(5) Contracts: Delegation/Assignment

Question 1

Delegation of Duties

Answer 1

All contract duties are delegable unless: (a) the contract prohibits delegations or assignments; (b) the delegation is against public policy; (c) the contract is for personal services that calls for the exercise of personal skill or discretion; OR (d) the delegation materially alters the expectancy of the oblige (the party to which the duty is owed).
*The obligor remains liable for non-performance of the contract, unless all parties agree otherwise through a novation.

Always discuss Novation when discussing delegation on an essay

Question 2

Assignment

Answer 2

Rights and benefits under a contract may be transferred to a 3rd party if (1) the assignor manifests their intent to transfer the rights; AND (2) the assignee assents to the assignment (Consideration is not required but if provided the assignment becomes irrevocable).

An assignment generally includes a delegation when not limited to contractual rights.

Question 3

Assignment Limitations

Answer 3

An assignment is valid unless (a) it materially alters what is expected under the contract; (b) it is prohibited by law or public policy; OR (c) it is precluded by contract

Question 4

Define “Materially Alters” under the Limitations of Assignment rule

Answer 4

Materially alters what is expected under the contract – occurs when the assignment: (a) materially changes the duty of the obligor; (b) materially increases the burden or risk imposed on the obligor; (c) materially impairs the obligors chance of obtaining return performance; OR (d) materially reduces the value of the return performance.

Question 5

Define “Precluded by” under the Limitations of Assignment rule

Answer 5

Precluded by contract by (a) Prohibitions (terms in the contract that prohibit the transfer or rights. And if the rights are assigned it is valid but the assignor is liable for damages); OR (b) Invalidations (terms in the contract that void all assignments. And if the rights are assigned they are void)

Question 6

Rights of Assignee and Assignor

Answer 6

An assignee takes all of the rights of the assignor as the contract stands at the time of the assignment but takes subject to any defenses that could be raised against the assignor.

Question 7

Subsequent Assignments

Answer 7

When there are multiple gratuitous assignments, the last assignee prevails. When there are multiple assignments with consideration the first assignee prevails unless the later assignee has no notice and is the first to obtain payment or pay depending on the assignment.