Assignment Of Contractual Rights

In 2003, P&O Trans Australia Holdings Ltd (P&O), who was lessee of the Land, entered into a contract with Walker Group Constructions Pty Ltd (WGC) for the design and construction of 5 warehouses, and associated work, which included laying pavements in between and outside of the 5 warehouses (D&C Contract).

There are several reasons why contractual rights may be assigned.

For example, it is common for assignment to be considered when an owner sells infrastructure that it contracted to have designed and built, and if done properly, it will enable the new owner to have the same rights as the original owner with respect to contractual rights (such as warranties as to design, construction and fitness for purpose), and to pursue those rights if they are breached.

A key issue was whether assignment of the benefit of the contractual warranties allowed Tzaneros to pursue its claim against WGC.

WGC accepted that the concrete pavement was defective, and that the warranties provided under the D&C Contract had therefore been breached.

Tzaneros argued that the assignment was not limited in this way, permitting it to pursue WGC for breaches of the warranties under the D&C Contract, irrespective of whether or not they accrued before the assignment was effected. His Honour found that the provisions in the Deed dealing with assignment had to be construed in the context of P&O and Tzaneros entering into the Deed when they were aware that there had been cracking in the pavements and therefore must have contemplated a claim against WGC for breach of warranty.

Further, His Honour concluded that the ordinary and natural meaning of the words `all of the benefits of the Building Warranties' included the right to sue in respect of breaches that had occurred before the date of the assignment.For example, you may want to assign the right to receive cash payouts from your life insurance or endowment plans to a loved one, for his/her benefit.Since an assignment only transfers the rights under the contract, you will still retain your obligations under the contract. the person you’ve assigned the contract to) will not be a party to the contract.Tzaneros' claim based on the assigned warranties Tzaneros commenced proceedings in the Supreme Court of New South Wales based on breach of the contractual warranties purportedly covered by the assignment in the Deed.Tzaneros claimed nearly AU million in damages from WGC and other parties as a result of the defects.His Honour opined that had the parties intended to limit the assignment to breaches arising after the assignment was effected, `they would have said so specifically'.WGC argued that it did not consent to the assignment in such broad terms.The contract will still be between you and the other original party to the contract. Contracts of a personal nature, such as employment contracts, cannot be assigned.This is because these contracts have been signed with parties specifically for certain exclusive qualities that these parties have.This can be particularly important in the case of (latent) defects.This case concerned the construction of a container terminal on land owned by the Sydney Ports Corporation (the Land).


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