Assignment of Rights & Delegation of Duties

Question 1

What is an assignment ?

Answer 1

A transfer of a right to receive a perf. under a K

Question 2

What is required to make an effective assignment of a contract right?

Answer 2

Present intent to transfer the right immediately

• No consideration is needed
• BUT lack of consideration would affect revocability of the assignment

Question 3

When is an assignment of rights not allowed?

Answer 3

1. When it materially increases the duty or risk of the obligor OR
2. Materially reduces the obligor’s chance to of obtaining perf.

Question 4

Prohibitions against assignment in the contrat

Answer 4

Strictly construed

• Assignment is permissible but is a breach of K

Question 5

Revocability of Assignment

Answer 5

• If assignment supported by consideration - Irrevocable
• No consideration - Revocable, unless obligor has already perf. or prom. estoppel applies

Question 6

What are the rights of the Assignee?

Answer 6

Takes all of the rights of the assignor as the K stands at the time of the assignment

• BUT she takes subj. to any defenses that could be raised against the assignor

Question 7

When does a delegation occur?

Answer 7

When a 3d party agrees to satisfy a perf. oblig. owed by one of the parties to a K

Question 8

When is Delegation not permitted?

Answer 8

1. When the other party to the K has a subst. int. in having the delegating indiv. perf. OR
2. The delegation is prohibited by the K

Question 9

What is the effect of Delegation on the Delegator?

Answer 9

The delegator is not released from liability

• Obligee can recover against delegator if the delegatee doesn’t perf.
• Exception - Novation

Question 10

What is Novation?

Answer 10

The substitution of a new K for an old one

• the orig. obligor is released from his promises under the orig. agreement
• Can be express or implied after delegation if:

1. The orig. obligor repudiates liab. to the orig. promisee AND
2. The obligee subseq. accepts perf. of the orig. agmt. from the delegatee w/out reserving rights against the obligor

Question 11

Effect of Delegation on the Delegate

Answer 11

Acceptance by delegate of delegation of K duties is a promise to perf. those duties

• Promise is enforceable against the delegate if:
  
  • the delegate has received consideration or
  • there is a consideration subst. that makes the promise enforceable

Question 12

What is the Effect of the Delegation of performance under a Contract for the sale of goods ?

Answer 12

Can be treated as creating a reasonable grounds for insecurity

• Other party can demand assurances from delegate
• If the delegation was permitted, the other party must accept the conforming perf. of delegate or be in breach of the K