Assignment and Delegation

Question 1

How does assignment differ from third party beneficiary?

Answer 1

An assignment of rights is factually different from a contract intended to benefit a third party because the assignment occurs after the original contract is created, whereas the third party beneficiary is included in the original agreement.

Question 2

What is an assignment?

Answer 2

The transfer of rights under a contract. Almost all contract rights can be assigned. Partial assignments are permissible, as is the assignment of future or unearned rights.

Question 3

What is delegation?

Answer 3

Transfer of duties and obligations under a contract. Most obligations can be delegated.

Question 4

What are the roles of the parties in an assignment?

Answer 4

The original contract is between the assignor (the party assigning the rights) and the obligor (the party not assigning rights). The recipient of the transfer of rights is the assignee.

Question 5

Who can the assignee sue?

Answer 5

The assignee can enforce the assignment against the obligor. Essentially, anything the assignor could do, the assignee can do in his or her place.

Question 6

When are assignments not allowed?

Answer 6

If the assignment:
* Materially increases the duty or risk of the obligor; or
* Materially reduces the obligor’s chance of obtaining performance.

Question 7

What are examples of non-assignable rights that would materially change the obligor’s duty?

Answer 7

• Personal service contracts: personal services where the personality or personal characteristics of the obligor are so connected to performance that it would be unfair to require the obligor to render performance to a third person.
• Requirement and output contracts

Question 8

What are examples of non-assignable rights that would materially increase the obligor’s risk or burden?

Answer 8

• Insurance
• Credit card
• where the assignment would materially change the contract’s terms

Question 9

What is required for an assignment?

Answer 9

There are no formalities required, but there must be a present intent to transfer the right immediately, even if you’re transferring future rights.

Question 10

Is consideration needed for assignment?

Answer 10

No consideration is needed, but the lack of consideration would affect the revocability of the assignment

Question 11

What language is required for an assignment?

Answer 11

Any language that manifests and intent by the assignor to divest themselves completely and immediately of the right in question and transfer the right to the assignee. The word “assign” isn’t necessary. Words such as “sell,” “transfer,” and “give” will usually suffice.

Question 12

Partial assignments

Answer 12

Assignable rights under a contract may be transferred to one assignee or divided up among several assignees. Or the assignor may assign only some rights and retain the balance.

Question 13

Promise of a future payment

Answer 13

A promise by a contracting party to pay moneys received under the contact to a third party is not an assignment of the party’s contractual rights, but a promise of a future payment. As a consequence, the third party is not an assignee of the contract.

Question 14

When is an assignment irrevocable?

Answer 14

When it is for consideration

Question 15

Are gratuitous assignments revocable?

Answer 15

Generally, yes, unless the obligor has already performed or promissory estoppel applies.

Question 16

When are gratuitous assignments automatically revoked?

Answer 16

Upon the death, incapacity, or bankruptcy of the assignor.

Question 17

What two situations render a gratuitous assignment irrevocable?

Answer 17

1. Where a contract right that is being assigned is evidenced by a document that symbolizes the right (e.g., a bankbook, an insurance policy, or a stock certificate)
2. The delivery of a written assignment signed by the assignor to the assignee

Question 18

What are the rights of the assignee?

Answer 18

Under an assignment, the assignee generally:
* takes all the rights of the assignor as the contract stands at the time of the assignment; but also
* takes subject to any defenses that could be raised against the assignor

Question 19

What effect does a subsequent assignment have on revocability?

Answer 19

A subsequent assignment of the same right revokes any prior revocable assignment

Question 20

What if an irrevocable assignment is subsequently assigned?

Answer 20

If the first assignment was an irrevocable assignment, then the first assignee will have priority over the second assignee, unless the second assigneeis a bona fide purchaser for value without notice of the first assignment, in which case the assignee who obtains payment from the obligor or judgment first will have priority.

Question 21

What happens if the second assignee knows about the first assignment?

Answer 21

If the second assignee knows about a prior assignment, then the second assignee is estopped from asserting a claim over the first assignee even if the second assignee would have otherwise prevailed.

Question 22

what are the roles of the parties in a delegation?

Answer 22

The party who delegates a duty is called the obligor or delegor. The other original party to the contract, to whom the delegated duty is owed, is called the obligee. The party to whom the duty is delegated is called the delegee.

Question 23

What is the difference between a delegation and novation?

Answer 23

The novation releases the delegating party from liability through substituting the parties. A delegation does not substitute the parties so the delegee is liable to both the obligor and the obligee.

Question 24

When are duties delegable?

Answer 24

Absent an agreement otherwise, any contractual duty can be delegated unless the obligee has a substantial interest in ahving the original obligor peform the duty personally. Thus, except when performance by a delegee would vary materially from the performance promised by the obligor, a contractual duty may be performed by a delegee without constituting breach.

Question 25

What is a nondelegable duty?

Answer 25

Personal services: if a contract requires performance by, for example, a portrait painter, an author, a teacher, or a lawyer, the duty to render this performance cannot be delegatd to another–no matter how competent–without the obligee’s consent.