The effect of the clause prohibiting assignment without consent

In all the cases except Darlington, the building contract contained a clause prohibiting assignment without consent. One party to a contract can never transfer his obligations to a third party without the consent of the other party. But, providing he gives notice, he is able to assign his rights under a contract unless the contract prohibits it. The logic behind prohibiting transfer of the employer’s obligations under a building contract without the contractor’s consent is that the contractor wants to know whom he is dealing with.

Despite the prohibition on assignment, the court in St Martins and Darlington found the contractor liable for substantial damages suffered by a third party. In the St Martins case, Lord Browne-Wilkinson decided it was proper "to treat the parties as having entered into the contract on the footing that Corporation would be entitled to enforce contractual rights for the benefit of those who suffered from defective performance but who, under the terms of the contract, could not acquire any right to hold McAlpine liable for breach."

It is difficult to understand this, as the prohibition on assignment would seem to lead to completely the opposite conclusion – namely that McAlpine showed an express intention of wanting to avoid responsibilities to third parties, directly or indirectly.