Lloyd's Maritime and Commercial Law Quarterly
PROHIBITIONS ON ASSIGNMENT—AGAIN
Foamcrete
v. Thrust Engineering
For all we hear of globalization these days, most of commerce remains a pretty personal activity. Businessmen are cautious beasts: they like to know who they are doing business with. In particular, they do not want to find themselves pushed unexpectedly into a contractual relationship with someone they do not know and may not trust. This is why any decently drafted construction or manufacturing contract is likely to obtain a “no-assignment” clause, to the effect that neither party can assign the benefit of it, or the right to payment under it, without the written consent of the other.
Some years ago, the House of Lords roundly approved this state of affairs. The case of Linden Garden Developments Ltd
v. Lenesta Sludge Disposal Ltd
1
involved a straightforward construction which expressly prohibited assignment by the client. The client later sold the development on and, in blind disregard of the prohibition, affected to assign with it the benefit of its contract with the builders. It then turned out that things had gone badly wrong, and the would-be assignee sued the builders for damages. It failed. The anti-assignment clause meant what it said; and moreover (as Lord Browne-Wilkinson said in the course of his admirably straightforward opinion) there was nothing wrong with such clauses as a matter of policy.2
It followed that, since the contract was by its plain terms unassignable, the assignee had no conceivable standing to sue.
So far so good. Since then, unfortunately, the Court of Appeal in a couple of decisions seems to have been bent on sabotaging much of the good work done in Linden
v. Lenesta.
CASE AND COMMENT
473