commercial law assignment

• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

Founded in 1939, our law firm combines the ability to represent clients in domestic or international matters with the personal interaction with clients that is traditional to a long established law firm.

Read more about our firm

© 2024, Stimmel, Stimmel & Roeser, All rights reserved  | Terms of Use | Site by Bay Design

• Find a Lawyer
• Legal Topics
• Business Law

Commercial Law

(This may not be the same place you live)

  What Is Commercial Law?

Commercial law, commonly known as business law, is the body of law that governs commercial and business transactions. Business law encompasses a wide variety of activities, such as the selling of commodities, commercial contracts, and consumer protection.

The following are some of the important areas and principles of commercial law:

• Sales of products: The sale of items between firms and customers is governed by this field of commercial law, which includes problems such as title, delivery, and warranty.
• Commercial contracts: Commercial contracts control the creation, execution, and enforcement of contracts between firms, covering problems such as offer and acceptance, consideration, and ability to contract.
• Consumer protection: This commercial law branch protects customers against misleading or fraudulent company activities such as false advertising, bait and switch, and hidden costs.
• Intellectual property: Intellectual property law protects creative works and innovations via patents , trademarks , and copyrights .
• Business law: Business law oversees the establishment, operation, and dissolution of businesses, covering topics such as incorporation, shareholder rights, and corporate governance.
• Banking and finance law: Banking and finance law involves regulating financial institutions and the supply of financial services, including lending, borrowing, and financial fraud.
• Insolvency: This field of business law oversees the process of resolving a company’s or an individual’s financial troubles, including bankruptcy , liquidation, and reorganization.
• Competition law: Competition law regulates fair competition among enterprises, covering problems like antitrust, price fixing, and monopolies.

Commercial law is a complicated and ever-changing topic, and organizations and people must grasp their legal rights and duties.

What Are Some Common Commercial Law Legal Issues?

How are commercial law disputes resolved, do i need a lawyer for help with commercial law issues.

There are several commercial legal challenges that organizations and people may face. Some types of commercial law conflicts are as follows:

• Contract conflicts: Contract conflicts emerge when one party to a contract fails to meet their duties, such as failing to provide products or services or failing to pay for goods or services.
• Intellectual property conflicts: Intellectual property conflicts develop when one party utilizes or misappropriates another party’s intellectual property, such as utilizing a brand or copyrighted content without authorization.
• Product liability conflicts: This commercial legal problem occurs when a product, such as a vehicle flaw or a pharmaceutical, causes injury or damage to a consumer.
• Consumer protection conflicts: Consumer protection conflicts emerge when a company engages in misleading or fraudulent tactics, such as false advertising or hidden costs.
• Employment law conflicts: This business legal problem emerges when employers and workers disagree, such as wrongful termination, discrimination, or wage and hour issues.
• Mergers and Acquisitions conflicts: This sort of commercial law problem emerges when a company buys or merges with another company, and it includes themes like due diligence, finance, and regulatory compliance.
• Banking & Finance conflicts: When there are conflicts or regulatory issues involving financial institutions and services, such as lending, borrowing, or financial fraud, this sort of commercial law problem occurs.
• Competition law conflicts: This sort of commercial legal problem develops when there are disagreements among enterprises about fair competition, such as anti-trust, price fixing, or monopolies.

Here are a few commercial law examples:

• Product liability rules may hold a firm accountable if it sells a faulty product that injures a customer.
• Under consumer protection regulations, a company that participates in misleading advertising may face penalties or legal action.
• Individuals who utilize another’s copyrighted content without permission may face a copyright infringement lawsuit under intellectual property laws.
• Under banking and finance rules, a financial institution participating in fraudulent lending may face legal action and regulatory fines.
• Under competition rules, a corporation participating in anti-competitive actions such as price fixing may face penalties and legal action.

Commercial and intellectual property laws are inextricably linked since they control the protection and use of different forms of property.

For example, copyright, trademark, and patent laws are intended to safeguard the rights of authors and owners of creative works, innovations, and symbols. These laws provide the authors and owners of these works exclusive rights, such as the right to reproduce, distribute, and sell them, as well as the right to prohibit others from exploiting them without permission.

Commercial law, on the other hand, which controls business and commercial transactions, often deals with the use of intellectual property in business and commerce. Business law, for example, may control matters such as the sale of copyrighted works, trademark licensing, or patent enforcement in a commercial environment.

Contract breach disputes may be settled in various ways, depending on the facts of the case. The following are the most prevalent methods for resolving contract violations :

• Mediation : Direct dialogue or mediation may be used by the parties to attempt to settle the conflict. This may be an efficient and cost-effective method of resolving disputes since the parties can reach a mutually agreeable settlement without requiring formal legal processes.
• Arbitration : The parties may agree to refer their issue to arbitration, which is a kind of alternative dispute resolution. A neutral third party, an arbitrator, will hear evidence and arguments from both parties and provide a final ruling. Arbitration is a less formal and less costly alternative to going to court.
• Litigation : The parties may opt to settle their disagreement in a court of law. This entails bringing a lawsuit and going through the entire legal procedure, which can be time-consuming and expensive.
• Specific performance: A court may require a breaching party to execute their contractual duties rather than pay damages in specific instances. This remedy is frequently employed when monetary damages would be insufficient.
• Injunctions : In some instances, a court may issue an injunction, a court order directing a party to perform or abstain from undertaking certain conduct. This remedy is often employed to avoid additional contract breaches.

