assignment by operation of law massachusetts

Do Change of Control Transactions Constitute an Assignment by Operation of Law?

Commercial landlords often rely on anti-assignment provisions to restrict the ability of tenants to assign their interest in a lease to a third party. Such provisions often restrict assignments by “operation of law,” which are generally considered involuntary assignments mandated via a court order. Commercial landlords may assume that a change of control transaction violates a basic anti–assignment clause. Landlords wishing to restrict change of control of a tenant entity, however, should have clear anti-assignment provisions in their leases that expressly restrict such transactions and characterize such “changes of control” as assignments.  

A change of control is a significant change in the equity, ownership, or management of a business entity. This can occur through a merger, consolidation or acquisition.  

The general rule is that change of control of a corporate entity is not an assignment by operation of law, and therefore does not violate a basic anti-assignment provision. Courts have reasoned that a landlord entering into a lease with a corporate tenant should be aware that a corporation, or limited liability company, is an entity which exists separate and apart from its ownership, and that a change in ownership of the corporate entity does not change the tenant entity under the lease.  

Courts in many states including Florida, New York and Delaware have held that a change of control is not an assignment by operation of law. In  Sears Termite & Pest Control, Inc. v. Arnold , a Florida court held, “[t]he fact that there is a change in the ownership of corporate stock does not affect the corporation’s existence or its contract rights, or liabilities.” Further, in  Meso Scale Diagnostics LLC v. Roche Diagnostics GMBH , a Delaware court ruled, “[g]enerally mergers do not result in an assignment by operation of law of assets that began as property of the surviving entity and continued to be such after the merger.” 

Importantly, the rule is different if the tenant entity does not survive the transaction. In  MTA Canada Royalty Corp. v.  Compania  Minera Pangea , a Delaware Superior Court held that a merger in which the contracting entity does not survive may be held to be an assignment by operation of law.  

If a landlord intends for a change of control of a tenant to violate the anti-assignment clause in its lease, the landlord should ensure that its lease expressly states that a change of control constitutes an assignment.

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Anti-Assignment Provisions and Assignments by ‘Operation of Law’: What Do I Have to Do? What Should I Do?

Introduction.

One of the key roles of legal due diligence in mergers and acquisitions (M&A) is to assist in the efficient and successful completion of any proposed M&A transaction. Due diligence is not merely a procedural formality but can serve as a proactive shield against unforeseen challenges and risks. One essential aspect of the legal due diligence process is reviewing third-party contracts to which the target entity is party, in order to better understand the scope of its commercial relationships and to anticipate any issues that may arise via the underlying contractual relationships as a result of completing the proposed M&A transaction.

A frequent reality in many M&A transactions is the requirement to obtain consents from third parties upon the “change of control” of the target entity and/or the transfer or assignment of a third-party contract to which the target is party. Notwithstanding the wording of such contracts, in many instances, the business team from the purchaser will often ask the question: “When is consent actually required?” While anti-assignment and change of control provisions are fairly ubiquitous in commercial contracts, the same cannot be said for when the requirement to obtain consent is actually triggered. The specifics of the proposed transaction’s structure will often dictate the purchaser’s next steps when deciding whether the sometimes-cumbersome process of obtaining consents with one or multiple third parties is actually needed.

This article examines what anti-assignment provisions are and how to approach them, depending on the situation at hand, including in the context of transactions where a change of control event may be triggered. This article also discusses how to interpret whether consent is required when faced with an anti-assignment provision which states that an assignment, including an assignment by operation of law , which requires consent from the non-assigning party.

Understanding Anti-Assignment Provisions

Generally, an anti-assignment provision prohibits the transfer or assignment of some or all of the assigning party’s rights and obligations under the contract in question to another person without the non-assigning party’s prior written consent. By way of example, a standard anti-assignment provision in a contract may read as follows:

Company ABC shall not assign or transfer this agreement, in whole or in part, without the prior written consent of Company XYZ.

In this case, Company ABC requires Company XYZ’s prior written consent to assign the contract. Seems simple enough. However, not all anti-assignment provisions are cut from the same cloth. For example, some anti-assignment provisions expand on the prohibition against general contractual assignment by including a prohibition against assignment by operation of law or otherwise . As is discussed in greater detail below, the nuanced meaning of this phrase can capture transactions that typically would not trigger a general anti-assignment provision and can also trigger the requirement to get consent from the non-assigning party for practical business reasons.

To explore this further, it is helpful to consider anti-assignment provisions in the two main structures of M&A transactions: (i) asset purchases and (ii) share purchases.

Context of M&A Transactions: Asset Purchases and Share Purchases

There are key differences between what triggers an anti-assignment provision in an asset purchase transaction versus a share purchase transaction.

i) Asset Purchases

An anti-assignment provision in a contract that forms part of the “purchased assets” in an asset deal will normally be triggered in an asset purchase transaction pursuant to which the purchaser acquires some or all of the assets of the target entity, including some or all of its contracts. Because the target entity is no longer the contracting party once the transaction ultimately closes (since it is assigning its rights and obligations under the contract to the purchaser), consent from the non-assigning party will be required to avoid any potential liability, recourse or termination of said contract as a result of the completion of the transaction.

ii) Share Purchases

Provisions which prohibit the assignment or transfer of a contract without the prior approval of the non-assigning party will not normally, under Canadian law, be captured in a share purchase transaction pursuant to which the purchaser acquires a portion or all of the shares of the target entity. In other words, no new entity is becoming party to that same contract. General anti-assignment provisions are not typically triggered by a share purchase because the contracts are not assigned or transferred to another entity and instead there is usually a “change of control” of the target entity. In such cases, the target entity remains the contracting party under the contract and the consent analysis will be premised on whether the contract requires consent of the third party for a “direct” or “indirect” change of control of the target entity and not the assignment of the contract.

Importantly, some anti-assignment provisions include prohibitions against change of control without prior written consent. For example, the provision might state the following:

Company ABC shall not assign or transfer this agreement, in whole or in part, without the prior written approval of Company XYZ. For the purposes of this agreement, any change of control of Company ABC resulting from an amalgamation, corporate reorganization, arrangement, business sale or asset shall be deemed an assignment or transfer.

In that case, a change of control as a result of a share purchase will be deemed an assignment or transfer, and prior written consent will be required.

A step in many share purchase transactions where the target is a Canadian corporation that often occurs on or soon after closing is the amalgamation of the purchasing entity and the target entity. So, what about anti-assignment provisions containing by operation of law language – do amalgamations trigger an assignment by operation of law? The short answer: It depends on the jurisdiction in which the anti-assignment provision is being scrutinized (typically, the governing law of the contract in question).

