- What a deed of assignment can and cannot move
- The three parties and their competing interests
- Start with the underlying contract
- If obligations are moving too: novation
- Receivables and security: when the PPSA gets involved
- Executing the deed correctly
- Where professional help makes the difference
- The step most assignments get wrong
Rights move between businesses all the time. A company sells its client book and wants to hand over the right to collect those invoices. A founder transfers copyright in the software they built to the company they incorporated. A lender takes the right to receive payment on a customer's outstanding invoices. Each of these is an assignment, and a deed of assignment is the formal document that records it.
A deed of assignment transfers an existing right from one party, the assignor, to another, the assignee. Its legal weight comes from being a deed. A deed is binding without consideration, which ordinary contracts are not, so it is the standard vehicle for transfers, releases and guarantees.
This guide walks through how the mechanism actually works: what a deed can and cannot move, who has to agree to what, which formalities make the transfer effective, where the process commonly fails, and when a lawyer is worth engaging. Most businesses meet this area of law when buying or selling a business, assigning receivables to a funder, or consolidating intellectual property into a holding company.
What a deed of assignment can and cannot move
Assignment is one-directional in a way that catches many owners by surprise. It transfers the benefit of a right. It does not, by itself, transfer the burden of an obligation.
The assignable rights are broad: the right to be paid an invoice, the benefit of a warranty or rebate under a supply agreement, copyright in a website or a set of designs, or a registered trade mark. Whatever the asset, the same structure applies. The assignor steps out of the right, the assignee steps in, and the person who owes the money or performance, the debtor, ends up dealing with a new party.
State property legislation sets out the requirements for a legal assignment of a debt or other chose in action. In NSW, s 12 of the Conveyancing Act 1919 (NSW) requires three things: the assignment must be absolute and not by way of charge, it must be in writing, and express written notice must be given to the debtor. Every other state and territory has an equivalent provision. The legal right passes from the date of the notice, not from the date of the deed. Until the debtor receives that notice, they can keep paying the assignor and obtain a good discharge, which leaves the assignee's position exposed.
Even where those requirements are not met, an assignment can still bind the parties in equity. But an equitable assignment is more fragile. It can lose priority to later interests, and the assignee may need the assignor's cooperation to enforce against the debtor. The deed, properly documented and notified, is how businesses avoid that fragility.
The three parties and their competing interests
Every assignment involves three parties, each with a different stake in the transaction:
- Assignor: The party giving up the right. Their interest is in walking away cleanly, with no continuing liability and no lingering claims against them.
- Assignee: The party taking the right. Their interest is in holding an enforceable right against the debtor, with priority over anyone else who might claim it.
- Debtor or counterparty: The party owing the money or performance. Their interest is in dealing with one clear party, not two, and in never paying or performing twice.
Those interests pull in different directions. The counterparty generally wants to consent to nothing and be left alone. The assignor wants finality. The assignee wants certainty. The consent clauses, notices and registrations that make up the mechanics of assignment exist to manage that tension, and a business that understands which party is driving the transaction is better placed to protect its own position.
Start with the underlying contract
Nearly every commercial contract has something to say about assignment. Some allow assignment of the benefit without consent provided the other side gets notice. Some require written consent, often expressed as not to be unreasonably withheld. Some prohibit assignment outright.
The deed cannot override the contract. If the contract requires consent and none is obtained, the assignment can be a breach of contract and the counterparty may be entitled to ignore the assignee. If the contract prohibits assignment, a deed purporting to assign is ineffective against the counterparty; the practical path is a variation, a fresh agreement, or a novation.
This is why the first step in any assignment is a read of the assignment clause, not a draft of the deed. The clause determines which document you need, who must agree, and what notice must be given.
If obligations are moving too: novation
Assignment moves benefits. It does not move obligations. If the commercial intent is that a new party performs the contract from now on and the original party drops out, that is a novation: the old contract is discharged, a new one comes into being with the incoming party, and every party must consent.
The classic mistake is assigning a contract the assignor is still obliged to perform. The counterparty later enforces against the original party, who points at the deed and discovers it transferred only the benefit. Nothing about their obligation moved. If the incoming party is to perform, prepare a novation and obtain the counterparty's written consent before completion.
The distinction also matters for releases. An assignment alone does not release the assignor from past breaches or accrued liabilities. If the parties intend a clean break, that needs separate drafting, such as a release and indemnity that splits responsibility between pre-assignment and post-assignment matters.
Writing and registration: the formalities that make it stick
Different assets have different formalities, and the differences matter. Some rights transfer only with a signed writing, and some registered rights transfer effectively only once recorded on a public register.
Copyright
Copyright is personal property and can be assigned, but under s 196 of the Copyright Act 1968 (Cth) the assignment has no effect unless it is in writing signed by or on behalf of the assignor. A handshake, an invoice or a payment alone does not move copyright. This catches many businesses buying a website or software: paying for the work does not assign the copyright, and the developer remains the owner until a signed assignment exists.