The method of dispute settlement adopted may be determined by the disagreement’s unique circumstances, the contract’s nature, and the remedies sought by the parties. It’s always a good idea to talk with a lawyer to determine the best course of action.

While a lawyer is not always required for assistance with business legal matters, it is often recommended.

A commercial lawyer that specializes in commercial law may advise and represent you in a variety of business and commercial transactions, including:

Advising on consumer protection legislation; reviewing and developing contracts; negotiating and resolving disputes; defending intellectual property rights

Representing companies and people in court or arbitration.

A competent legal assessment and guidance on commercial law concerns may reduce any legal risks and safeguard the rights and interests of the firm or person. They may also advise on the best course of action and assist in navigating the legal system.

A lawyer may also give legal advice on the particular rules and regulations that apply in your state or municipality, as well as guidance on how to comply with them.

Don’t put it off any longer. Use LegalMatch now to locate the best lawyer for your business law requirements.

LegalMatch is an online legal matching service that may put you in touch with skilled criminal defense attorneys in your region. Simply fill out their online form, and you will be contacted by attorneys in your region who are competent to handle your case. Don’t put it off any longer; act immediately and use LegalMatch to locate the best lawyer for you.

Need a Commercial Lawyer in your Area?

• Connecticut
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

Ty McDuffey

LegalMatch Legal Writer

Updating Author

Ty began working at LegalMatch in November 2021. Ty holds a Professional Writing Degree from Missouri State University with a minor in Economics. Ty received his Juris Doctorate from the University of Missouri-Kansas City School of Law in May of 2021. Before joining LegalMatch, Ty worked as a law clerk and freelance writer. Ty is a native of Lake of the Ozarks, Missouri, and currently resides in Kansas City. Read More

Jose Rivera

Managing Editor

Original Author

Related Articles

• Bartering Laws
• Bill of Sale Laws
• Business Conflicts of Interest Laws
• Contract Negotiation Basics
• Corporate Fiduciary Duties
• Distribution Agreement Laws
• Enforcing a Licensing Agreement
• Hiring a General Counsel for a Small Business
• Home Based Business Lawyers
• Hotelkeepers' Liens
• How Much Will a Business Lawyer Cost?
• Liability for Sole Proprietorship Business Debts
• Merchandise Risk of Loss
• Mismanagement of Funds
• Pawnshops and Civil Liability
• Risk of Loss in the Sale of Goods
• Sales and Purchase Agreement
• Transfer the Risk of Loss in a Sale of Goods
• UCC Article 2
• UCC Filing Lawyers
• UCC Sale of Goods
• Uniform Commercial Code Laws
• What is a Cease and Desist Order?
• What is an Injunction?

Discover the Trustworthy LegalMatch Advantage

• No fee to present your case
• Choose from lawyers in your area
• A 100% confidential service

How does LegalMatch work?

Law Library Disclaimer

16 people have successfully posted their cases

Select a product below:

• Connect Math Hosted by ALEKS C
• My Bookshelf (eBook Access) C

Sign in to Shop:

• Professional
• International
•   Sign In
• There are currently no items in your shopping cart.
• News & Insights
• Diversity, Equity & Inclusion
• Social Responsibility
• About   
• Get Support   

Get Support

• My Account Details

Business Law

Products by Course

• Business Law (12)
• Legal Environment of Business (5)
• Employment Law (2)

Featured Products

Melvin, Business Law and Strategy,

2nd edition.

Kubasek, Dynamic Business Law: The Essentials

Pagnattaro, The Legal and Regulatory Environment of Business

Bennett-Alexander, Employment Law for Business,

10th edition, connect for business law features, case analysis exercises (caes) in mcgraw hill connect®.

New Case Analysis Exercises are highly interactive, automati¬cally graded online exercises in Connect that provide students the opportunity to dive into real-world cases. Learners are presented with the facts of a real case, asked to evaluate relevant evidence, and apply their knowledge of the law to decide on the judgment. Students are then challenged to take their knowledge of the law a step further by using their criti¬cal thinking skills to assess a similar legal scenario. There are over 50 Case Analysis Exercises available for Melvin, The Legal Environment of Business, A Managerial Approach: Theory to Practice to excite and engage your business law students.

Document-Based Review Exercises

UNIQUE TO MELVIN, BUSINESS LAW AND STRATEGY 2E! Document-Based Review Exercises (DBRE) are designed to help students connect the various topics covered in a single unit. DBREs challenge students to analyze significant evidence such as legal documents, periodicals, data, and photos or editorial cartoons that are related to strategic legal dilemmas. These exercises encourage students to think critically and strategically and connect several concepts and sources when they prepare their answers. The DBREs are a part of Connect, McGraw Hill’s digital platform for assignment and assessment. DBREs include both auto-graded questions and questions that require manual grading. The DBREs’ multipart format permits instructors to customize which portions of the DBREs they would like to assign.

Proceedings: A Monthly Business Law Newsletter

A newsletter designed specifically with you, the business law educator, in mind.

Each month Proceedings incorporates Hot Topics in business law, video suggestions, an Ethical Dilemma, Teaching Tips, and a Chapter Key cross-referencing newsletter topics with the various McGraw-Hill business law textbooks.

Featured Voices

5 tips to reduce your work stress.

