Question

Mr. Dealer bought a fleet of SUVs (sport utility vehicles) from General Motors (GM) on credit, GM agreeing not to assign the resulting account receivable without Dealer's consent. GM later, without debtor dealer's consent, assigned the account to The Bank of New York (BNY) for consideration. Dealer made payments to BNY, but claimed damages from GM for breach of contract. 1. Could Dealer collect damages from GM? Explain fully supporting your yes/no answer.

Answer 1

The dealer could collect damages from GM if the clause or condition of not assigning the account receivable without his consent was added in the terms and conditions of the legal contract. If such a condition was incorporated in the contract and if GM did not comply with it, the dealer has full rights to repudiate the contract and claim damages from GM.

If the condition was verbally agreed to and all other entities of contract were present in the deal (offer and acceptance, consideration, intention and capacity), then it comes under a verbal contract. Verbal contract can be legally binding, but proving the evidence of the agreement can be very difficult.