLAUSE PROHIBITING ASSIGNMENT WITHOUT CONSENT In all the cases except Darlington, the building contract contained a clause prohibiting assignment without consent. One party to a contract can never transfer his obligations to a third party without the consent of the other party. But, providing he gives notice, he is able to assign his rights under a contract unless the contract prohibits it. The logic behind prohibiting transfer of the employer’s obligations under a building contract without the contractor’s consent is that the contractor wants to know whom he is dealing with.

5.0 CONCLUSION Probably, the most common use of assignment in the construction industry today is in relation to collateral warranties. The collateral warranties given by consultants, contractors and sub-contractors are often assigned to subsequent owners or leases. Assignment can do no more than transfer rights available to the assignor; it is not capable of creating new rights in favour of an assignee.

Thus while the client can in theory assign the right to have a building adequately designed by the Architect, the Architect cannot in turn assign his job or duty to another Architect. Likewise, a contractor on site cannot assign the contract to another contractor.

19 REFERENCES

. Ogunsote O.O (2009). ’Building Law’ - Lecture notes Fut. Akure. (Unpublished) . www.architectureideas.info . www.internationallawoffice.com . www.duhaime.org . www.en.wikipedia.org . www.longworthconsulting.co.uk/construction_contracts/assignment.htm . law.jrank.org/pages/9543/Public-Contract-Contractual-Rights-Parties.html . www.construction.practicallaw.com/4-385-6875 . www.maddocks.com.au . www.practicallaw.com