Difference between Negotiation and Assignment

The following are the differences between Negotiation and Assignment

1. Mode of Transfer

Negotiation can be effected by mere delivery or endorsement followed by delivery. Mode of transfer is not so undemanding. Assignment is always done by writing, usually by executing a separate document signed by the transferor.

2. Consideration

Consideration is normally presumed in case of negotiation. The endorsee is not required to prove that he has obtained the instrument for consideration. The burden of proof, in fact, lies on the opposite party. In case of assignment, consideration is not presumed. The assignee has to prove that he has obtained the instrument for consideration.

3. Title

In case of negotiation the transferee, as a holder-in-due course, takes the instrument free from defect in the title of the transferor, if any and acquires the better title than his transferor. In assignment, the Assignee of an actionable claim takes it subject to the defect(s) that may exist in the title of the transferor.

4. Notice of Transfer

Notice of transfer by the transferee to the debtor is not necessary in assignment. In case of transfer by endorsement, if the debtor, e.g., maker, payee, etc., is not given any notice, he will still be liable to pay the amount on maturity. In case of transfer by assignment, notice of transfer must be given to the debtor by the transferee.

5. Relevancy

Negotiation is relevant chiefly in case of negotiable instruments. Assignment is usually done in case of other documents but may be done in respect of negotiable instrument as well.

6. Suit against

A transferee can sue the third third party in assignment. But in Negotiations, an assignee cannot do so. Party in his own name.

7. Governing Act

Transfer by negotiation is regulated by the Negotiable Instruments Act, 1881. Transfer of negotiable instruments by means of assignment is regulated by the Transfer of the Property Act.

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