By Rebecca Davis

Helping Our Students Move from Periods to Question Marks

By Dr. M. Neil Browne

Why and How to Incorporate Diversity & Inclusion into the Classroom

By Dr. Dawn D. Bennett-Alexander

You must enable JavaScript in order to use this site.

How to Write a Business Law Assignment – The Ultimate Guide

Business law is a broad area of study that covers many aspects of a company’s life. It involves the study of laws that govern starting a business, managing it, selling it, and more.

However, students often find it difficult to write assignments and homework on this topic. That’s why they often seek business law assignment help .

1. Know the Topic

Business law is a complicated subject that can be difficult to learn. It requires a logical and scientific approach.

A well-written business law assignment can help you get the best possible grade. However, it is important to know the topic properly before you begin writing.

Students often struggle to find the right topic for their business law assignments. The best way to do this is to choose a topic that you’re familiar with and are interested in.

You can also get business law research help from experts to help you find the perfect topic for your assignment. You can even ask for a free sample to ensure that the company is reputable and offers quality work.

2. Plan Your Work

The best way to get the most out of your business law assignment is to plan it out in advance. This will ensure that you don’t end up with a poorly constructed paper that will be tossed into the trash bin. Moreover, you’ll be able to complete your business law homework on time without sacrificing too much quality in the process. In addition, you’ll have a much better chance of earning top marks for your efforts.

Nevertheless, it’s no secret that business law is a challenging subject to master. In fact, most students are so stressed out by the task of tackling it that they simply don’t know what to do with their lives. As a result, they look for the best business law assignment help in the form of expert guidance from a trustworthy online service.

3. Brainstorm

Business law is a vast field, and preparing and writing assignments on this subject can be a challenging task. This is the reason why students need to take professional help from experts who can guide them in a proper manner.

The first step in writing a perfect assignment solution on this topic is brainstorming. Brainstorming is an activity that can be done in groups or individually.

When you are brainstorming, try to come up with as many ideas as possible. This will give you plenty of content to write about and keep you on track with your assignment.

You can also use a variety of prompts to inspire your creative thinking and make brainstorming easier. This can be especially helpful if you are working on a group project.

Business law is a broad subject that includes the study of laws related to businesses. It covers a wide variety of topics that deal with starting a business, managing it, selling it, and ending it.

Business laws also include a number of regulations that affect businesses, such as intellectual property rights and patents. These regulations can be difficult to understand for many students, especially those who don’t analyze them as a major college topic.

For this reason, many students seek online business law assignment help from experts. These professionals can provide step-by-step solutions and help students complete their assignments on time.

5. Proofread

Students often face a lot of difficulties while writing business law assignments. They may not be able to understand the topic and may make grammatical mistakes that affect their grades.

Proofreading helps students to spot errors in the corporate law assignment and makes it a better piece of writing. It also allows them to eliminate any traces of plagiarism that may have occurred.

A business law assignment is usually a legal case study that deals with a conflict between two parties over a certain issue. It can involve contracts, mergers, and other legal matters.

Primary tabs

Assignment is a legal term whereby an individual, the “assignor,” transfers rights, property, or other benefits to another known as the “ assignee .”   This concept is used in both contract and property law.  The term can refer to either the act of transfer or the rights /property/benefits being transferred.

Contract Law   

Under contract law, assignment of a contract is both: (1) an assignment of rights; and (2) a delegation of duties , in the absence of evidence otherwise.  For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C.  That is, this assignment is both: (1) an assignment of A’s rights under the contract to the $50; and (2) a delegation of A’s duty to teach guitar to C.  In this example, A is both the “assignor” and the “delegee” who d elegates the duties to another (C), C is known as the “ obligor ” who must perform the obligations to the assignee , and B is the “ assignee ” who is owed duties and is liable to the “ obligor ”.

(1) Assignment of Rights/Duties Under Contract Law

There are a few notable rules regarding assignments under contract law.  First, if an individual has not yet secured the contract to perform duties to another, he/she cannot assign his/her future right to an assignee .  That is, if A has not yet contracted with B to teach B guitar, A cannot assign his/her rights to C.  Second, rights cannot be assigned when they materially change the obligor ’s duty and rights.  Third, the obligor can sue the assignee directly if the assignee does not pay him/her.  Following the previous example, this means that C ( obligor ) can sue B ( assignee ) if C teaches guitar to B, but B does not pay C $50 in return.

            (2) Delegation of Duties

If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor.  It can only be delegated if the promised performance is more commonplace.  Further, an obligee can sue if the assignee does not perform.  However, the delegee is secondarily liable unless there has been an express release of the delegee.  That is, if B does want C to teach guitar but C refuses to, then B can sue C.  If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.

Lastly, a related concept is novation , which is when a new obligor substitutes and releases an old obligor.  If novation occurs, then the original obligor’s duties are wiped out. However, novation requires an original obligee’s consent .  

Property Law

Under property law, assignment typically arises in landlord-tenant situations.  For example, A might be renting from landlord B but wants to another party (C) to take over the property.   In this scenario, A might be able to choose between assigning and subleasing the property to C.  If assigning , A would be giving C the entire balance of the term, with no reversion to anyone whereas if subleasing , A would be giving C for a limited period of the remaining term.  Significantly, under assignment C would have privity of estate with the landlord while under a sublease, C would not. 

