A holder of an option to purchase certain real estate property, assigned the option, against zero consideration, to another entity, which undertook all obligations towards the sellers of the real estate. The sellers demand the cancellation of the option agreement because the option was assigned without their consent.
The Court held that the assignment of the option required the consent of the sellers and was therefore invalid. Israeli law dictate that there is no restriction on the assignment of a right, which does not require the consent of the creditor. However, when the assigned agreement includes rights and obligations together, it is a mixed assignment of rights and obligations which requires the consent of the creditor. When the agreement deals with an option, which upon its exercise enters into force an agreement that includes obligations, including payment obligations, then it is a combination of obligations and rights. In the event there is no specific reference to the option assignability in the agreement, then it must be assumed that the creditor consent to such assignment is required. Here, the agreement deals with an option for the purchase of real estate which, upon exercise, requires the purchaser to take on a series of obligations, in a way that turns the assignment into a mixed assignment that requires the consent of the sellers, which was never received. The fact that the agreement does not include any reference to the option holder's ability to assign it does not indicate a blank check to assign it without restriction and the fact that the exercise notice was given by the original option holder and not by the assignee indicates that the assignment of the option had no validity.