Trade marks
A registered trade mark, or a mark whose registration is being sought, may be assigned with or without the goodwill of the business, and the assignment may be partial, covering only some of the goods or services (s 106 of the Trade Marks Act 1995 (Cth)). The assignee becomes the registered owner only when the assignment is recorded with IP Australia (s 110). Until the recordal, the register still names the old owner, which matters for enforcement, licensing and renewal. The recordal application should be lodged promptly, because registration of the new owner is taken to have effect from the filing date of the recordal.
Patents, designs and other registered rights have their own assignment and recordal rules with IP Australia, and those should be checked before the transaction documents are settled.
Receivables and security: when the PPSA gets involved
Where an assignment of receivables is part of a financing arrangement, such as factoring or a loan secured over the debts, the Personal Property Securities Act 2009 (Cth) (the PPSA) can apply. Depending on how the transaction is structured, a transfer of receivables can create or involve a security interest, and the consequences of getting the registration wrong can be severe.
Under s 55 of the PPSA, a perfected security interest has priority over an unperfected one, and where two interests are both perfected, the first to perfect wins. Perfection usually means registration on the Personal Property Securities Register. An unperfected interest can lose priority to a later lender who registers first, and in an insolvency it may be lost entirely.
The practical point for a business taking or granting security over receivables: identify whether the PPSA applies, and register promptly. Timing is not a formality; it decides who gets paid first if the debtor fails.
When a deed of assignment is the wrong tool
Three situations come up repeatedly where a deed of assignment does not achieve what the parties want.
Leases
Commercial and retail leases almost always require the landlord's consent to a transfer, often in the landlord's own form. Treat a lease transfer as a consent exercise with the landlord, not a simple assignment between the outgoing and incoming tenant.
Consumer guarantees
Under s 64 of the Australian Consumer Law, which sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth), a term of a contract is void to the extent it purports to exclude, restrict or modify the consumer guarantees. Two businesses assigning a supply contract between themselves cannot use the deed to strip away the statutory rights consumers hold against the supplier. The guarantees follow the supply, and past breaches remain the responsibility of the party that committed them.
Obligations that must move
As covered above, if the incoming party is to take over performance, a novation with the counterparty's consent is required. A deed of assignment alone leaves the original party on the hook.
Executing the deed correctly
A deed has stricter execution rules than an ordinary contract, and an invalidly executed deed is not a deed at all.
For a company, s 127 of the Corporations Act 2001 (Cth) provides the reliable pathway. A document is validly executed without a common seal when signed by two directors, or by a director and the company secretary, or, for a proprietary company with a sole director, by that director where they are also the sole secretary or the company has no secretary. If the document is expressed to be a deed and is executed in that way, it takes effect as a deed.
The common failures are signing with a single director's signature where the company has more than one director, failing to state that the document is executed as a deed, and using an execution block for the wrong entity type. Individuals have their own rules, and witnessing requirements differ between states and territories, so check the rules under the governing law before an individual signs. Execution also involves delivery, so the parties should be clear about when the deed takes effect rather than leaving that to inference.
Where professional help makes the difference
For a simple transfer between parties who both want it done, a carefully completed deed with the right execution block can be sufficient. The assignments where professional help pays for itself are the ones with moving parts around the deed: an assignment clause with conditions attached, a transaction that actually needs a novation, registered IP that must be recorded, receivables that engage the PPSA, or a sale where past and future liability has to be split between the parties.
A commercial lawyer's role is to read the underlying contract, confirm which document the transaction needs, draft the deed so that what transfers is precise and everything else is expressly excluded, coordinate the consents and registrations, and make sure execution is valid. A lawyer also sees the traps a template cannot: the warranty the assignor cannot honestly give, the security interest that will outrank yours if it is registered a day later, the accrued liability no one has mentioned.
The cost of a review at the start of the transaction is usually small compared with the cost of a transfer that fails, or the cost of discovering after completion that the assignee's rights are unenforceable.
The step most assignments get wrong
Ask a commercial lawyer what fails in assignment transactions and the answer is rarely the deed itself. It is the step around the deed: consent that was never obtained, notice that was never given, a recordal that was never lodged, a signature that was never witnessed. Each of those steps is cheap to do early and expensive to fix later, because by then the debtor has paid the wrong party, a later lender has registered first, or the register still names the old owner.
If you are planning an assignment, the most useful thing you can do is have the transaction checked before the deed is drafted: which rights are moving, whether the contract permits it, who must consent, what must be in writing and recorded, and which document is actually needed. A short consultation can answer those questions, and it usually costs far less than redoing a failed transfer. The deed itself is the easy part. Everything around it is where the value, and the risk, sits.