[Last updated in May of 2020 by the Wex Definitions Team ]

• business law
• landlord & tenant
• property & real estate law
• trusts, inheritances & estates
• wex definitions

Commercial Law

Introduction:

Commercial law, also known as business law, is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales.It is often considered to be a branch of civil law and deals with issues of both private lawand public law.

Commercial law includes within its compass such titles as principal and agent; carriage by land and sea; merchant shipping; guarantee; marine, fire, life, and accident insurance; bills of exchange and partnership. It can also be understood to regulate corporate contracts, hiring practices, and the manufacture and sales of consumer goods. Many countries have adopted civil codes that contain comprehensive statements of their commercial law.

There are different type of business available in the country. Partnership business is one of them. It is consist of the some partners (more than one) and they must have the good relationship and faith before starting the business. It any partners have the wrong mentality business can continue. So, the base of partnership business is fiduciary relationship.

Here we are discussing about the partnership business with some information regarding these ideology. The Indian Partnership Act of 1932 (Act IX of 1932) applies to partnerships created by agreement between parties.

  Definition & Characteristics:

          Section 4 of the Partnership Act defines a partnership as follows: “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.” A partnership, as defined in the Act, must have three essential elements:

• There must be an agreement entered into by two or more persons
• The agreement must be to share the profits of a business.
• The business must be carried on by all or any one of them acting for all.

1. Voluntary Agreement

          A partnership can only arise as a result of an agreement, express or implied, between two or more persons. Where there is no agreement there is no partnership. But a partnership cannot be formed with more than ten persons in banking and twenty persons in other types of business.

  2. Sharing of Profits of a Business:

          The second element states the motive underlying the formation of a partnership. It also lays down that the existence of a business is essential to a partnership. Business includes any trade, occupation or profession. If two or more persons join together to form a music club it is not a partnership because there is no business in this case.

3. Mutual Agency:

          The third elements is the most important feature or partnership. It states that persons carrying on business in partnership are agents as well as principals. The business of a firm is carried on by all or by any one or more of them on behalf of all. Every partner has the authority to act on behalf of all and can, by his actions, bind all the partners of the firm. Each partner is the agents of the others in all matters connected with the business of the partnership.

  Who can be a Partner:

2   A person:

          Under the Indian partnership Act, a person may be partner if he has the capacity to enter into a contract (“Capacity of parties”)

          A minor cannot be a partner. But in an existing partnership, a minor can be admitted into a firm if all the partners of the firm agree.

2 Persons of unsound mind:

          A person who is of unsound mind cannot become a partner.

          A woman can be a partner, married or unmarried. Of course a woman cannot be a partner if she is a minor or she is of unsound mind.

          In a company the capacity to enter into contract is determined by the Memorandum and Articles of the Association of the company. The liability of the members of a firm under the Partnership. Act, for the debts of the firm, is unlimited. But a company cannot incur unlimited liability. Therefore a company cannot become a partner of a firm.

2 An alien enemy:

An alien enemy cannot enter into a contract of partnership with a citizen of any Country.

  Classes of Partners:

Partners can be classified as below:

d Active partner:

          An active partner is one who actually participates in the business of the firm. A person becomes a partner only by agreement.

d Dormant, Sleeping or Nominal Partner:

          These partners join the firm by agreement but do not take any active part in the business. Their liabilities are same as of Active Parnters.

d Sub-Partner:

The transferee of a share of a partner’s interest in a firm is called a Sub-partner. Suppose P, the owner of ½ of firm, transfers 1 / 2 of his share to Q. Q will be called a sub-partner. His rights and liabilities are limited.

  Classes of Partnerships:

Partnerships can be classified as below:

d Partnership-will:

          A partnership is called a partnership at-will (i) when the partnership is not for a fixed period of time and (ii) when no provision is made as to when and how the partnership will come to an end.

d Particular Partnership. Joint Venture:

          A particular partnership is one-which is formed for a particular adventure or a particular undertaking. Such a partnership is usually dissolved on the completion of the adventure or undertaking.

d Limited Partnership:

In Great Britain, according to the provisions of the partnership Act of 1907, a partnership may be formed in which the liability of all partners (except one) is limited. There must be at least one partner with unlimited liability.

  Partnership Agreement:

          The agreement to carry on business in partnership may be oral or in writing. If it is in writing, the document in which the terms are incorporated is called the Deed of Partnership or the Articles of Partnership.-

• Relationship between partners regarding the business.
• Name, Address, age etc. of the partners
• Nature of business
• Location of business
• Business address
• Duration of the partnership
• Mode of dissolution of partnership
• Amount of capital contribution of each partner.
• Share profit to be taken by each member
• Mode of management
• Power of the partners
• Term of retirements (Under what condition a partner retired)
• Expulsion of member
• Interest of Advance
• Indemnity fault or personal fault

Registration:

 It is not compulsory for partnership. If any partnership firm is not registered it is not illegal association.

As far discussion made above we see that though an unregistered firm is not illegal association, it rights as per contract or partnership act. That is though registration of a partnership is optional, its registration is necessary for its own interest.

  Relations of Partners to one another:

The Partnership Act lays down two general rules regarding the conduct of the partners to one another.

d General duties of partners:

“Partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other, and to render true account and full information of all things affecting the firm to any partner or his legal representative.

This section lays down that the relationship between partners is one of utmost good faith. Though partners are not trustees for one another, it has been held in some cases that the relationship between them is of a fiduciary character.

d Indemnity:

 “Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.

