Assignment is a legal term in which a person who is an «assignor» transfers rights, property or other benefits to another person known as a «assignor». This concept is used in both contract law and property law. The term can refer to either the act of transfer or the rights/assets/benefits transferred. Under contract law, the assignment of a contract is both: (1) an assignment of rights; and (2) delegation of duties, unless there is other evidence. For example, if A signs a contract with B to teach B guitar for $50, A can award that contract to C. That is, this assignment is both: (1) an assignment of A`s rights under the $50 contract; and (2) a delegation of A`s duty to teach guitar C. In this example, A is both the «assignee» and the «delegate» who delegates the tasks to another (C), C is called the «debtor» who must fulfill the obligations to the assignee, and B is the «assignee» to whom the obligations are due and who is liable to the «debtor». The power of the treaty to restrict the assignment is broad. As a general rule, contractual provisions that restrict the assignment of the contract without the consent of the debtor are valid and enforceable even if there is legal approval for the assignment. Limiting the power of attribution is often ineffective unless the restriction is expressly and precisely stated. Anti-release clauses are only effective if they contain clear and unambiguous prohibition language.
Anti-season assignment clauses protect only the debtor and have no influence on the transaction between the assignee and the assignor. Accessibility of contractual rights is useful, and prohibitions, on the other hand, are generally not preferred. Many contracts contain general language that prohibits the assignment of rights or «the contract.» Both the reformulation and Article 2-210(3) of the UCC stipulate that, in the absence of circumstances to the contrary, a provision of the agreement prohibiting the assignment of the «contract» prohibits «only the transfer of the service from the assignor to the assignor». Reformulation (second) of contracts, Article 322. In other words, unless the contract expressly prohibits the assignment of any of its terms, a party is free to assign anything other than its own obligations. And note that although an assignment confers on the assignee all possible rights, remedies and benefits related to the assigned item, those that are personal to the assignor and for its sole benefit will not be assigned. Rasp v. Hidden Valley Lake, Inc., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided for X, X cannot assign that right to Y.
It may happen that an assignee allocates the same interest twice (see Figure 14.2 «Successive allocations»). With a few exceptions, the first assignee has priority over any subsequent assignee. An obvious exception is when the first assignment is ineffective or revocable. A subsequent assignment results in a previous, ineffective or revocable assignment being revoked. Another exception is that if the subsequent assignee is contemplating the assignment in good faith and has no knowledge of the previous assignment, it will prevail if it receives payment from the debtor, enforcement or judgment against the debtor or if it receives tangible proof from the assignor that the right has been assigned (for example, a bank deposit book or insurance policy). In Egyptian Navigation Co. v. Baker Invs.
Corp., 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. 14 April 2008), the tribunal concluded that there is an assignment under English law when an assignor intending to transfer its right to a decision informs the assignor of the right so transferred. An enforcement agreement or escrow statement is also a fair assignment if it is unenforceable as an assignment by a court but is enforceable by an equitable court exercising reasonable discretion in the circumstances of the case. Since California combines courts and tribunals, the same court would hear arguments on whether a just assignment has taken place. Often, such relief is granted to prevent fraud or unjust enrichment. The general rule – as already mentioned – is that most contractual rights are transferable.
But there are exceptions. Five of them are noted here. If the contract expressly excludes an assignment, contract law is not transferable. Whether a contract is transferable is a question of contractual intent, and the language used by the parties to recognize that intention must be examined. Notice to the debtor is not required, but a debtor who provides the service to the assignor without notice of the assignment (that performance of the contract must now be provided to the assignee) is relieved. Obviously, the transferor cannot then keep the consideration he received; It owes it to the assignee. But if the debtor is notified and is still working on the assignors, the assignee may recover either from the debtor or from the assignee, so that the debtor may have to perform twice, as in exercise 2 at the end of the chapter, Aldana v. Colonial Palms Plaza. Of course, a debtor who receives notification of the assignment from the assignee wants to be sure that the order actually took place. After all, anyone could approach the debtor and say, «I am the assignee of your contract with the bank. From now on, pay me the $500 a month, not the bank.
The debtor has the right to review the assignment. The common law favours freedom of assignment, so an assignment is generally permitted unless there is an express prohibition on assignment in the contract. If the assignment is authorized in this manner, the assignor is not obliged to consult the other contracting party. An assignment may not affect the obligations of the other party, nor reduce the possibility that the other party will receive the full service of the same quality. Some types of services cannot therefore be assigned because they create a unique relationship between the parties. For example, the assignment of an abuse of rights claim is void because an assignee would be alien to the attorney-client relationship to which the attorney had no obligation and would compromise the sanctity of the strictly confidential and fiduciary relationship between the attorney and the client. There are notable rules regarding assignments of contracts. On the one hand, if a person has not yet concluded the contract of performance of obligations towards another, he cannot assign his future right to an assignee.
In other words, if A has not yet signed a contract with B to teach B guitar, A cannot assign his rights to C. Second, rights cannot be assigned if they substantially alter the obligations and rights of the debtor. Third, the debtor may sue the assignee directly if the assignee does not pay the assignee. According to the previous example, this means that C (debtor) can sue B (assignee) if C teaches guitar B, but B does not pay $50 CAD in return.