Assignments by Operation of Law

In Canada, the assignment of a contract as part of an asset sale, or the change of control of a party to a contract pursuant to a share sale – situations not normally effected via legal statute or court-ordered proceeding in M&A transactions – will not in and of itself effect an assignment of that contract by operation of law . [1]

Still, one must consider the implications of amalgamations, especially in the context of a proposed transaction when interpreting whether consent is required when an anti-assignment provision contains by operation of law language. Under Canadian law, where nuances often blur the lines within the jurisprudence, an amalgamation will not normally effect the assignment of a contract by operation of law . The same does not necessarily hold true for a Canadian amalgamation scrutinized under U.S. legal doctrines or interpreted by U.S. courts. [2]

Difference Between Mergers and Amalgamations

As noted above, after the closing of a share purchase transaction, the purchasing entity will often amalgamate with the target entity ( click here to read more about amalgamations generally). When two companies “merge” in the U.S., we understand that one corporation survives the merger and one ceases to exist which is why, under U.S. law, a merger can result in an assignment by operation of law . While the “merger” concept is commonly used in the U.S., Canadian corporations combine through a process called “amalgamation,” a situation where two corporations amalgamate and combine with neither corporation ceasing to exist. For all of our Canadian lawyer readers, you will remember the Supreme Court of Canada’s description of an amalgamation as “a river formed by the confluence of two streams, or the creation of a single rope through the intertwining of strands.” [3] Generally, each entity survives and shares the pre-existing rights and liabilities of the other, including contractual relationships, as one corporation. [4]

MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V.

As a practical note and for the reasons below, particularly in cross-border M&A transactions, it would be wise to consider seeking consent where a contract prohibits assignment by operation of law without the prior consent of the other contracting party when your proposed transaction contemplates an amalgamation.

In MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V. (a Superior Court of Delaware decision), the court interpreted a Canadian (British Columbia) amalgamation as an assignment by operation of law , irrespective of the fact that the amalgamation was effected via Canadian governing legislation. In essence, the Delaware court applied U.S. merger jurisprudence to a contract involving a Canadian amalgamation because the contract in question was governed by Delaware law. This is despite the fact that, generally, an amalgamation effected under Canadian common law jurisdictions would not constitute an assignment by operation of law if considered by a Canadian court. As previously mentioned, under Canadian law, unlike in Delaware, neither of the amalgamating entities cease to exist and, technically, there is no “surviving” entity as there would be with a U.S.-style merger. That being said, we bring this to your attention to show that it is possible that a U.S. court (if the applicable third-party contract is governed by U.S. law or other foreign laws) or other U.S. counterparties could interpret a Canadian amalgamation to effect an assignment by operation of law . In this case, as prior consent was not obtained as required by the anti-assignment provision of the contract in question, the Delaware court held that the parties to that agreement were bound by the anti-assignment provision’s express prohibition against all assignments without the other side’s consent. [5]

To avoid the same circumstances that resulted from the decision in MTA Canada Royalty Corp. , seeking consent where an anti-assignment provision includes a prohibition against assignment by operation of law without prior consent can be a practical and strategic option when considering transactions involving amalgamations. It is generally further recommended to do so in order to avoid any confusion for all contracting parties post-closing.

Practical Considerations

The consequences of violating anti-assignment provisions can vary. In some cases, the party attempting to complete the assignment is simply required to continue its obligations under the contract but, in others, assignment without prior consent constitutes default under the contract resulting in significant liability for the defaulting party, including potential termination of the contract. This is especially noteworthy for contracts with third parties that are essential to the target entity’s revenue and general business functions, as the purchaser would run the risk of losing key contractual relationships that contributed to the success of the target business. As such, identifying assignment provisions and considering whether they are triggered by a change of control and require consent is an important element when reviewing the contracts of a target entity and completing legal due diligence as part of an M&A transaction.

There can be a strategic and/or legal imperative to seek consent in many situations when confronted with contractual clauses that prohibit an assignment, either by operation of law or through other means, absent the explicit approval of the non-assigning party. However, the structure of the proposed transaction will often dictate whether consent is even required in the first place. Without considering this nuanced area of M&A transactions, purchasers not only potentially expose themselves to liability but also risk losing key contractual relationships that significantly drive the value of the transaction.

The  Capital Markets Group  at Aird & Berlis will continue to monitor developments in cross-border and domestic Canadian M&A transactions, including developments related to anti-assignment provisions and commercial contracts generally. Please contact a member of the group if you have questions or require assistance with any matter related to anti-assignment provisions and commercial contracts generally, or any of your cross-border or domestic M&A needs.

[1] An assignment by operation of law can be interpreted as an involuntary assignment required by legal statute or certain court-ordered proceedings. For instance, an assignment of a contract by operation of law may occur in, among other situations: (i) testamentary dispositions; (ii) court-ordered asset transfers in bankruptcy proceedings; or (iii) court-ordered asset transfers in divorce proceedings.

[2] MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V ., C. A. No. N19C-11-228 AML, 2020 WL 5554161 (Del. Super. Sept. 16, 2020) [ MTA Canada Royalty Corp. ].

[3] R. v. Black & Decker Manufacturing Co. , [1975] 1 S.C.R. 411.

[4] Certain Canadian jurisdictions, such as the Business Corporations Act (British Columbia), explicitly state that an amalgamation does not constitute an assignment by operation of law (subsection 282(2)).

[5] MTA Canada Royalty Corp .

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Spotting issues with assignment clauses in M&A Due Diligence

Written by: Kira Systems

January 19, 2016

6 minute read

Although not nearly as complex as change of control provisions , assignment provisions may still present a challenge in due diligence projects. We hope this blog post will help you navigate the ambiguities of assignment clauses with greater ease by explaining some of the common variations. (And, if you like it, please check out our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence. )

What is an Assignment Clause?

First, the basics:

Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non-assigning counterparties, such as employment agreements and consulting agreements.) For all other contracts, parties may want an anti-assignment clause that allows them the opportunity to review and understand the impact of an assignment (or change of control) before deciding whether to continue or terminate the relationship.

In the mergers and acquisitions context, an assignment of a contract from a target company entity to the relevant acquirer entity is needed whenever a contract has to be placed in the name of an entity other than the existing target company entity after consummation of a transaction. This is why reviewing contracts for assignment clauses is so critical.

A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty’s right to consent to the assignment of a contract. Below are five common occurrences in which assignment provisions may provide exclusions or inclusions.

Common Exclusions and Inclusions

Exclusion for change of control transactions.

In negotiating an anti-assignment clause, a company would typically seek the exclusion of assignments undertaken in connection with change of control transactions, including mergers and sales of all or substantially all of the assets of the company. This allows a company to undertake a strategic transaction without worry. If an anti-assignment clause doesn’t exclude change of control transactions, a counterparty might materially affect a strategic transaction through delay and/or refusal of consent. Because there are many types of change of control transactions, there is no standard language for these. An example might be:

In the event of the sale or transfer by [Party B] of all or substantially all of its assets related to this Agreement to an Affiliate or to a third party, whether by sale, merger, or change of control, [Party B] would have the right to assign any or all rights and obligations contained herein and the Agreement to such Affiliate or third party without the consent of [Party A] and the Agreement shall be binding upon such acquirer and would remain in full force and effect, at least until the expiration of the then current Term.

Exclusion for Affiliate Transactions

A typical exclusion is one that allows a target company to assign a contract to an affiliate without needing the consent of the contract counterparty. This is much like an exclusion with respect to change of control, since in affiliate transfers or assignments, the ultimate actors and responsible parties under the contract remain essentially the same even though the nominal parties may change. For example:

Either party may assign its rights under this Agreement, including its right to receive payments hereunder, to a subsidiary, affiliate or any financial institution, but in such case the assigning party shall remain liable to the other party for the assigning party’s obligations hereunder. All or any portion of the rights and obligations of [Party A] under this Agreement may be transferred by [Party A] to any of its Affiliates without the consent of [Party B].