 This rule follows logically from the rule laid down in the previous section. Since partnership implies utmost good faith, a partner must not act fraudulently against the firm. If he does, he must make up the loss.

  Rules regarding the conduct of the business:

Subject to any agreement to the contrary, the following rules apply as regards the management of a firm:

    Every partner has a right to take part in the conduct of the business.

    Every partner is bound to attend diligently to his duties in the conduct of the business.

    and difference arising as to ordinary matters connected with the business may be decided by a majority of the partners, and every partner shall have the rights to express his opinion before the matter is decided but no change may be made in the nature of the business without the consent of all the partners; and

    Every partner has a right to have access to and to inspect and copy any of the books of the firm.

Mutual rights and duties:

          Subject to any contract to the contrary, the mutual rights and duties of partners are as follows:-

    A partner is not entitled to receive remuneration for taking part in the conduct of business.

   The partners are entitled to share equally in the profits earned and shall contribute equally to the losses sustained by the firm.

    Where a partner is entitled to interest on the capital subscribed by him such interest shall be payable only out of profits.

    A partner making, for the purposes of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of six percent per annum.

    A partner shall indemnify the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm.

  Personal Profits Earned by Partners:

Subject to contract between the partners,

    If a partner derives any profit for himself from any transaction of the firm, or from the use of the property or business connection of the firm or the firm name, he shall account for that profit and pay it to the firm.

    If a partner carries on any business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in that business.

Liability of a Partner:

The partner’s liabilities can be discussed in three categories.

d Liability of a partner for Acts of the Firm:

Every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.

This section lays down the rule that every partner is liable, to an unlimited extent, for all debts due to third parties from the firm incurred where he was a partner.

As between the partners, the liability is adjustable according to the terms of the partnership agreement. Thus if a partner is entitled to receive £th share of profits he is liable to pay the share of the losses. The accounts between the partners will be adjusted on this basis. But a third party, who is a creditor of the firm, is entitled to realize the whole of his claim from any one of the partners.

There is no difference between working partners and dormant partners as regards liability to third parties. A dormant partner also is liable to an unlimited extent for all debts of the firm.

 Liability of   the   firm    for    wrongful acts of a   partner:

Where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefore to the same extent as the partner.

Liability of firm for misapplication by partners:

Where a partner acting within his apparent authority   receives money or property from a third party and misapplies it, or a firm in the course of its business receives money or property from a third party, and the money or property is misapplied by any of the partners while it is in the custody of the firm, the firm is liable to make good the loss.

  Example :

X, a member of a firm of solicitors, obtained a loan for A/, from some other clients of the firm. A” said to M that the mortgagee required collateral security for the loan and M deposited certain share warrant payable to bearer. The security was actually not necessary. The other partners of the firm and the mortgagee had no knowledge of this deposit. X then misappropriated the share and absconded. Held, the transaction was within the apparent authority of the other partners, and was an act of firm. Therefore the act was binding on the firm. The firm had to pay the loss. M. Rhodes v. Moules.

Rights Op Partners:

The rights of partners, and the relations of partners to one another, are determined by the agreement of the partners. Where there is no express or implied terms in the agreement, the rules stated in the Partnership Act will be applied. Subject to any con­tract to the contrary, the important rights of partners are summarised below :

    Conduct of business. Every partner has a right to take part in the conduct of the business.

    Can express opinion. Every partner shall have the right to express his opinion.

   Access, inspection, copy. Every partner has a right to have access to and to inspect and copy any of the books of the firm—Sec.

    Equality of profits he   partners are entitled to share equally in the profits earned.

    Interest on capital A partner is entitled to get interest  on the capital out of profits only.

     Interest on advance. A partner, paid or advanced to the firnvbeyond the amount of capital, is entitled to interest thereon at the rate of six per cent per annum.

     To get indemnity. The firm shall indemnify a partner in respect of payment’s made and liabilities incurred by him, in the ordinary and proper conduct of the business and in doing such act, in any emergency.

     Application of property of firm. The property of the firm shall be held and used by the partners exclusively for the purposes of the business.

    Partner’s authority. Every partner has right to act on be­half of the firm. He has express and implied authority and

     Powers in an emergency. He has certain powers in an emergency.

     Reconstitution the constitution of a firm may be changed by the introduction of a new partner, death, retirement, insolvency, expulsion or by the transfer of a partner’s share to an outsider. The rights and liabilities of the incoming and outgoing partners have been stated in the sections 29 & 31 to 38. (See under “Reconstitution”

    Dissolution. A partner has the right to get the firm dissol­ved inider appropriate circumstances. Upon dissolution, the partners have the right to get accounts of the firm and surplus assets according to their shares.

    Right to carrying on a competing business : By a special agreement, an outgoing partner can be prevented from carrying on a similar business within a specified period or local limits. But if there is no restraining agreement, an outgoing partner can carry on a com­peting business and may advertise such business. But, subject to contract to the contrary, he cannot use the firm-name, represent himself as carrying on the firm business or solicit the custom of the former buyers of the firm.

     Right to share profits after retirement:    If after retirement (or death) and the continuing partners carry on the business of the firm with the property of the firm (without any final settlement of accounts) the outgoing, partner (or the legal representative of the deceased partner) is entitled to get share of profits or d% per annum of his share of the property of the firm, at their option.

