Notice of Assignment (Kenya)

A Notice of Assignment in Kenya conveys a defined interest from the assignor to the assignee and fixes the effect of that transfer.

The Law of Contract Act Cap. 23 governs the assignment of contractual rights in Kenya. Under principles of Kenyan contract law derived from English common law through Section 3(1) of the Judicature Act Cap. 8, contractual benefits (rights) are assignable without the consent of the other contracting party unless the contract expressly prohibits assignment, the rights are personal in nature, or the assignment would materially change the obligor's position. Contractual burdens (obligations) cannot be assigned without the obligor's consent — a distinction that is fundamental to Kenyan commercial practice.

The Movable Property Security Rights Act No. 13 of 2017, administered by the Collateral Registry established under Section 26 of the Act, governs the assignment and registration of security interests in movable property including trade receivables, accounts, and chattel paper. Where receivables are assigned as security for a loan or other financial obligation, the assignment must be registered in the Collateral Registry under the Movable Property Security Rights Act to be effective against third parties and to maintain priority over competing security interests. The Notice of Assignment delivered to the debtor is a separate requirement that makes the assignment effective as between the assignor, the assignee, and the debtor specifically.

In the context of debt factoring and invoice discounting — significant financing mechanisms for Kenyan small and medium enterprises (SMEs) — a Notice of Assignment is served on the debtor (the customer of the business) to direct payment of invoices to the factor or financier as the assignee of the receivable. The Banking Act Cap. 488 and the Microfinance Act No. 19 of 2006, administered by the Central Bank of Kenya (CBK), regulate factoring and invoice discounting activities by licensed commercial banks and microfinance institutions. The Kenya Revenue Authority (KRA) administers withholding tax obligations on assigned receivables under the Income Tax Act (Cap. 470).

In the property sector, the assignment of lease rights under a commercial lease agreement requires a Notice of Assignment to be delivered to the landlord under the terms of the lease and in compliance with the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Cap. 301, which regulates the assignment of tenancies of controlled premises. Section 4 of Cap. 301 requires the tenant to obtain the landlord's written consent before assigning a controlled tenancy, and the Notice of Assignment provides formal notification of the completed assignment following such consent. The Registration of Titles Act (Cap. 281) and the Land Registration Act No. 3 of 2012 govern the registration of interests in immovable property including assigned leases.

For intellectual property assignments, the Industrial Property Act No. 3 of 2001 — administered by the Kenya Industrial Property Institute (KIPI) — and the Copyright Act Cap. 130 — administered by the Kenya Copyright Board (KECOBO) — require the assignment of registered intellectual property rights to be recorded on the relevant register. A Notice of Assignment delivered to a licensee or user of the intellectual property is the mechanism by which the licensee is informed to direct future royalty payments and compliance obligations to the new owner. Forms-legal.com provides this Kenya Notice of Assignment template as a country-specific, legally precise document for use in commercial, property, and financing transactions governed by Kenyan law.

A Notice of Assignment in Kenya is required in a range of commercial and financing situations whenever a party to a contract transfers its rights under that contract to a third party and must formally notify the counterparty or debtor of the transfer.

A Notice of Assignment is needed in debt factoring and receivables financing transactions where a Kenyan business assigns its trade receivables to a bank, microfinance institution, or specialised financier in exchange for immediate cash. The Notice of Assignment must be delivered to each customer (debtor) whose invoices have been assigned, directing that payment be made to the factor or financier rather than the original creditor. This is essential for the assignment to bind the debtor and for the factor to enforce the receivable directly against the debtor under the Law of Contract Act Cap. 23.

A Notice of Assignment is required when a lender assigns a loan receivable — the right to receive principal and interest repayments from a borrower — to another financial institution or to a debt purchaser. Kenyan commercial banks frequently assign non-performing loans to Kenya Deposit Insurance Corporation (KDIC) or specialist asset management companies, and the Notice of Assignment is the mechanism by which the borrower is informed that future payments and communications should be directed to the new creditor.

A Notice of Assignment is needed when a lease is assigned from one tenant to another following receipt of the landlord's consent under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Cap. 301 or under the terms of the lease agreement. The outgoing tenant (assignor) or incoming tenant (assignee) delivers the Notice of Assignment to the landlord to complete the formalities of the assignment and to establish the new tenant's direct liability to the landlord.

