8 Prohibition on Assignment

Common law assignable without notice
A contract may expressly or impliedly authorise the assignment of rights that would not otherwise be assignable.
Conversely, the contract may expressly or impliedly prohibit the assignment of rights that are otherwise on their face assignable
An attempted assignment of contractual rights in breach of a prohibition on assignment is ineffective: ‘if the law were otherwise, it would defeat the legitimate commercial reason for inserting the contractual prohibition, viz, to ensure that the original parties to the contract are not brought into direct contractual relations with third parties‘
However, an assignment in breach of a contractual prohibition may still have an effect as between the assignor and the assignee.
In particular, ‘[i]f the obligor or promisor, after the purported assignment, performs the contract in favour of the assignor, the assignor may hold the fruits of such performance upon trust for the assignee, by analogy to the treatment in equity of contracts to assign afteracquired property’
However, a contract may (also) prohibit one or both parties from declaring themselves to be a trustee of the benefit of the contract.
It is important to point out that one must use the correct terminology when drafting assignment clauses in financing documents.
So when wish to document a novation provision it could be fatal to use the term assignment.