Assignments Flashcards
Definition
Present transfer of a contractual right which operates to extinguish the right in the assignor and sets it up in the assignee.
a) Any generally accepted words of transfer will suffice.
b) Generally, no writing required; but for our purposes, know that an assignment of interest in land must be in writing.
c) No consideration required; gratuitous assignments are effective
Definition - UCC 2-210
An assignment of “the contract” or of “all my rights under the contract” or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties.
Parties - Assignor
One transferring the right
Parties - Assignee
One receiving the transferred right
Parties - Obligor
The one who is to perform to the assignee
What rights can be assigned?
Generally all except:
- Assignments that would substantially change obligor’s duty/risk
- Assignments of future rights
- Contract prohibition
Unassignable rights - Those that would substantially change obligor’s duty/risk
(1) Personal service contracts
(2) Requirement/Output contracts, unless amount determined in good faith and not unreasonably disproportionate.
Unassignable rights - Future rights
Compare assignment of future rights in existing contract (valid) with assignment of future rights in future contract (invalid and only treated as promise to assign)
Unassignable rights - Contract prohibition
(1) Prohibition on assignment of “the contract” is construed as only barring the delegation (common law and UCC 2-210)
(2) Prohibition on assignment of contractual right generally doesn’t bar the assignment, but gives obligor action for breach of contract (Assignor has the power but not the right to assign)
(a) But using words like “void” or “voidable” can extinguish the power as well.
When are assignments revocable/irrevocable? - Assignments for consideration
Irrevocable.
a) An irrevocable assignment removes the right from the assignor, but not the power; except assignment accompanied by delivery of token chose terminates power and right.
When are assignments revocable/irrevocable? - Gratuitous Assignments
Generally revocable, except:
a) If obligor has already performed
b) Delivery of token chose
c) Writing
d) Estoppel/Reliance
When are assignments revocable/irrevocable? - Gratuitous assignments may be revoked by:
a) Death of assignor
b) Bankruptcy of assignor
c) Notice to either assignee or obligor
d) Assignor takes performance directly from obligor
e) Subsequent assignment of same right by assignor to another
Effect of successive assignments of the same right - revocable
a) If first assignment is revocable, subsequent assignment of same right revokes it (subsequent assignee prevails)
Effect of successive assignments of the same right - irrevocable
Generally first assignee wins, except second assignee who pays value and takes without notice of earlier irrevocable assignment will prevail if:
(1) Subsequent assignee gets first judgment against obligor
(2) Later assignee gets first payment from obligor
(3) Subsequent assignee gets first delivery of a token chose from assignor
Rights and liabilities of the parties - Assignee v. obligor
a) May enforce rights against obligor directly.
b) May be subject to any rights that obligor had against assignor except for defenses that are unrelated to the contract and arose after notice to obligor, unless there is a waiver-of-defense clause
c) Obligor cannot use defenses assignor has against assignee.
d) Once obligor gets notice of the assignment, he must pay assignee or pay assignor at his peril.