A Notice of Assignment is required when intellectual property rights — patents registered with the Kenya Industrial Property Institute (KIPI) under the Industrial Property Act No. 3 of 2001, copyrights administered by the Kenya Copyright Board (KECOBO) under the Copyright Act Cap. 130, or trade marks — are assigned to a new owner. The Notice informs licensees, users, and royalty payers that future payments and communications must be directed to the assignee.

A Notice of Assignment is needed in construction and infrastructure projects when a contractor assigns the benefit of a performance bond, advance payment guarantee, or insurance policy to the employer as security for the contractor's obligations under the building contract, consistent with the Movable Property Security Rights Act No. 13 of 2017 and the Collateral Registry requirements.

A complete and effective Notice of Assignment in Kenya under the Law of Contract Act Cap. 23 must include the following key elements.

Where any party is a company, the Business Registration Service (BRS) registration number and registered address should be stated. The date of the notice and the date of the original assignment agreement should both be recorded.

Identification of the Assigned Rights: A precise description of the contractual rights being assigned — for example, the right to receive payment of KES [amount] under Invoice No. [X] dated [date]; the benefit of a lease agreement over premises at [address]; or the benefit of Patent No. [X] registered with the Kenya Industrial Property Institute (KIPI). The description must be specific enough that the obligor can identify which of their obligations are now owed to the assignee rather than the assignor.

Date of Assignment: The date on which the assignment took effect between the assignor and the assignee. This is the date from which the obligor should direct performance — payments, communications, and compliance — to the assignee rather than the assignor.

Instruction to Pay or Perform: A clear and unambiguous instruction to the obligor to make all future payments, perform all remaining obligations, or direct all future communications relating to the assigned rights to the assignee. Payment details for the assignee — account name, bank name, account number, and branch — should be included where the assignment relates to a monetary obligation. The Kenya Revenue Authority (KRA) administers withholding tax obligations, and the notice should clarify whether withholding tax deductions continue to apply and to whom the tax certificates should be issued.

Effect on Defences: A statement noting that the obligor retains all rights of set-off and other defences that it had against the assignor at the date of the notice, consistent with the equitable rule received into Kenyan law through the Judicature Act Cap. 8. The assignee takes the assignment subject to the equities — meaning the obligor can raise against the assignee any defence or cross-claim it could have raised against the assignor in respect of the assigned right up to the date of notice.

Acknowledgment Request: A request that the obligor confirm receipt of the notice by signing and returning a copy — the acknowledgment of receipt. An acknowledged Notice of Assignment provides the assignee with clear evidence that the notice was received and that the obligor is bound to perform in favour of the assignee from the date of acknowledgment. Forms-legal.com recommends that the assignee retain a copy of the acknowledged notice as part of the assignment documentation.

Registration in the Collateral Registry: Where the assigned rights constitute a security interest in movable property — such as an assignment of receivables as security for a loan — the assignment must be registered in the Collateral Registry established under the Movable Property Security Rights Act No. 13 of 2017. The Notice of Assignment to the debtor is a distinct requirement from the registration obligation, and both must be satisfied for the assignee to have full priority protection.

Intellectual Property Registration: Where the assigned rights include intellectual property registered with KIPI under the Industrial Property Act No. 3 of 2001 or KECOBO under the Copyright Act Cap. 130, the Notice of Assignment should be accompanied by or followed by an application to record the assignment on the relevant register, as registration affects the enforceability of the IP rights against subsequent third parties.

Governing Law and Dispute Resolution: The notice and the underlying assignment should be governed by the laws of Kenya. Disputes should be referred to the High Court of Kenya (Commercial Division) or to arbitration under the Nairobi Centre for International Arbitration (NCIA) Rules 2015 as agreed in the original assignment agreement.

Forms-legal.com provides this Kenya Notice of Assignment as a country-specific, professionally drafted template for use in commercial, financing, property, and intellectual property transactions governed by Kenyan law. Complex multi-party assignments and security assignments in regulated financial sectors should be reviewed by an advocate admitted to the Roll of Advocates of the Law Society of Kenya (LSK).