Guaranty or Warranty From Assignor

Guaranties as to the validity of the subsisting contract and as to the genuineness of all signatures appearing on the contract are warranties.[i]  When an assignment occurs during a pending action on the assigned claim, the assignor’s covenant that the claim “is a just and legal demand” does not assure success in the action.  The uncertainty occurs when:

  • the claim was known to be a disputed one;
  • the consideration for the assignment was less than half the amount of the claim; and
  • it was stipulated that the assignment was without recourse and that payment of the claim or any part of it was not guaranteed.[ii]

However, an assignment may contain an express agreement that the assignor is exempt from liability.  The purchaser may take it at his/her own risk.[iii]

[i] Merchants Service Co. v. Small Claims Court, 35 Cal. 2d 109 (Cal. 1950)

[ii] Genard v. Hosmer, 285 Mass. 259 (Mass. 1934)

[iii] Brod v. Cincinnati Time Recorder Co., 82 Ohio App. 26 (Ohio Ct. App., Hamilton County 1947)

Inside Guaranty or Warranty From Assignor