• James D. Lynch

Contract tip - Assignment

An assignment is a transfer of rights under a contract. In other words, a person who was a party to the original contract wishes to transfer the rights under the contract to a person who was not a party to the original contract.

For example, assume X and Y enter into a contract in which X will pay Y $50 if Y mows X’s lawn. Y then assigns the payment rights to Z. Y (the Assignor) has assigned the contract rights to Z (the Assignee), who will receive the $50 from X (the Obligor). (But Y does NOT assign the responsibility of mowing the lawn to Z. Y's transfer of duties to Z would be classified as a "delegation" as opposed to an assignment.)

Almost all contract benefits can be assigned. The law favors the free assignability of contractual rights. However, some contracts will include a clause that either prohibits or invalidates assignments.

● Clause prohibiting assignments: If the contractual provision prohibits assignments, the assignor breaches the agreement by assigning away the contractual rights, but the assignee will still be able to enforce his or her rights against the obligor.

● Clause invalidating assignments: On the other hand, if the contractual provision states that attempts to assign are “void,” the assignee cannot sue the obligor (because there was never any power or right to assign).

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