Duties of Partners:

The important duties of partners are summarized below:

    Justice, Faithfulness, True Accounts, Full Information. Partners are bound to carry on the business of the firm to the greatest common advantages, to be just and faithful to each other, and to render true accounts and full information of all things affecting the firm to any partner or his legal representative.

    To pay indemnity. Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.

    To attend diligently. Every partner is bound to attend diligently to his duties.

    No remuneration. Subject to any contract to the contrary, a partner is not entitled to receive remuneration for taking part in the contract of the business.

    Equality of losses. Subject to any contract to the contrary, partners are bound to pay the losses of the firm equally.

    To pay indemnity for willful neglect. A partner shall indemni­fy the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm.

No private benefit.   A partner cannot use the partnership “properties, directly or indirectly, for his own benefit.

To account for secret profit. If a partner derives any profits for himself from any transaction of the firm, or from the use of the property or business connection of the firm or the firm name, he shall account for that profit and pay it to the firm.

No secret profit. If a partner carries on any competing business of the firm, he shall account for and pay to the firm all profits made by him in that business.

Unlimited liability. Every partner is liable for the acts of the firm done while he is a partner. The liability is joint and several.

Dissolution of Firms:

A firm may be dissolved on any of the following grounds:

By agreement. A firm gray be dissolved any of with the consent of all the partners of the firm Partnership is created by contract, it can also be terminated by contract.

Compulsory Dissolution.

A firm   is dissolved

• by the adjudication of all the partners or of all the part­ners but one as insolvent, or
• by the happening of any event which makes the business of the firm unlawful.

But if a firm has more than one undertaking, some of which be­come unlawful and some remain lawful, the firm may continue to carry on the lawful undertakings.

On the   happening of   Certain   Contingencies

 Subject to contract between the partners firm is dissolved

• if constituted for a fixed^ term, by the expiry of that term
• if constituted to carry out one or more adventures  or undertakings, by the completion thereof:
• by the death of a partner
• by the adjudication of a partner as an insolvent.

The partnership agreement may provide that the firm will not be dissolved in any of the aforementioned cases. Such a provision is valid

Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all other partners of his intention to dissolve the firm. The firm is dissol­ved as from the date mentioned in the notice as the date of dissolu­tion, or, if no date is mentioned, as from the date of communication, of the notice.

Dissolution by the Court:

At the suit of a partner, the court may dissolve a firm on any one of the following grounds:

a. Insanity:

If a partner has become of unsound mind. The suit for dissolution in this case can be field by the next friend of the insane partner or by any other partner.

b. Permanent incapacity:

If a partner becomes permanently incapable of performing his duties as a partner. Permanent incapacity may arise from an incurable illness like paralysis. In Whitwell v. Arthur a partner was attacked with paralysis which on medical evidence was found to be curable. Dissolution was not granted.

 The suit for dissolution in this case must be brought by a partner other than the person who has become incapable.

c. Guilty Conduct:

If a partner is guilty of conduct-which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business. To justify dissolution under this clause the misconduct must be of such a nature as to affect adversely the particular business concerned. Misconduct which affects one business may not affect another business. Therefore the court must take into account the nature of business that 1 the partnership carries on. The test generally applied is whether the act complained of is likely to affect the credit and custom of the particular business.

 The suit for dissolution on the ground mentioned in this clause must be brought by a partner other than the partner who is guilty of misconduct.

a    The partner of a firm of solicitors was convicted of traveling on the railway without a ticket and with intent to defraud. It was held that since the conviction was for dishonesty, it was likely to be detrimental to the partnership business and dissolution was granted. Carmichael v. Evans.

a    In English cases dissolution has been granted for the following acts conviction for an offence involving moral turpitude ; misapplica­tion of the monies of a client by a solicitor ; adultery by a doctor ; speculation in shares by the partner of a regular mercantile business.

a    Persistent Breach of Agreement. If a partner willfully and persistently commits breach of the partnership agreement regarding management, or otherwise conducts himself in such a way that it is not reasonably practicable for the other partners to carry on business in partnership with him.

The suit for dissolution in cases coming under this clause is to be brought by a partner other than the partner guilty of the acts complained of.

In English cases the following acts have been held to be suffices ground for directing dissolution: refusing to account for monies received taking away the books of account; the application of monies belonging to the firm in payment of his private debts; continued quarrelling, and such a state of animosity as precludes reasonable hopes of reconciliation and friendly co-operation Transfer of whole interest. It a partner has transferred the whole of his interest in the firm to an outsider  or has allowed his interest to be sold in execution of a decree.

Transfer of a partner’s interest does not by itself dissolve the firm. But the other partners may ask the court to dissolve the firm if such a transfer occurs. Only the transfer of the entire interest of the partner gives ground for action. The transfer of a part of the partner’s interest does not provide any ground for dissolution. The formation of a sub-partnership is, therefore, not a ground for dissolution.

The suit for dissolution on the ground mentioned in this clause must be brought by a partner other than the partner whose interest has been transferred or sold.

If thy business of the firm cannot be carried on except at a loss. Since the motive, with which partnerships are formed, is acquisition of gain, the courts have been given discretion to dissolve a firm in cases where it is impossible to make profits.

Just and Equitable clause:

If the court considers it just and equitable to dissolve the firm. This clause gives a discretionary power to the court to dissolve a firm in cases which do not come within any of the foregoing clauses but which are considered to be fit and proper cases for dissolution.