Assignment by Operation of Law

Assignments by operation of law typically occur in the context of transfers of rights and obligations in accordance with merger statutes and can be specifically included in or excluded from assignment provisions. An inclusion could be negotiated by the parties to broaden the anti-assignment clause and to ensure that an assignment occurring by operation of law requires counterparty approval:

[Party A] agrees that it will not assign, sublet or otherwise transfer its rights hereunder, either voluntarily or by operations of law, without the prior written consent of [Party B].

while an exclusion could be negotiated by a target company to make it clear that it has the right to assign the contract even though it might otherwise have that right as a matter of law:

This Guaranty shall be binding upon the successors and assigns of [Party A]; provided, that no transfer, assignment or delegation by [Party A], other than a transfer, assignment or delegation by operation of law, without the consent of [Party B], shall release [Party A] from its liabilities hereunder.

This helps settle any ambiguity regarding assignments and their effects under mergers statutes (particularly in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the merger).

Direct or Indirect Assignment

More ambiguity can arise regarding which actions or transactions require a counterparty’s consent when assignment clauses prohibit both direct and indirect assignments without the consent of a counterparty. Transaction parties will typically choose to err on the side of over-inclusiveness in determining which contracts will require consent when dealing with material contracts. An example clause prohibiting direct or indirect assignment might be:

Except as provided hereunder or under the Merger Agreement, such Shareholder shall not, directly or indirectly, (i) transfer (which term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of its Subject Shares, or any interest therein.

“Transfer” of Agreement vs. “Assignment” of Agreement

In some instances, assignment provisions prohibit “transfers” of agreements in addition to, or instead of, explicitly prohibiting “assignments”. Often, the word “transfer” is not defined in the agreement, in which case the governing law of the contract will determine the meaning of the term and whether prohibition on transfers are meant to prohibit a broader or narrower range of transactions than prohibitions on assignments. Note that the current jurisprudence on the meaning of an assignment is broader and deeper than it is on the meaning of a transfer. In the rarer case where “transfer” is defined, it might look like this:

As used in this Agreement, the term “transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in…

The examples listed above are only of five common occurrences in which an assignment provision may provide exclusions or inclusions. As you continue with due diligence review, you may find that assignment provisions offer greater variety beyond the factors discussed in this blog post. However, you now have a basic understand of the possible variations of assignment clauses. For a more in-depth discussion of reviewing change of control and assignment provisions in due diligence, please download our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence.

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Do Change of Control Transactions Constitute an Assignment by Operation of Law?

Commercial l andlords  often  rely on  anti-assignment provisions  to  restrict the ability of tenants to assign their interest in  a  lease to a third party .  Such provisions will often explicitly restrict assignments by  “ operation of law, ”  which are generally considered involuntary assignments  mandated via a  court order. Commercial landlords may assume that a change of control transaction violates a basic anti – assignment cla use, but clear drafting is necessary for Landlords to protect their interests .  Landlords  wishing to restrict change of control of a tenant entity ,  should  have clear  anti-assignment provision s in their leases that   expressly restrict such transaction s  and characterize such “changes of control” as assignments .   

A change of control is a significant change in the equity, ownership, or management of a business entity. This can occur through a merger, consolidation or acquisition.   

The general rule is that change of control of a corporate entity  is  not  an assignment by operation of law ,  and therefore  does not violate a basic  anti- assignment provision. Courts have reasoned that a landlord entering into a lease with a corporate tenant should be aware that a corporation, or limited liability company, is an entity which exists separate and apart from its ownership, and that a change in ownership of the corporate entity does not change the tenant entity under the lease.   

Courts in many states including Florida, New York and Delaware have held that a change of control is not an assignment by operation of law. I n  Sears Termite & Pest Control, Inc. v. Arnold ,  a Florida court held ,  “ [t] he fact that there is a change in the ownership of corporate stock does not affect the corporation’s existence or its contract rights, or liabilities. ”  Further,   i n  Meso Scale Diagnostics LLC v. Roche Diagnostics GMBH , a Delaware court ruled, “ [ g ] enerally  mergers do not result in an assignment by operation of law of assets that began as property of the surviving entity and continued to be such after the merger.”  

Importantly,  the rule is different if the tenant entity does not survive the transaction.   In  MTA Canada Royalty Corp. v.  Compania  Minera Pangea , a  Delaware Superior Court held that a  merger in which the contracting entity does not survive may be held to be an assignment by operation of law.   

If  a  l andlord inten d s for a change of control of a tenant to violate the anti-assignment clause  in its lease, the landlord should ensure that its  lease expressly state s   that a change of control constitutes an assignment .

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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.

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Prohibition of assignment clause did not prevent a transfer of rights by operation of law

What happened, what did the court of appeal say, what does this mean for me.

Dassault Aviation SA v Mitsui Sumitomo Insurance Co. Ltd [2024] EWCA Civ 5 involved a contract for the sale of two aircraft and spare parts.

Under the contract, which was governed by English law, Dassault Aviation would sell the aircraft to Mitsui Bussan Aerospace (MBA). Under a separate contract (governed by Japanese law), MBA would subsequently on-sell the aircraft to the Japanese Coastguard.

MBA was concerned that, if Dassault delivered the aircraft late to MBA, this would affect delivery times under MBA’s contract with the Coastguard and MBA could be liable for late delivery to the Coastguard.

To protect itself against this risk, MBA took out an insurance policy from Mitsui Sumitomo Insurance (MSI) (which, despite the name, was not connected in any way with MBA). The insurance policy was governed by Japanese law.

As it happened, the aircraft were delivered late. MBA claimed under the insurance policy, and MSI duly paid the claim.

Under article 25 of the Japanese Insurance Act (No. 56 of 2008), where an insurer pays out under a Japanese policy of insurance, the insurer is automatically subrogated to any claim the policyholder may have in connection with the event that led to the pay-out. In other words, the policyholder’s right to claim damages passes automatically to the insurer.

Essentially, the same position applies in England and Wales under the common law. See the box “ What is subrogation? ” for more information.

In this scenario, this would mean that MBA’s right to claim against Dassault for breach of contract (due to the late delivery by Dassault) would pass to MSI, so that MSI could claim directly against Dassault.

However, the sale contract between Dassault and MBA contained the following clause (the assignment prohibition):

“[T]his Contract shall not be assigned or transferred in whole or in part by any Party to any third party, for any reason whatsoever, without the prior written consent of the other Party and any such assignment, transfer or attempt to assign or transfer any interest or right hereunder shall be null and void without the prior written consent of the other Party.”

Dassault argued that the prohibition prevailed and prevented MBA’s rights under the contract from transferring to MSI under the Insurance Act. If correct, this would mean that MSI would have no right to claim against Dassault to recover the amount it had paid out to MBA.

