Can a seller, in a transaction covered by the MMPA, by assigning rights and delegating duties pretermit the other’s rights under the MMPA? There appears to be some question. Peel v. Credit Acceptance Corp., 2013 WL 2301095 (Mo. App. W.D. May 28, 2013), and prior authority, raise some interesting questions. We below provide a somewhat complicated discussion of certain issues raised. As an introduction, let us not provide some basic observations under the common law of contracts (understanding that FTC rules also may apply):
- An obligor cannot assign rights without the consent of the obligee if the assignment operates to materially affect the rights of the obligee.
- An assignment of the right to payment under a contract, where the payee’s performance is subject to the MMPA, would materially affect the rights of the obligee if the assignment operated to eliminate protections in the debt collection process that would be otherwise available absent the assignment.
- It would appear that a party cannot consent to elimination of protection of the MMPA. There would not seem to be a useful reason not to apply that to consenting to an assignment in circumstances that operated to eliminate MMPA protections.
- Were a court to determine an assignee of a debt representing deferred payments from a payor benefitting from the MMPA was not subject to the MMPA, effectiveness of the assignment would therefore require the assignor remained liable for any practice engaged-in by the assignee that would be actionable had there not been an assignment and it had been performed by the assignor.
More after the break …