Dissolution has been granted under the clause in the following cases deadlock in the management; partners not on speaking terms; disappearance of the substratum of the business.

Conclusion:

Under the above discussion, we can say that partnership business is a legal business and its partners are also legal. Because they have to perform some formalities. But except these the most important thing of this business is belief. Without belief everything is baseless. As the partnership business is consist of some partners. So, the partners must be honest and faithful to each other. If there is lack of perfect relationship among the partners the business must be dissolve. So, we can say that “Partnership Business is a Business Based on Fiduciary Relationship.”

References:

Commercial law including company law & Industrial law

Arun Kumar Sen

Jitendra Kumar Mitra

Class Lecture of-

Advocate, Abul Kalam Azad

MSS, PG DMP (1 st Class), LLB

Trials for Bangladesh Rifles Abuses

Reason for hire experience lawyers rather then price, the value of legal translation services, transformation of enemy property into vested property, teens’ mental health suffers when they have more siblings, discount printing is cost effective option, analysis on storage calgary units, environmental racism, particle model of solids, liquids and gases, financial statement analysis of rahimafrooz batteries limited (part 2), latest post, scientists create an ultra-thin, minimally invasive pacemaker operated by light, geodynamics – a subfield of geophysics, electrical resonance – in the electric circuit, acoustic resonance, developing a covering for disease-free produce, space solar power project completes first in-space trip with triumphs and lessons.

• Study Guides
• Homework Questions

Assignment No. 2 - 2024 Winter

Assignments for the Benefit of Creditors – an often-overlooked state law alternative to Chapter 7 bankruptcy

For some folks the three letters ABC are a reminder of elementary school and singing a song to learn the alphabet.  For others, it is a throw back to the early 70’s when the Jackson Five and its lead singer Michael, still with his adolescent high voice, sang a catchy love song.  Then there is a select group of people in the world of corporate workouts, liquidations and bankruptcies, who know those three letters to stand for the A ssignment for the B enefit of C reditors – a voluntary state law liquidation process that may arguably offer a hospitable and friendly alternative to federal bankruptcy.  This article is a brief summary of this potentially attractive alternative to bankruptcy.

 The Assignment for the Benefit of Creditors (“ABC”), also known as a General Assignment, is a state law procedure governed by state statute or common law.  Over 30 states have codified statutes, and the remainder of states rely on common law.  See Practical Issues in Assignments for the Benefit of Creditors , by Robert Richards & Nancy Ross, ABI Law Review Vol. 17:5 (2009) at p. 6 (listing state statutes).  In some states, the statutory authority and common law can coexist.  At its most basic, the ABC process involves the transfer of all assets by a financially distressed debtor (the assignor) to an individual or entity (the assignee) with fiduciary obligations who then liquidates the assets and pays creditors.  The assignment agreement is essentially a contract involving the transfer and control of property, in trust, to a third party.  In some states that have enacted a statute, state courts may supervise the process (and at different levels of involvement depending on the statute).  The statutory scheme in other states such as California and Nevada, and in states where common law govern, do not provide for judicial oversight..  

ABCs are promoted as less expensive and more flexible than a chapter 7 liquidation and may proceed substantially faster than bankruptcy liquidation. See generally Practical Issues in Assignments for the Benefit of Creditors , ABI Law Review Vol. 17:5 (2009) at p. 8 (citations omitted).  In addition, the ABC process may provide four other noteworthy benefits not available in a bankruptcy.  First, the liquidating company chooses the assignee, there is no appointment of a random trustee or formal election required like in a bankruptcy.  This freedom of choice allows the assignor to evaluate the reputation and experience of proposed assignees, as well as select an assignee with familiarity in the nature of the assignor’s business and/or with more expansive contacts in the industry to facilitate the sale/liquidation.  Second, the ABC process generally falls under the radar of the media (particularly in states that do not require court supervision), and the assignor may avoid publicity, often negative, that can be associated with bankruptcy proceedings.  Third, with an ABC, the assignee has the ability to sell the assets without the imposition of potentially cumbersome requirements of Section 363 of the Bankruptcy Code, and in some cases, can conduct a sale the same day as the general assignment.  Finally, the ABC process generally authorizes the sale of assets free of unsecured creditor debt.  In essence, in an ABC, a company buying assets from a distressed business does not acquire the debt of the assignor.

On the down side, ABCs do not provide the protection of the automatic stay that is triggered upon the filing of a bankruptcy petition.  In some situations, the debtor entity needs to stop the pursuit of creditors immediately, and a bankruptcy proceeding will supply this relief.  Unlike bankruptcy, the sale through an ABC: i) is not free and clear of liens; ii) unexpired leases cannot be assumed and assigned without the consent of the contract counter-party; and iii) insolvency can trigger a default under an unexpired lease or executory contract. See generally Practical Issues in Assignments for the Benefit of Creditors , ABI Law Review Vol. 17:5 (2009) at p. 20. In general, an ABC is not a good choice for debtors that have secured creditors that do not consent because there is no mechanism for using cash collateral or transferring assets free and clear of liens without the secured creditors’ consent.  In cases where junior lienholders are out of the money, there is no incentive for those creditors to voluntarily release their liens.  In addition, while unsecured creditors do not have to consent to the general assignment for it to be valid, choosing this alternative forum may cause concern for creditors (particularly those used to the transparency of a court-supervised bankruptcy or receivership proceeding) and invite the filing of an involuntary bankruptcy. Therefore, it is prudent to involve major creditors in the process, and perhaps even in the pre-assignment planning. In addition, if an involuntary petition is filed, the assignee could request that the bankruptcy court abstain in order to proceed with the ABC.

