Encyclopaedia Judaica

Assignment (of Debt)

ASSIGNMENT (OF DEBT)

History and Development

Basically, Jewish law did not recognize the concept whereby personal rights or obligations (whether arising from contract or from a liability for damages in tort) could be legally assigned, either by the creditor or the debtor, to one who was not a party to the obligation itself. This was because a debt was considered intangible and therefore incapable of legal transfer (Rashi, Git. 13b; R. Gershom, bb 147b; Tos. to Ket. 55b). It was compared to the case of an object that was not yet in existence (davar she-lo ba la-olam) which also could not be transferred (see Tos. to bk 36b).

The development of commerce and its increasingly sophisticated requirements made it necessary however to overcome this difficulty in the law, and the assignment of debts, whether verbal or by deed, is already mentioned in the tannaitic period (Tosef., bm 4:3, et al.). Two principal methods of assignment were invented: (1) a form of novation, whereby an existing debt was canceled and an identical, but new debt created between the debtor and the creditor's assignee – all three parties consenting; and (2) a formula whereby the creditor appointed an agent to recover a debt on his behalf, but empowered the agent to retain the proceeds for himself. From these two methods were developed the two legal forms of assignment of debts dealt with in the Talmud, namely Ma'amad Sheloshtan (lit. "a meeting of the three") and Mekhirat Shetarot ("sale of bonds"). In addition, there was the Shi'buda de Rabbi Natan a process of legal execution entrusted to the court.

Ma'amad Sheloshtan, as an authorized legal transaction, is first mentioned by the early amoraim (Git. …