Subrogation is a broad doctrine which essentially states that, if a person (X) pays or discharges a debt or obligation of someone else (Y), then X steps into Y’s shoes and acquires Y’s rights.

Under English law, subrogation applies in a wide range of circumstances, including the following.

• When an insurer pays out to a policyholder . The insurer is subrogated to the policyholder’s rights and can take action in place of the policyholder. For example, an individual might take out buildings and contents insurance on their property and, at some point during the policy term, a leak develops, flooding the property and causing damage. The damage is caused by faulty workmanship by a plumber. The individual may be able to claim against the plumber in negligence but instead claims under their insurance policy. The insurer is subrogated to the claim in negligence against the plumber in place of the individual.
• When a guarantor pays out under a guarantee . For example, a person (X) borrows a sum of money from a lender. Another person (Y) gives a guarantee for X’s obligation to repay the sum. The lender calls on the guarantee and Y repays the sum instead of X. By way of subrogation, Y can bring proceedings against X to claim back the amount Y has paid out to the lender. (This is also described as a right of reimbursement, rather than subrogation.)
• Where a person pays someone else’s secured debt . For example, a person (K) takes out a mortgage loan from a bank, which is secured by a mortgage over K’s property. The mortgage becomes payable, but K’s colleague (L) pays the mortgage off instead of K. Until K reimburses L, L is subrogated to the mortgage security over the property. If K does not reimburse L, L can enforce the mortgage and take possession of the property (and sell it).
• Where an agent pays out for their principal . For example, an individual appoints an agent to negotiate a purchase of land on the individual’s behalf. The purchase contract is settled and the individual is required to pay the purchase price. However, for whatever reason (perhaps for ease), the agent pays the purchase price. The seller transfers the land to the individual. By virtue of subrogation, until the agent is paid back, the agent has all the rights over the land which the seller had before the sale.

Subrogation can be complicated and how it works in practice varies greatly depending on the legal and factual circumstances. In many respects, subrogation is less a doctrine and more a form of remedy which a person who has discharged someone else’s obligations can seek in an appropriate form. The principal point of subrogation is that the person whose obligations have been discharged should not be unjustly enriched by failing to perform those obligations themselves.

However, one common factor to all types of subrogation is that it involves an automatic transfer of rights , which occurs by operation of law and does not require a specific assignment by anyone.

Initially, the dispute was referred to arbitration at the ICC in London. The arbitration panel held (by a majority) that MBA’s rights under the sale contract had transferred to MSI under the Insurance Act.

Dassault appealed to the High Court of England and Wales. The High Court overturned the arbitrators’ decision, finding that the prohibition was wide enough to capture a transfer by operation of law.

The High Court noted the words “by any Party” in the assignment prohibition were ambiguous and needed to be interpreted. It therefore embarked on the traditional process of contractual interpretation that applies when the wording of a contract is unclear. See the box “ How will the court interpret a contract? ” for more information.

It held that the words indicated an element of action or willingness by a Party, and that this was what was required for the prohibition to apply. A transfer would fall outside the prohibition only if it were outside the voluntary control of the transferring party (here, MBA).

In this case, although MBA had not directly assigned its rights to MSI, it had entered willingly into the insurance policy and made a claim under it, with the direct and predictable result that its rights would be transferred to MSI under the Insurance Act. In the High Court’s view, this amounted to an assignment by MBA and was caught by the prohibition.

MSI appealed to the Court of Appeal of England and Wales.

The court re-examined the words “by any Party” and found that they were unambiguous and clear. They covered a transfer effected by a party to the sale contract, but that did not include a transfer that occurred automatically by operation of law (as was the case under the Insurance Act).

The judges disagreed with the High Court’s approach that the key question was whether the transfer was outside MBA’s voluntary control. Rather, it was a simple case of reading the contract to decide whether the transfer had been made by MBA.

It had not. The transfer had taken place automatically under the Insurance Act and so was not prohibited by the assignment prohibition.

In reaching its decision, the court noted that the sale contract between Dassault and MBA contained provisions that specifically contemplated the parties taking out insurance (Dassault insurance against loss or damage to certain specific equipment, and MBA insurance in connection with ferry flight delivering the aircraft).

Although these specific provisions did not cover the insurance policy that MBA had placed with MSI, they did indicate that the parties were happy for insurance to cover the arrangements, suggesting in turn that they understood that rights under the contract might transfer to an insurer.

The court found, therefore, that MBA’s rights had transferred to MSI and the assignment prohibition did not apply.

If the wording of an agreement is clear, the courts will assume that it reflects the parties’ intentions and enforce the literal word of the contract. This will be the case even if the result is unusual or uncommercial.

The only exception to this is where the parties’ agreement is in some way restricted by law. For example, the court may find that a clause is unenforceable as a restraint of trade, a contractual penalty, and unreasonable exclusion or limitation of liability, or an attempt to carry out unlawful acts. In these cases, the courts may be able to strike parts of the contract out to make it work.

However, if the wording of a contract is ambiguous and could have more than one meaning, the court must embark on a process of contractual interpretation (also called construction).

The law on contractual interpretation is now settled, following three landmark cases ( Rainy Sky SA v Kookmin Bank [2011] UKSC 50; Arnold v Britton [2015] UKSC 36; and Wood v Capita Insurance Services Ltd [2017] UKSC 24).

In short, the court will examine the wording of the contract and ascertain what a reasonable person with all the relevant background knowledge at the time of the contract would have understood.

The court will look not only at the text of the contract, but also the surrounding context at the time. This is a single exercise, and the court will not automatically prefer the wording (textualism) over the surrounding circumstances (contextualism) or vice versa. However, the weight the court will give the text and the context will vary depending on the nature and formality of the contract.

If, after doing this, the court finds there is still more than one plausible interpretation of the contract, it will prefer the interpretation that is most consistent with business common sense.

The case shows the importance of formulating any prohibition of assignment provisions properly.

Here, the court felt that the wording of the sale contract was clear. By using the words “by any Party”, the prohibition extended only to direct attempts by a party to assign their rights.

Had those words not appeared (e.g. “ [T]his Contract shall not be assigned or transferred in whole or in part to any third party… ”), the court may have been required to embark on a deeper analysis of the clause to understand whether it would have prohibited transfers by operation of law. Indeed, the court might have concluded that it would have done so.

The case revolved around automatic transfers under Japanese law. The position might well be different under English law. This point was not argued – both Dassault and MSI appear to have accepted that, had the contract been governed by English law, the transfer of rights to MSI would have taken place – and so the court did not need to decide the issue.

But that does not mean that it is impossible to exclude the right to subrogation through a prohibition of assignment, and contract parties may wish to ensure any contractual prohibitions are worded broadly enough that they at least make an attempt to do so.

However, whether this is appropriate will need to be judged on a case-by-case basis, and may be more obviously covered by agreeing a subrogation waiver. For example, it is very common for a buyer of a business to deploy warranty and indemnity (W&I) insurance and for the seller(s) to require the W&I insurer to expressly waive any rights of subrogation.

Conversely, most liability insurance policies contain an express obligation on the insured party not to enter into any agreement with a third party that might restrict the insurer’s right of recovery. A prohibition of assignment that excludes a right of subrogation may do exactly that and could, in theory, invalidate the insurance policy itself.

