An assignment is when the rights, title, and interest in debts due or accruing due to a person are transferred to another person. The debts which are sought to be assigned may be present, future, conditional or contingent charge by way of assignment can be created under actionable claim. Transfer of Life Insurance Policy, National Saving Certificates, Supply bills etc., to the name of the bank for the purpose of borrowing are examples of assignment.
What constitutes negotiation?
An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer, it is negotiated by delivery; if payable to order, it is negotiated by the indorsement of the holder and completed by delivery.
Basically, negotiation and assignment are forms of transferring property rights to another person, there is a certain difference between them. They are given in the following table.
|Transactions under negotiation are governed by Negotiable Instrument Acts.||Transactions under Assignment are governed by Transfer of property acts.|
|The negotiation refers to the promissory note, bill of exchange or cheque transferred to any person.||Assignment is usually done for other types of documents.|
|In the case of negotiation, the holder in due course gets a better title than the person from whom he acquired the title as he holds the instrument free from any defect of title of prior parties.||In the assignment, the assignee of actionable claim is not eligible for a better title in case of the defects that may exist in the title of the transferor.|
|In the case of negotiation, consideration is presumed; the endorsee need not prove the consideration for having obtained the instrument.||In the case of assignment, consideration is not presumed; the onus of proving consideration for the assignment of an instrument will be on the assignee.|
|No notice of transfer is required to effect the negotiation.||
In the case of assignment, notice of transfer must be given to the debtor by the transferee.
|Negotiation can be made by mere delivery or endorsement followed by delivery.||Assignment is done by writing. Normally a separate document is executed by the transferor in favour of a transferee.|