Chose in Action: Meaning
A chose in action is:
- an intangible property right or property
- which is legally not in a person's possession
- but is only enforceable by legal process.
The legal process begins with a chose in action and ends with a judgment or court order.
Therefore, a chose in action is a right to sue: a legal right. It's a property right. It's more often referred to as a cause of action.
A person owns a chose in action in the same way as someone owns the device you are using right now.
Choses in action comprise all personal rights of property which cannot be taken by possession of a physical object (ie a chose in possession).
Depending on the cause of action, a person would be:
- owed a sum of money (ie a creditor owed a debt), and the debtor must pay the money
- entitled to performance of a contract
- the owner of intellectual property rights and entitled to sue for infringement
- entitled to a licence to use intellectual property rights
In turn, the remedy leads to the entitlement to enforce (aka "enjoy") the legal rights which flow from the chose in action, which is usually one or more of:
- an injunction
- specific performance
And suppose the debtor, did not pay the sum ordered to be paid, the creditor would be entitled to initiate action to enforce the judgment or order.
For a chose in action to exist, there must be a remedy at common law or equity which recognises the chose.
So, if a remedy does not exist for the alleged chose in action, the chose in action cannot exist.
It's pronounced "ch-oh-se" in action.
Types of Choses in Action: Examples
Legal choses in action are enforceable in a court exercising its common law jurisdiction.
Well known forms of legal choses in action include:
- claims for debts
- claims relating to the exclusive rights of owners of intellectual property rights:
- patent rights
- trade marks
- design rights
- confidential information
- other claims for civil wrongs, such as
Equitable choses include:
- a share in a trust fund
- the share of proceeds of sale in the hands of a mortgagee.
Chose in Action Examples
- Chattels: One person can hand another a pen, and thereby pass possession of the pen. The pen is a physical object.
In legal terminology, the pen is a chattel and a chose in possession, not a chose in action.
- Conversion: Suppose a person steals your pen. The person took possession of your pen unlawfully.
Ignoring the criminal law, the person who took your pen is liable to you for the tort of conversion. You are entitled to either an award of damages for the pen, or a court order that the person deliver the pen to you.
The tort of conversion is:
- a chose in action
- which is personal property
- which is owned by you
- which entitles you to sue the person for conversion
- for damages or delivery up of a chattel
- Copyright law: Suppose you own copyright in some software. The software is protected by copyright law. A person uses the software without your consent.
As the person has not obtained a licence from you, it is an infringement of copyright law. Infringement entitles you to damages for your pecuniary loss and an injunction to restrain infringement (ie unlawful use of the software) in the future.
The right to sue for infringement is a chose in action.
- Conspiracy: Continuing the copyright infringement example above, a series of people combine with an intention to infringe the copyright of your software. A separate, freestanding tort of conspiracy arises to render each of the participants in the conspiracy liable for the conspiracy.
- Legal choses in action may be assigned in equity, at common law or by statute.
- Equitable choses can be assigned in equity or by statute.
For an assignment of a legal chose in action to be effective by statute:
- it must be in writing,
- be absolute (the whole of the chose, unconditional and not a security interest),
- with notice to the debtor.
If an assignment is ineffective by statute (for instance, an assignment of part of a debt), it still may be effective in equity.
A deed of assignment or ordinary contract may be used to assign the property rights in a chose.