Where insurance arrangements are contemplated under a contract, the parties should have a mind to the potential implications from an insurance-law perspective, including any potential subrogation following a claim under an insurance policy.

Any contractual provisions that do contemplate insurance are unlikely to stipulate a particular governing law for the insurance, so it may not be possible to make an informed assessment. In addition, the party taking out insurance may well not inform the other party that they are doing so and/or might take out insurance of a type not contemplated by the contract.

In each case, this could lead to a contract party facing legal proceedings under the contract by a third party whose identity is not known at the date of the contract.

Ultimately, where a contract party intends in advance to procure insurance in relation to the subject matter of the contract, it is important to seek legal advice to ensure that the policy and the contract operate smoothly and clearly alongside each other.

Access the court’s decision on whether a contract prohibited an assignment by operation of law ( Dassault Aviation SA v Mitsui Sumitomo Insurance Co. Ltd [2024] EWCA Civ 5)

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2012 Massachusetts General Laws PART I ADMINISTRATION OF THE GOVERNMENT(Chapters 1 through 182) TITLE XVI PUBLIC HEALTH CHAPTER 111 PUBLIC HEALTH Section 150A Solid waste disposal facilities; maintenance and operation; applications for site assignment

Section 150A. As used in this section and in section one hundred and fifty A1/2 the following words shall, unless the context otherwise requires, have the following meanings:--

"Department'', the department of environmental protection.

"Facility'', a sanitary landfill, a refuse transfer station, a refuse incinerator rated by the department at more than one ton of refuse per hour, a resource recovery facility, a refuse composting plant, a dumping ground for refuse or any other works for treating, storing, or disposing of refuse.

"Refuse'', all solid or liquid waste materials, including garbage and rubbish, and sludge, but not including sewage, and those materials defined as hazardous wastes in section two of chapter twenty-one C and those materials defined as source, special nuclear or by-product material under the provisions of the Atomic Energy Act of 1954.

"Maintain'', to establish, keep or sustain the presence of a facility on a site, whether or not such facility is in operation and whether or not such facility has been closed.

No place in any city or town shall be maintained or operated by any person, including any political subdivision of the commonwealth, as a site for a facility, or as an expansion of an existing facility, unless, after a public hearing, such place has been assigned by the board of health of such city or town in accordance with the provisions of this section, or, in the case of a facility owned or operated by an agency of the commonwealth, such place has been assigned by the department after a public hearing and unless public notice of such assignment has been given by the board of health or the department, whichever is applicable.

The determination by the board of health, or the department in the case of a state agency, of whether to assign a place as a site for a facility, or for the expansion of an existing facility, shall be based upon the site suitability criteria established by the department in cooperation with the department of public health pursuant to section one hundred and fifty A 1/2, and any site assignment shall be subject to such limitations with respect to the extent, character and nature of the facility or expansion thereof as may be necessary to ensure that the facility or expansion thereof will not present a threat to the public health, safety or the environment.

Any person desiring to maintain or operate a site for a new facility or the expansion of an existing facility shall submit an application for a site assignment to the local board of health and simultaneously provide copies to the department and the department of public health. A copy of the application for site assignment shall be filed with the board of health of any municipality within one-half mile of the proposed site. Any municipality within such one-half mile shall be afforded all the procedural rights of an abutter for the purpose of administrative review by the department or public hearing by the board of health where the proposed site is located. The department shall, upon request by the board of health, provide advice, guidance and technical assistance to said board during its review of a site assignment application. The department and a board of health may enter into such other cooperative agreements in addition to those herein specified for the purpose of achieving an effective and expeditious review of the application. The board of health may charge a reasonable application fee to cover the costs of conducting a hearing and reviewing technical data submitted to the board. The application fee may also include a portion of the reasonable costs of other technical assistance. The application fee shall be established in accordance with rules and regulations promulgated by the department.

[ Paragraph inserted following fourth paragraph by 2011, 68, Sec. 83 effective July 1, 2011. See 2011, 68, Sec. 221.]

Within 60 days of receipt of the application, the department shall issue a report stating whether the proposed site meets the criteria established under section 150A1/2 for the protection of the public health and safety and the environment. Any such reports shall be made available to the public in a timely manner prior to any public hearing concerning the site application.

Within sixty days of receipt of said application, the department of public health shall review said application and comment thereon as to any potential impact of a site on the public health and safety. The department of public health may, in addition to its comment, make or cause to be made a public report, in writing, as it relates to an expansion of an existing facility or the assignment of a place as a site for a facility and provide said report with its written comments to the board of health. The department of public health shall coordinate and cooperate with a board of health on any matter relating to said public health report.

[ Sixth paragraph effective until July 1, 2011. For text effective July 1, 2011, see below.]

Within 60 days of receipt of said application, the board of health shall hold a public hearing satisfying the requirements of chapter thirty A. Within forty-five days of the initial date of such hearing, the board of health shall render its decision on whether to assign a site for a facility, in writing, accompanied by a statement of reasons therefor and publish notice of said decision including determinations of each issue of fact or law necessary to the decision.

[ Sixth paragraph as amended by 2011, 68, Sec. 84 effective July 1, 2011. See 2011, 68, Sec. 221. For text effective until July 1, 2011, see above.]

Within 30 days of the receipt of the department's report, the board of health shall hold a public hearing satisfying the requirements of chapter thirty A. Within forty-five days of the initial date of such hearing, the board of health shall render its decision on whether to assign a site for a facility, in writing, accompanied by a statement of reasons therefor and publish notice of said decision including determinations of each issue of fact or law necessary to the decision.

[ Seventh paragraph effective until July 1, 2011. For text effective July 1, 2011, see below.]

No assignment shall be granted by the local board of health unless the local board of health affirms that the siting criteria of said section one hundred and fifty A1/2 have been met by the proposed site. The board of health shall consider the concerns, if any, relative to the public health and safety cited by the department of public health. A local board of health shall assign a place requested by an applicant as a site for a new facility or the expansion of an existing facility unless it makes a finding, based on the siting criteria established by said section one hundred and fifty A 1/2, that the siting thereof would constitute a danger to the public health or safety or the environment.

[ Seventh paragraph as amended by 2011, 68, Sec. 85 effective July 1, 2011. See 2011, 68, Sec. 221. For text effective until July 1, 2011, see above.]

No assignment shall be granted by the local board of health unless the department's report affirms that the siting criteria of said section one hundred and fifty A1/2 have been met by the proposed site. The board of health shall consider the concerns, if any, relative to the public health and safety cited by the department of public health. A local board of health shall assign a place requested by an applicant as a site for a new facility or the expansion of an existing facility unless it makes a finding, based on the siting criteria established by said section one hundred and fifty A 1/2, that the siting thereof would constitute a danger to the public health or safety or the environment.

Any person aggrieved by a decision of a board of health in assigning or refusing to assign a place as a site for a new facility, or expanding or refusing to expand an existing facility, except a resource recovery facility in operation or under construction prior to July first, nineteen hundred and eighty-seven, may, within thirty days of the publication of notice of such decision, appeal under the provisions of section fourteen of chapter thirty A. For the limited purposes of such an appeal, a local board of health shall be deemed to be a state agency under the provisions of said chapter thirty A and its proceedings and decision shall be deemed to be a final decision in an adjudicatory proceeding.

