Assignment clause determines which rights and responsibilities can be transferred from one party of the contract to another one, they mainly protects against increased risk.
The assignment clause specifies who a new assigned entity can be; also it may provide that a contract may only be attributed to creditor who has almost the same features to the original creditor.
The assignment clause in property insurance policies
In every insurance policy is rooted risk, the risk that the insurer has thoroughly checked everything before insuring the insured. The most important entity that the insurer checks is of course the insured itself. Characteristic of the insured is important in the context of coverage of property by another person but also the attention is paid to life insurance, civil liability and medical insurance. For example, the level of risk shown by the insured is a kind of operation, which leads to the nature of the individual and other relevant factors.
The insurer takes into account whether the risk he gave did not increase through factors such as change of identity or characteristics of the insured. Insurers bear a risk, which they try to prevent by limiting the insured, the ability to transfer coverage rights (under an insurance policy) to another entity or another person. This type of restriction is implemented by including in the policy a sentence that concerns non-transferability or can counteract the change.
The insured's risk and its characteristics determine if the insurer will ensure coverage and in what amount.
Issues covered by considerations of anti-assignment clause against transfer:
- the applicable law to check whether there are any limits on the anti-department clauses
- conditions should be provided if one party is entitled to assign under certain conditions, it is very important to determine conditions as precisely as possible
It is important to include an appropriate assignment clause that determines who can become new assigned party. The assignment clause may contain information that the contract can be appropriate only for people who are able to participate in HIPC (Heavily Indebted Poor Countries) initiatives or for entities that are members of the Paris club (it is a group of people from creditor countries; their role is to find solutions to monetary problems in countries that are debtors).
As indicated earlier, the assignment clause may provide that the contract may be attributed to a person (creditor) who has almost the same features as the original creditor.
- (Sigman H. C.,(2009) p. 165)
- (Colinvaux C.M., (2010), vol. 39, p. 1)
- (Colinvaux C.M., (2010), vol. 39, p. 2)
- (Adams C. M., (2014) p. 295-296)
- (Sookun D. (2010), p. 75)
- Adams C. M. and others (2014) Drafting Contracts in Legal English: Cross-border Agreements Governed by U.S. Law, Wolters Kluwer Law & Business, p. 295-296
- Colinvaux C. M. and others (2010)The Assignment Clause in First-Party Property Insurance Policies., vol 39, p. 1-2
- Sigman H. C. and others (2009) Cross-border Security Over Receivables, Sellier. European law publisher, p. 165
- Sookun D. (2010) Stop Vulture Fund Lawsuits: A Handbook, Commonwealth Secretariat, p. 75.
Author: Monika Sojka