What Are Choses In Action?

A chose in action is a personal right to possess or recover a debt or claim through legal action.

This legal concept has evolved over time and plays a significant role in various legal contexts, including family law. Understanding choses in action involves delving into its historical background, types, associated legal rights and remedies, and its specific applications in family law. This article will provide a comprehensive overview, complete with practical examples and case studies, to help you grasp the intricacies of choses in action and how they may impact your legal matters.

Understanding the concept of choses in action

Choses in action, often referred to as “things in action,” represent intangible personal property rights that can only be claimed or enforced through legal action, rather than physical possession. 

These rights encompass a wide range of claims, including 

• Debts
• Shares
• Intellectual property rights
• Contractual rights

In the context of family law, choses in action can also include rights to spousal maintenance, child support, or claims to a share of marital assets. 

Choses in action & property

One of the first steps in a family law property settlement is determining the property that each side has; the property that is to be divided. 

There is on occasion a question of whether an asset can be defined as actual property or whether it is merely a “choses in action.”

The term ‘property’, as it’s applied pursuant to s79 of the Family Law Act, is given a very wide meaning. It’s basically any item or chose in action to which either party is entitled. It will include such thing as shares, bonds and land. But for an asset to be included in the matrimonial pool for family law purposes, it needs to exist, or be realised, as at the date of trial or separation of assets, i.e. today. 

As an example, if someone has been informed that they will inherit a property on death of a family member, then this would be an entitlement is still in the future. It has not yet been realised. And thus it is not property that is the asset of that person. Neither it, nor it’s value, can be part of the property pool. 

Types of choses in action

Choses in action can be broadly categorised into several types, each with its own legal implications and methods of enforcement.

Debts and Financial Claims

One of the most common types of choses in action is the right to recover a debt. This includes personal loans, credit card debts, and other financial obligations where one party owes money to another. 

Contractual Rights

Contractual rights are another significant category of choses in action. These rights arise from agreements between parties and can include claims for breach of contract, specific performance, or damages. In the context of family law, prenuptial and postnuptial agreements often give rise to contractual rights that can be enforced through legal action.

Intellectual Property Rights

Intellectual property (IP) rights, such as copyrights, patents, and trademarks, also fall under the umbrella of choses in action. These rights are intangible and can only be enforced through legal mechanisms. 

Shares and Securities

Shares in a company and other securities represent another form of choses in action. These financial instruments grant the holder certain rights, such as the right to receive dividends or to vote at shareholder meetings. 

Insurance Claims

Insurance claims, whether related to life, health, property, or other types of insurance, are also considered choses in action. These claims can be particularly relevant in family law cases involving the division of assets or the provision of financial support following a separation or divorce.

Choses in action in Family Law Context

In a family law dispute, choses in action can play a role in determining the financial and property entitlements of the parties involved.

Division of Marital Assets

The division of marital assets during divorce proceedings frequently involves choses in action. These can include rights to future income, such as pensions or retirement benefits, which are considered marital property and subject to division. 

Additionally, any claims to business interests, intellectual property, or shares in a company are also treated as choses in action. The court will assess the value of these intangible assets and determine an equitable distribution between the parties.

Spousal Maintenance and Child Support

Choses in action in family law often include claims for spousal maintenance and child support. These are not merely financial obligations but legally enforceable rights that one party holds against the other. For instance, if a court orders one spouse to pay maintenance or child support, the recipient has a chose in action to enforce this order. Should the paying party default, the recipient can take legal action to recover the owed amounts, potentially through wage garnishment or other enforcement mechanisms.

Prenuptial and Postnuptial Agreements

Prenuptial and postnuptial agreements often contain provisions that create choses in action. These agreements may stipulate financial arrangements or property divisions that one party can enforce through legal action if the other party fails to comply. For example, a prenuptial agreement might specify that one spouse is entitled to a certain percentage of the other’s business interests in the event of a divorce. If the terms are not honored, the aggrieved party can seek legal remedies to enforce the agreement.

Enforcement and Legal Remedies

The enforcement of choses in action in family law requires a thorough understanding of the available legal remedies. Courts can issue orders to ensure compliance with financial obligations, such as maintenance or support payments. In cases involving the division of assets, courts may order the transfer of property or financial instruments to achieve a fair settlement. Additionally, if one party fails to honour a prenuptial or postnuptial agreement, the court can award damages or specific performance to rectify the breach.

Practical Examples and Case Studies

To illustrate the application of choses in action in family law, let’s delve into some practical examples and case studies that highlight how these intangible rights are enforced and resolved in real-world scenarios.

Case Study 1: Enforcing Spousal Maintenance

Consider the case of Jane and John, who recently divorced after 15 years of marriage. The court ordered John to pay Jane spousal maintenance due to her lower earning capacity. However, John failed to make the payments as stipulated. Jane’s right to receive these payments is a chose in action. To enforce this right, Jane filed a legal claim, resulting in the court issuing a garnishment order on John’s wages. This ensured that the maintenance payments were deducted directly from John’s salary and transferred to Jane, thereby enforcing her chose in action.

Case Study 2: Division of Intellectual Property

In another case, Sarah and Michael, both successful entrepreneurs, decided to divorce. During their marriage, they co-developed a software application that became highly profitable. The intellectual property rights to this software are considered a chose in action. During the property settlement process, the court had to determine the value of these IP rights and decide on an equitable division. Ultimately, the court awarded Sarah a 50% share of the future profits from the software, recognising her contributions to its development. This decision ensured that Sarah’s chose in action was fairly addressed in the divorce settlement.

Case Study 3: Prenuptial Agreement Enforcement

A prenuptial agreement between Emma and Liam stipulated that in the event of a divorce, Emma would receive a 30% share of Liam’s business. When they divorced, Liam contested the agreement, arguing that the business had significantly increased in value due to his efforts alone. Emma’s right to a share of the business, as outlined in the prenuptial agreement, is a chose in action. Emma took legal action to enforce the agreement, and the court upheld the terms, ordering Liam to transfer 30% of the business shares to Emma. This case underscores the importance of prenuptial agreements in creating enforceable choses in action.

Case Study 4: Child Support Arrears

David and Laura’s divorce included a court order for David to pay child support for their two children. Over time, David accumulated significant arrears. Laura’s right to these overdue payments is a chose in action. To recover the arrears, Laura sought legal intervention, resulting in the court issuing a lien on David’s property. This legal remedy ensured that Laura could recover the owed child support, demonstrating how choses in action can be enforced to protect the financial well-being of children.

These practical examples and case studies illustrate the diverse ways in which choses in action manifest in family law and the legal mechanisms available to enforce them. Understanding these real-world applications helps demystify the concept and highlights its critical role in achieving fair and just outcomes in family law disputes.

Need help?

If you need assistance with any aspect of your family law matter, including consideration of choses in action, book a consultation with a MovementLegal team lawyer today.