[ Ninth and tenth paragraphs effective until July 1, 2011. For text effective July 1, 2011, see below.]

No facility, except a refuse transfer station that handles not greater than 50 tons of refuse per day and is designed, constructed and operated in accordance with performance standards issued by the department, shall be established, constructed, expanded, maintained, operated or devoted to any past closure as defined by regulation, unless detailed operating plans, specifications, a public health report, if any, and necessary environmental reports have been submitted to the department and the department has granted a permit for the facility and notice of such permit is recorded in the registry of deeds or, if the land affected thereby is registered land, in the registry district of the land court for the district wherein the land lies. A refuse transfer station that handles not greater than 50 tons of refuse per day and is designed, constructed and operated in accordance with performance standards issued by the department shall not be established, constructed, expanded, maintained, operated or devoted to any past closure as defined by regulation, unless detailed operating plans, specifications, a public health report, if any, and necessary environmental reports have been submitted to the board of health in the city or town in which the facility is located and such board of health has granted a permit for the facility and notice of such permit is recorded in the registry of deeds or, if the land affected thereby is registered land, in the registry district of the land court for the district wherein the land lies. Within 120 days after the department or board of health, as appropriate, has determined that the operating plans, specifications and reports are complete, the department or board of health shall make a decision granting or refusing to grant a permit. The permit, whether issued by the department or board of health, may limit or prohibit the disposal of particular types of solid waste at a facility in order to protect the public health, promote reuse, waste reduction and recycling, extend the useful life of the facility or reduce its environmental impact.

A decision by the department or a board of health, as appropriate, granting or refusing to grant a permit shall be in writing and shall contain findings with regard to criteria established by the department. A person aggrieved by the action of the department in granting or refusing to grant such permit may appeal that decision pursuant to section 14 of chapter 30A. For the limited purposes of that appeal, the department action shall be deemed to be a final decision in an adjudicatory proceeding. A person aggrieved by the decision of a local board of health in granting or refusing to grant a permit for a refuse transfer station may, within 30 days after the publication of notice of such decision, appeal under said section 14 of said chapter 30A. For the limited purposes of that appeal, the board of health shall be deemed to be a state agency under said chapter 30A and its proceedings and decision shall be deemed to be a final decision in an adjudicatory proceeding.

[ Ninth and tenth paragraphs as amended by 2011, 68, Sec. 86 effective July 1, 2011. See 2011, 68, Sec. 221. For text effective until July 1, 2011, see above.]

No facility shall be established, constructed, expanded, maintained, operated or devoted to any past closure as defined by regulation unless detailed operating plans, specifications, any public health reports and necessary environmental reports have been submitted to the department, the department has granted a permit for the facility and notice of the permit is recorded in the registry of deeds, or if the land affected thereby is registered land in the registry section of the land court for the district wherein the land lies. Within 120 days after the department is satisfied that the operating plans, specifications and reports are complete, the department shall make a decision granting or refusing to grant a permit. The permit may limit or prohibit the disposal of particular types of solid waste at a facility in order to protect the public health, promote reuse, waste reduction and recycling, extend the useful life of the facility, or reduce its environmental impact.

Every decision by the department granting or refusing to grant a permit shall be in writing and shall contain findings with regard to criteria established by the department. Any person aggrieved by the action of the department in granting or refusing to grant a permit may appeal that decision under section 14 of chapter 30A. For the limited purposes of any such appeal, the department action shall be deemed to be a final decision in an adjudicatory proceeding.

Every person maintaining or operating a facility, including every political subdivision of the commonwealth, shall maintain and operate the same in such manner as will protect the public health and safety and the environment. Upon determination that the operation or maintenance of a facility results in a threat to the public health and safety or the environment, such site assignment decision by a board of health may be rescinded or suspended or may be modified through the imposition or amendment of conditions, at any time after due notice and public hearing satisfying the requirements of section eleven of chapter thirty A by the board of health of the city or town where such facility is located or by the department. Any person aggrieved by the decision of the board of health or the department in rescinding, suspending or modifying a site assignment may appeal said decision within thirty days of the publication of notice thereof pursuant to the provisions of section fourteen of chapter thirty A. For the limited purposes of such an appeal a local board of health shall be deemed a state agency under the provisions of said chapter thirty A and said decision shall be deemed to be a final decision in an adjudicatory proceeding and the decision of the department shall be deemed to be a final decision in an adjudicatory proceeding. The department may rescind, suspend or modify the permit upon a determination that the operation or maintenance of the facility results in a threat to the public health and safety or to the environment. Any person aggrieved by such decision of the department may, within thirty days of the publication of notice thereof, appeal said decision pursuant to the provisions of chapter thirty A.

If a facility is a landfill owned or operated by any person other than a town or agency of the commonwealth, such person shall pay to the town where the facility is located an amount in accordance with the provisions of section twenty-four A of chapter sixteen for each ton of solid waste which is disposed of in such landfill. On or before the twentieth day of each month every such person shall file a return subscribed under the penalties of perjury with the board of health of the town in which such facility is located, on such form as the commissioner of environmental protection shall require for determination of the fee imposed by this paragraph. Said fee shall be due and payable on or before the due date of the return. Notwithstanding the foregoing, however, no fee shall be required or collected from an owner of a privately owned facility used by the owner thereof for the sole disposal of refuse generated from his own premises, and no such return need be filed.

No person shall dispose or contract for the disposal of solid waste at any place which has not been approved by the department pursuant to the provisions of this section or other applicable law.

