Assignment Contract Law

Assignment Contract Law-48
For the assignment to become effective, the assignee must manifest his acceptance under most circumstances.This is done automatically when, as is usually the case, the assignee has given consideration for the assignment (i.e., there is a contract between the assignor and the assignee in which the assignment is the assignor’s consideration), and then the assignment is not revocable without the assignee’s consent.

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The contract includes an assignment clause, so when Ken goes out of business, he assigns the contract to his sister-in-law Karrie, who also owns a lawn mowing service.

Rights and obligations of specific people can’t be assigned because special skills and abilities can’t be transferred. For example, Billy Joel can’t transfer (assign) a contract to perform at Madison Square Garden to anyone else.

The assignor may assign any right unless (1) doing so would materially change the obligation of the obligor, materially burden him, increase his risk, or otherwise diminish the value to him of the original contract; (2) statute or public policy forbids the assignment; or (3) the contract itself precludes assignment.

The common law of contracts and Articles 2 and 9 of the Uniform Commercial Code (UCC) govern assignments.

The Restatement (Second) of Contracts defines an assignment of a right as “a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires the right to such performance.” The one who makes the assignment is both an obligee and a transferor.

The assignee acquires the right to receive the contractual obligations of the promisor, who is referred to as the obligor (see Figure 14.1 "Assignment of Rights").Notice to the obligor is not required, but an obligor who renders performance to the assignor without notice of the assignment (that performance of the contract is to be rendered now to the assignee) is discharged.Obviously, the assignor cannot then keep the consideration he has received; he owes it to the assignee.You may have come across an “assignment of contract” clause in a business contract.This type of clause is common in contracts with suppliers or vendors and in intellectual property (patent, trademark, and copyright) agreements.Problems of acceptance normally arise only when the assignor intends the assignment as a gift.Then, for the assignment to be irrevocable, either the assignee must manifest his acceptance or the assignor must notify the assignee in writing of the assignment.Assignments are an important part of business financing, such as factoring.A To effect an assignment, the assignor must make known his intention to transfer the rights to the third person.After all, anybody could waltz up to the obligor and say, “I’m the assignee of your contract with the bank.From now on, pay me the 0 a month, not the bank.” The obligor is entitled to verification of the assignment. He gains all the rights against the obligor that the assignor had, but no more.


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