Using the ABC state process in lieu of filing for bankruptcy in federal court may result in a more streamlined, efficient liquidation process that is less expensive and likely completed quicker than a federal bankruptcy proceeding.  In some jurisdictions, such as New Jersey, workout professionals note anecdotally that corporate clients fare better under this state law alternative rather than the lengthy, more complicated federal bankruptcy proceedings.

Many bankruptcy professionals are unfamiliar with the procedures of ABC and are reluctant to recommend it as a method for liquidating assets and administering claims.  This lack of familiarity may be a disservice to potential clients.  

[ View source .]

Related Posts

• Mediation in Bankruptcy: A Glimpse
• In re The Hacienda Company, LLC – Round 2: Bankruptcy Courts May be Available to Non-Operating Cannabis Companies to Liquidate Assets
• PAGA Dischargeable in Bankruptcy?

Latest Posts

• Fifth Circuit Vacates EPA’s Orders Regulating PFAS under Significant New Use Rule
• IRS Issues New Guidance for Cannabis Companies That Receive Over $10K Cash

See more »

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

Refine your interests »

Written by:

Published In:

Fox rothschild llp on:.

"My best business intelligence, in one easy email…"

PERM, H-1B and Prevailing Wage Case Processing Statistics from the Department of Labor (FY2015 Q1)

The Department of Labor has provided some updates for the first quarter of the Fiscal Year 2015 (October 1, 2014 to December 31, 2014) on their processing of PERM, H-1B LCA and prevailing wage determination cases and we are happy to share them with our clients and readers.

DOL Processing Statistics (First Quarter, 2015 Fiscal Year)

According to the PERM case report , during the quarter, there were 23,133 new cases received (an increase of 7% from the prior quarter and a significant 31% increase compared to the same period of the previous year ), 16,192 certified (slight increase over the previous quarters), 1,322 denied (increase, but in proportion of the rate of new filings) and 1,104 withdrawn (about the same as the prior quarter).

There are 64,810 applications pending as of December 31, 2014 which is about 8% increase in the pending case load.   Out of these cases, approximately 60% are in analyst review stage (no change to prior quarter), 30% under audit review (no change) and 8% on appeal (slight decrease.)

Prevailing Wage Determinations

The prevailing wage report provides some detailed breakdown of the rate of filings in addition to details about top employers, top occupations and top areas.   During the first quarter, there were approximately 38,000 prevailing wage determination requests filed — of those, 29,870 were for PERM cases ( increase of 27% compared to prior year’s period), 1,476 were for H-1B cases (increase of 5%) and 6,334 were for H-2B cases (increase of 38%).     In terms of activity, 31,946 prevailing wage determinations were issued during the first quarter and the pending load has increased from 14,619 during the prior quarter to 18,282 in the first quarter of FY2015.

The H-1B/LCA report also provides a breakdown in the rate of filings, in addition to some details about the top LCA filers and the top positions and geographic areas.    Since this quarter fell entirely outside of the H-1B cap filing season, the number of LCA filings is lower compared to other quarters during the year, and especially Q2 of 2014.  Even then, there were 80,520  H-1B LCA filings in the first quarter, noting a decrease of about 13% compared to the prior quarter.   During the quarter, there were 77,691 LCAs certified for 169,282 positions (one LCA can include more than 1 position).

According to DOL, 100% of the LCAs are processed timely within seven days of receipt.     The rate of LCA denial is fairly low (1,761 out of 89,367 determinations) and the main reasons remain (1) FEIN mismatch or failure to verify before LCA filing  or (2) prevailing wage tracking number issues.

The first quarter of the FY2015 shows a significant increase in the number of DOL filings in a number of categories.  Perhaps most notable is the increase in PERM filings – 31% increase over the prior year and 7% increase over the prior quarter.   Similarly, the PERM prevailing wage requests rose by 27% over the prior year period, signaling continued strong rate of upcoming PERM filings.   Thus, in turn, is likely to translate increase in the PERM case processing times.    We are hopeful that DOL would continue to work on decreasing its load and processing times, especially for the PERM cases (see the most recent PERM processing times report ).

We will continue monitoring DOL processing metrics and report any notable developments and trends.      Please visit us again, contact us, or subscribe to our free weekly newsletter to ensure that you obtain this and related immigration-related news and announcements.

About the Author: Dimo Michailov

Related News and Articles

• PERM Labor Certification Overview and Processing Times
• October 2023 Government Shutdown and Immigration: (How) Will It Affect Me?
• Premium Processing Requests on Form I-907: Eligible Petitions, Fees, and Processing Times
• 2024 H-1B Cap Season – Quota, Timeline, Requirements; Lottery Registration Window Opens March 6; Beneficiary-Centric Selection Process Announced

The Capitol Immigration Law Group has been serving the business community for over 15 years and is one of the most widely respected immigration law firms focused solely on U.S. employment-based immigration.   Disclaimer:  we make all efforts to provide timely and accurate information; however, the information in this article may become outdated or may not be applicable to a specific set of facts.  It is not to be construed as legal advice.

Consultation Options

Live chats and webinars, contact and quote forms.