Pronunciation: uh - sine - muhnt
Definition: the transfer of contract rights by one party – the assignor – to another party – the assignee
So, how exactly does an assignment work? In short, an assignment is when one person transfers contractual rights (as opposed to duties) to another person. Let’s go over an example to clarify.
In the diagram shown here, Al agrees to pay Bob $100 for a TV and they put the agreement in a written contract. But assume they will wait 2 weeks until the TV is ready to be delivered to Al before either exchange anything. In the meantime, Bob agrees to assign his right to be paid $100 from Al to Ron in exchange for Ron paying Bob $90 now. (Who knows, maybe Bob needs cash right away for something.)
In this situation, Bob is called the assignor and Ron is called the assignee. Bob is the assignor because he is making the assignment to Ron while Ron is the assignee because he is receiving the assignment from Bob (i.e. Ron will receive the money from Al). In other words, think of the assignee as the person who receives something – as Ron will receive the $100.
Assignments happen all the time in contracts. But keep some things in mind. First, the assignor (e.g. Bob) remains liable on the contract unless there is an agreement to the contrary. In other words, if Al never receives the TV, Al can sue Bob for it. Second, assignments are permitted for nearly every kind of contract, unless there is an express prohibition against assignments in the contract or a particular exception applies. (i.e. The assignor does not need to consult the other party to the contract to make the assignment. For example, Bob does not have to ask Al if Bob can assign his right to be paid to Ron.) So, what are some exceptions where a contract cannot be assigned?
Assignments which would not be enforceable include: (i) personal services contract, (ii) varying the contract duties, and (iii) varying the material terms of contract (e.g. time, quantity, place, manner, etc.) For example, personal services contracts cannot be assigned, like if you were to hire a particular professional painter to paint your portrait. That painter could not then take your money and assign the work to another painter. This is because you hired that particular painter to paint your portrait, not someone else!
Further, certain types of assignments must be in writing to be enforceable, including assignments of real property (i.e. to sell your house), a loan or debt, etc. But please refer to the statute of frauds for further details on what contracts generally must be in writing.
Finally, a very similar concept to an assignment is a delegation. A delegation occurs when one party transfers his duties (or liabilities) under a contract to another (rather than his or her rights, as with assignments). Please read delegation
for further details.
Ron could be completely liable to Al (and Bob would be off the hook) if they created a novation. A novation replaces the original party with a new party. Please read novation
for further details.