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A firm of surveyors (F) managed a portfolio of properties for
one of its clients. Pursuant to an agreement between F, Regis and
one of Regis' subsidiary companies, F subcontracted management
to the Regis subsidiary. In return, Regis guaranteed to F that the
subsidiary would perform its obligations and agreed to indemnify F
in the event the subsidiary failed to do so.
F's business was subsequently acquired by Cluttons. The
client made a claim against F in relation to the Regis
subsidiary's management of its properties. This claim was
settled by F, who was reimbursed by Cluttons. Cluttons then sought
to recover the sums paid from Regis under the guarantee Regis had
given.
The Recorder concluded that Regis was liable to Cluttons
pursuant to the guarantee originally given to F. Regis appealed
contending the benefit of the guarantee remained with F and did not
pass to Cluttons.
The Court of Appeal upheld the Recorder's decision and
concluded that Cluttons had been assigned, by way of an equitable
assignment, the benefit of Regis' guarantee and was entitled to
enforce it to recover the payment made to the client.
Comment
The case highlights the importance of including express
non-assignment provisions if the intention is to prevent the other
party from assigning the benefit of a contract.
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