The department shall allow any unlined landfill, owned or operated by a municipality or a solid waste district, to continue accepting refuse in compliance with existing approvals after January first, nineteen hundred and ninety-four; provided, that said municipality or district files a statement of intent with the department on or before August fifteenth, nineteen hundred and ninety-three, as to its intent to continue in operation after January first, nineteen hundred and ninety-four; provided further, that any landfill for which a statement of intent has been submitted shall operate in accordance with applicable federal and state statutes, regulations, existing approvals, and provisions included herein. For purposes of this paragraph, the term "existing approval'' shall include any permit, site assignment, plan approval, condition of operation, or any other applicable order or rule governing the operations of a landfill issued or granted by a municipality, the department, or any other agency of the commonwealth, or for which an application was pending as of May first, nineteen hundred and ninety-three, when granted in accordance with applicable regulations; provided, that no such application shall be denied arbitrarily and capriciously. Any municipality or district which does not file such a statement of intent shall cease accepting refuse no later than January first, nineteen hundred and ninety-four, and shall commence closure of the landfill under its control subject to the approval of the department in accordance with regulations promulgated by the department. On or before October first, nineteen hundred and ninety-three, the department shall compile and publish a list of all landfills for which a statement of intent has been filed and classify separately, as supported by scientific data, those landfills which pose a significant threat to the public health, safety, or the environment, those landfills which pose a potential threat, and those landfills for which current scientific data demonstrate little or no present discernible threat or for which current data is inconclusive. In classifying landfills, the department shall utilize all available scientific data, including, without limitation, any scientific data submitted by the municipality or the district and any additional scientific data generated by the department relative to an assessment of the actual or potential migration of leachate or other contaminants off the site of the landfill. The department shall publish the list and accept public comment on said list. The department shall, if requested by November first, nineteen hundred and ninety-three, by the chief executive officer of a municipality or a district with a landfill on the list, participate in a public meeting in the municipality or district to be scheduled at mutual convenience within sixty days of such request. By February first, nineteen hundred and ninety-four, the department shall issue a final revised list taking into account any additional information generated or received through the comment and meeting process. The department shall work in conjunction with a municipality or a district to establish a schedule for the municipality or district to commence and complete closure of the landfill, considering the risks posed by the landfill and the fiscal capacity of the municipality or district to be incorporated in a consent order. If an agreement is not reached, the department may order any landfill which is classified as a significant threat to public health, safety or the environment to cease operations and commence closure, or take such other action as the department deems necessary; provided, that the municipality or district may request an adjudicatory hearing on such order pursuant to chapter thirty A. A municipality or district operating a landfill classified by the department as a potential threat shall no later than July first, nineteen hundred and ninety-four, install a groundwater monitoring system approved by the department, and shall report the results of such monitoring to the department no more than quarterly thereafter. A municipality or district operating a landfill for which the department has determined little or no present discernible threat exists or for which current data is inconclusive shall no later than January first, nineteen hundred and ninety-five, install a groundwater monitoring system approved by the department, and shall report the results of such monitoring to the department no more than quarterly thereafter. It shall be a violation of this section to falsify or falsely report any monitoring results. If the results of such groundwater monitoring or other site specific assessment indicate that a landfill does pose a threat to public health, safety or environment, the department shall work in conjunction with a municipality or a district to establish a schedule for the municipality or district to commence and complete closure of the landfill, considering the risks posed by the landfill and the fiscal capacity of the municipality or district to be incorporated in a consent order. If an agreement is not reached, the department may order the municipality or district to cease operations and commence closure, or to take such other action as the department deems necessary; provided, that the municipality or district may request an adjudicatory hearing on such order pursuant to chapter thirty A. Nothing in this paragraph shall preclude the department from acting to address violations of this section, chapter twenty-one E or the regulations promulgated thereunder.

No site on which a facility was operated shall be conveyed or leased by the owner thereof, or be devoted to any use other than the operation of a facility, until notice that such facility was operated on the site is recorded in the registry of deeds, or if the land affected thereby be registered land, in the registry section of the land court for the district wherein the land lies. No site on which a facility was operated shall be used for any other purpose without the prior written approval of the department.

The department shall adopt and may from time to time amend rules and regulations, and the commissioner may issue orders, to enforce the provisions of this section. Any person, including any political subdivision of the commonwealth who violates this section, or any order issued pursuant thereto, or any rule or regulation promulgated hereunder (1) shall be subject to a fine of not more than twenty-five thousand dollars, or by imprisonment for not more than two years in a house of correction, or both, for each such violation; or (2) shall be subject to a civil penalty not to exceed twenty-five thousand dollars for each such violation. Each day each such violation occurs or continues shall be deemed a separate offense. These penalties shall be in addition to any other penalties that may be prescribed by law.

The superior court shall have jurisdiction in equity to enforce the provisions of this section upon petition of the department or any aggrieved person.

Ash produced from the combustion of coal, including but not limited to fly ash and bottom ash, shall not be construed as refuse, rubbish, garbage, or waste material under this section when used as a raw material for concrete block manufacture, aggregate, fill, base for road construction, or other commercial or industrial purpose, or stored for such use. A location where such use or storage takes place may be constructed, established, maintained, and operated without being construed as a facility or site for a facility under this section, and no assignment or approval from the board of health or the department shall be required for such construction, establishment, maintenance, or operation; provided, however, the department shall have jurisdiction to determine, after notice and hearing, that the establishment or operation of such a location has created a nuisance condition by reason of odor, dust, fires, smoke, the breeding or harboring of rodents, flies or vermin, or other causes, and to prevent or order abatement thereof; and provided, further, that no final disposal of ash produced by the combustion of coal may be accomplished by burial of such ash in the ground, other than as base for road construction or fill, unless the place where such disposal takes place has been assigned for such disposal by the board of health and plans for such disposal have been approved by the department pursuant to this section. The department may waive the requirements of the preceding paragraphs of this section and the application of any regulations, or portions thereof, promulgated under the preceding paragraphs of this section as they may apply to the disposal by burial of ash produced by the burning of coal, and shall review and may approve the plans, site and method of storage upon a determination that no nuisance is created and damage to the environment is minimal. Use of ash produced from the combustion of coal as intermediate cover material over rubbish at sanitary landfill facilities may be permitted by assignment of the board of health with approval of the department under this section.

Disclaimer: These codes may not be the most recent version. Massachusetts may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

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RE05RC12: Contract Law

I. History of Contract Law

II. What is a contract? 

A contract is a voluntary, legally enforceable promise between two competent to perform (or not to perform) parties some legal act in exchange for consideration.

• Voluntary agreement or promise
• Parties to the Contract
• Requirement of competency of parties 1. Age of Majority 2. Mentally competent or other disability limiting comprehension 3. Influence of drugs or other
• Must be for legal purposes
• Consideration
• Offer and Acceptance (required)
• Executed vs. Executory
• Equitable Title (Equitable Conversion) vs. Legal Title
• Statute of Limitations

III. Contracts used by real estate licensees? 

• Offer contracts
• Letter of Intent (LOI)
• Listing Agreements
• Buyer Representation Contracts/Agreements
• Purchase and Sale Contracts
• Residential Leases
• Commercial Leases
• Contracts for a Deed

NOTE: Massachusetts Mandatory Licensee-Consumer Relationship Disclosure form is NOT a contract.

IV. Use of Lawyers

• Role of attorney
• Legal advice
• Drafting contracts by licensees
• Relationship between lawyers and licensees

V. Statute of Frauds – M.G.L. c. 259

• Contract for purchase/sale of real property in writing to be enforceable
• Agreement greater than one year not enforceable
• A Will or Devise transferring property must be in writing
• Sale of personal property in excess of $500 (UCC 2 201)

VI. Types of Contracts

• Express – the parties state their terms and show their intentions in words 1. Written 2. Oral
• Implied – the agreement of the parties is demonstrated by their: 1. Acts 2. Conduct

VII. Classification of Contracts

VIII. Elements of a Contract

• Competent party
• Legal object

IX.  Acknowledgements (Notary)

• Identity of party
• Free and willing act
• Admissibility in court

X. Electronic Signatures

• Federal law - Electronic Signatures in Global and National Commerce Act
• Massachusetts law - Uniform Electronic Transactions Act (UETA)
• Electronic signature same as paper
• Only few cases where electronic signature not accepted 1. Wills, codicils 2. Certain adoption and divorce matters 3. Some service terminations 4. Specific court documents 5. Deed
• Admissible in court

XI. Minimal Requirements of a Contract:  For a contract for the purchase and sale of real property to be valid and enforceable under the Massachusetts Statute of Frauds, you must have a written memorandum with following minimal requirements:

