Is an assigmenet of a businesscontract legal?
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Is an assigmenet of a businesscontract legal?
I have a promissory note, customer assignment, and EFT authorization with pay to the order of Karate Academy on it. They sold out to X Karate Academy. I didn’t care for the customer service or methods of training so I put a stop payment on it through my bank because they told me basically too bad. It has been turned over to Affiliated Acceptance Corporation who basically is also saying too bad. Does this case have a chance in small claims court?
Asked on October 12, 2010 under Bankruptcy Law, Florida
Answers:
S.L,. Member, California Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Assignment of a contract is legal unless there is a provision in the contract prohibiting assignment. Assignment is a complete transfer of interest which means that payment would go to X Karate Academy. If there is a provision in a contract prohibiting assignment, it is narrowly construed and sometimes is interpreted as prohibiting delegation of duties rather than an assignment. Delegation of duties is a transfer of something less than a complete transfer of interest. In that case, Karate Academy would still retain an interest in the business. If there is a unique service that is being performed pursuant to the contract, assignment may be prohibited. However, that would not apply here since you have two karate academies that are providing the same type of training.
If your legal argument is based on opposition to the assignment, that won't prevail because the assignment appears to be valid. The fact that you didn't like the customer service or the methods of training standing alone would not be sufficient; however, if something additional constituted a breach of contract between you and the company, you might be able to raise that argument. The breach of contract argument is separate and apart from the assignment and won't invalidate the assignment if as mentioned above, assignment is not prohibited in the contract. Not liking the training or the customer service would not be sufficient to claim breach of contract. There would have to be something more substantial to support an argument for breach of contract to justify stopping payment on the promissory note. There would have to be a material breach of contract (one that goes to the basis of the bargain) not a mere minor breach of contract to support stopping payment on the promissory note.
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