Assignment of Contract/More Info


  Assignment of Contract 
Additional Information 
Assignment And Delegation 

Transferring rights, like the right to receive payments, is called "assigning."  Transferring obligations, such as the promise to do some work or deliver some goods, is called "delegating." 

The party making an assignment is called an "assignor" and the person who receives the assignment is the "assignee."  If an obligation is transferred, the person that delegates his or her duties is a "delegator" and the person who accepts the obligation is called the "delegatee". 

As a general rule, parties to a contract are free to assign rights or delegate responsibilities, subject to certain exceptions.  First, the parties are free to make their own rules in their contract, including the prevention or restriction of assignments.  As a result, contracts now commonly provide a restriction on assignment that covers at least one of the parties.  Second, the law prohibits assignment if the transfer of rights would increase the performance obligations of the other party.  For example, consider a contract to deliver goods to the buyer's warehouse, which is close to the seller's facility.  If the buyer assigns the contract rights to someone else in another city, this creates a hardship on the seller.  It's substantially more expensive to deliver to another city, so this assignment would not be permitted. 

The same principle applies if duties are to be delegated.  Those who have made promises cannot delegate the responsibility to someone else if it would cause an undue burden on the party receiving the performance, or if the delegation changes the character of the promised performance.  This is most common when the promised performance involves something of a personal character.  For example, you might hire a well-known artist to do a portrait of your child.  The artist could not delegate that responsibility to another artist.  Similarly, the law will not let you delegate a promise to repay a debt. The promise to repay a debt is personal in nature, and the person to whom the promise is transferred may not be an acceptable credit risk. Again, these rules can be modified by the agreement of the parties. 

Do Obligations Get Transferred With Rights? 

Often, contracts are assigned with no mention of transferring duties. A court will look at all of the circumstances to determine if the parties intended a transfer of duties, too.  In most cases, it is presumed that the parties intended to transfer both rights and duties, unless the facts suggest otherwise.  As always, it is best to make your intentions clear in a written assignment agreement.  This form includes language that clearly makes the assignee responsible for any remaining obligations. 

Consent 

Double check the contract carefully to see if the other party's consent is required before assignment.  If consent is required, make sure the other party gives you that consent in writing before committing to assign. 

Notice 

Even if neither consent nor notice to the other party is required in the contract, it is a good idea to give notice anyway.  See the Notice of Assignment letter form included with this program to give that notice.