• Must identify the parties
• Accurate description of property
• Recital of consideration
• Must be signed by the party to be charged
• Basis for rescission 1. Misrepresentation 2. Fraud 3. Undue influence or duress
• Do brokers sign purchase and lease contracts? (Maybe)

XII. Validity of Contracts

• Unenforceable

XIII. Types of real estate contracts

• Listing Contracts – in Massachusetts an employment contract 1. Exclusive right to sell 2. Exclusive agency 3. Open listing 4. Net Listing (illegal) 5. In writing or oral
• Buyer Representation Contract 1. Exclusive buyer agency agreement 2. Exclusive agency buyer agency agreement 3. Open buyer agency agreement
• Legal description of property
• Purchase & Sale Agreement contingency
• Contingencies
• Earnest money
• Time is of the Essence"

      2. Types of Offers:

c. Multiple offers

d. Letter of Intent

      3. Binding or non-Binding

a. McCarthy v. Tobin

b. Supreme Judicial Court suggested language

  D. Options

• A right (buy or lease)
• Option expiry date
• Optionee right of sale

   E. Purchase & Sale Agreement (more detailed contract)

1. Parties (identification of buyer and seller)

2. Legal description of property

3. Consideration including schedule of payments

4. Time for performance and possession

5. Earnest money (down payment)

6. Type of Title Deed (possible covenants and restrictions)

7. Adjustments (proration of taxes, utilities, fuel, insurance etc.)

8. Casualty loss

9. Default provisions

a. Opportunity for cure

b. Liquidated damages (Must be reasonable)

c. Specific performance

10. Contingency clauses including inspections

11. Brokerage – identity and commissions

12. Provisions for title evidence

13. Identification and appointment of closing agent

14. Provision regarding damage or destruction to property

15. Identify personal property, if any

16. Right of assignment

17. Construction of agreement

18. Dates and signatures

 F. Land Contracts (Installment Land Contracts aka Contract For A Deed)

1. Seller retains legal title

2. Buyer – all other benefits of ownership

3. Similar to mortgage

 G. Leases

1. Estate for Years

2. Month-to-Month (Periodic Tenancy, tenancy-at-will)

3. Residential

4. Commercial

  H. Mortgage and Note

1. Note – Promise to pay

2. Mortgage – security instrument

XIV. Termination

• Performance of the contract
• Expiration of the time for performance
• Partial performance with written acceptance by other party
• Substantial performance
• Impossibility of performance

1. By mutual agreement

2. Unilateral

   G. Operation of law   H. Breach of contract

XV. Remedies for Breach

• Specific performance
• Liquidated damages
• Lis Pendens
• Vendor/vendees lien
• Monetary damages

XVI. Alternative Dispute Resolution

• Arbitration or Mediation
• Massachusetts ADR law - M.G.L. c. 251
• Must be agreed by both parties in contract
• Provisions of arbitration or mediation
• Courts must uphold

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• Massachusetts Court System

Jury Operations Supervisor

• Boston, Massachusetts, United States

TRIAL COURT MISSION 

The Trial Court is committed to: 

• Fair, impartial, and timely administration of justice;
• Protection of constitutional and statutory rights and liberties;
• Equal access to justice for all in a safe and dignified environment strengthened by diversity, equity, and inclusion;
• Excellence in the adjudication of cases and resolution of disputes;
• Courteous service to the public by dedicated professionals who inspire public trust and confidence.

The Trial Court is a qualifying employer for Federal Student Loan forgiveness To learn more about this program, and all of our benefits, click here

The Massachusetts Trial Court is an Affirmative Action/Equal Opportunity employer and provides equal opportunity in state employment to all persons. No person shall be denied equal access because of race, creed, color, religion, national origin, ancestry, sex, sexual orientation, gender identity, age, pregnancy, military or veteran status, physical/mental disability; or genetic information. If you need a reasonable accommodation, or have any questions or concerns about being afforded fair and equal treatment, please contact the HR Benefits Team at [email protected]

• Office of Jury Commissioner
• Clerical/Entry Level
• Closing at: May 28 2024 at 23:55 EDT

Title: Jury Operations Supervisor

Pay Grade: Grade 14-15

Starting Pay: $63,418.15

Departmental Mission Statement: The core mission of the Office of Jury Commissioner (OJC) is to provide randomly selected pools of eligible jurors, representative of the community from which they are drawn, to each of the jury courts of the Commonwealth of Massachusetts, in accordance with the needs of those courts and the direction of the Trial Court. The OJC is committed to educating the public on the value and responsibility of serving as a juror, and to providing courteous, professional service to the public and the courts.

• This position is designated as a union position and is covered by the Collective Bargaining Agreement with O.P.E.I.U., Local 6.

Position Summary:  The Mailroom Operations Supervisor is responsible for coordinating the day-to-day activities of the Mailroom within the Office of Jury Commissioner. The position supervises all mailroom staff, manages incoming and outgoing communications, oversees mailroom equipment such as postage meter and scanning equipment, and assists the Operations Manager as needed.

Operations Supervisor Duties: • Coordinates the daily work of the mailroom within the Office of Jury Commissioner; • Responsible for proper processing of all incoming and outgoing communications, including scanning, and archiving of required communications. • Process all incoming faxes and deliver to appropriate recipient in a timely fashion, • Maintain, monitor, and replenish all mailroom equipment and supplies. • Answers public inquires on the telephone and effectuates scheduling changes on matters pertaining to juror service via use of the automated, on-line computer system; • Assists the Operations Manager in the supervision of the mailroom; • Backs up the Operations Department staff as needed; • Evaluates and recommends ways to improve activities within the work unit, reports on trends; • Provides direct supervision to members of the mailroom. • Assists the Operations Manager in interviewing job applicants and in the orientation of new employees; • Prepares reports and statistics, using computer programs such as MS Excel and MS Word; • Reviews special requests and makes recommendations to approve or disapprove; • Develops and maintains databases; • Communicates with vendors and other internal and external stakeholders as necessary; • May act on behalf of the Operations Manager in his or her absence; • Performs special projects; and • Performs related duties and special projects as required.

Minimum Requirements:

• Graduation from high school or its equivalent; Associates Degree preferred; • Prior customer service experience and excellent telephone etiquette; • Experience supervising staff preferred; • Extensive knowledge of mailing procedures, data batching and data entry procedures, and automated telephone technological procedures that have been attained by education and/or experience; • Knowledge of court and jury-system operational procedures; • Knowledge of, and experience with computer terminals and computerized on-line system technology; • Ability to follow through on all assignments with a minimum of direct supervision and instruction; • Ability to write and communicate in a professional manner; • Ability to operate standard office equipment and personal computers, including MS Office; • Ability to set up and maintain filing system; • Ability to work independently and supervise mailroom employees; • Demonstrated ability to identify problems and to recommend improvements.

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Head account clerk-southeast housing court, case specialist- ayer district court, telephone scheduler - office of jury commissioner, systems administrator, assistant deputy court administrator-administrative office of the housing court, case specialist - worcester probate & family court.

Employment with the Trial Court is contingent upon passage of a criminal record check.

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