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LEGAL DICTIONARY

Assignment

Assignment is a legal definition that refers to the transfer of rights, property, or other benefits between two parties. The party allocating the rights is known as the “assignor”, while the one receiving them is called the “assignee”. The other original party to the contract is known as the “obligor”.

A burden, duty, or detriment cannot be transferred as an assignment without the agreement of the assignee. Furthermore, the assignment can be carried out as a gift, or it may be paid for with a contractual consideration.

Keep reading to learn how this important legal term is used both in contract and property law and to see relevant examples.

Assignment Examples

A common example of assignment within property law can be seen in rental agreements between landlords and tenants. For example, a tenant may be renting from a landlord but wants another party to take over the property. In this scenario, the tenant may be able to choose between assigning the lease to a new tenant or subleasing it.

If assigning it, the new tenant will be given the entire balance of the term, with no reversion to anyone else being possible. In other words, the new tenant would have a legal relationship with the landlord. On the other hand, if subleasing the property, the new tenant would be given a limited term and no legal responsibility towards the property owner, only towards the original tenant.

Another example of assignment can be seen within contract law. Let’s say that a school hires a piano teacher for a monthly employment contract with a salary of $2000 per month. As long as there is consent from all parties, the teacher could assign their contract to another qualified piano instructor.

This would be an assignment both of the piano teacher’s rights to receive $2000 per month, and a delegation of their duty to teach piano lessons. This illustrates the fact that under contract law, assignment always includes a transfer of both rights and duties between the parties. If a breach of contract is made by either party, for example for defective performance, then the new teacher or the school can sue each other accordingly.

For an assignment to be legally valid, it must meet certain requirements. If these are not met, a trial court can determine that the transfer of rights did not occur. The legal requirements for assignment are as follows:

  • All parties must consent and be legally capable to carry out the assignment.
  • The objects, rights, or benefits being transferred must be legal.
  • The assignment is not against public policy or illegal.
  • Some type of consideration is included if necessary.
  • The contract in question must already be in place and doesn’t prohibit assignment.
  • If a duty is being transferred, and it requires a rare genius or skill, then it cannot be delegated.
  • The assignment doesn’t significantly change the expected outcome of a contract.

Assignment Steps

To successfully assign a contract, certain steps must be followed to ensure the process is legally valid. The necessary assignment steps are listed below:

  1. Ensuring there is no anti-assignment clause in the contract.
  2. Executing the assignment by transferring the obligations and rights to a third party.
  3. Notifying the obligor of the transfer, which in turn relieves the assignor of any liability.

Avoiding Assignment

In certain situations, one of the two parties may not want to allow their counterpart to assign the contract. This can be prevented by setting anti-assignment clauses in the original contract. An example of this is making it necessary for prior written consent to be attained from the other parties before the assignment is approved. Nevertheless, an anti-assignment clause cannot be included in an assignment that was issued or ordered by a court.

Assignment vs. Novation

Novation occurs when a party would like to transfer both the benefits and burden of a contract to another party. This is similar to assignment in the sense that the benefits are transferred, but in this case, the burden is also passed on. When novation is finalized, the original contract is deleted and a new one is created, in which a third party becomes responsible for all the obligations and rights of the original contract.

Assignment vs. Delegation

Although delegation and assignment are similar in purpose, they are two different concepts. Delegation refers to transferring the obligation to a third party without an assignment contract. While in assignment an entire contract and its rights and benefits can be passed on, in delegation only a particular contractual task or activity is transferred.

Let’s look at an example. Lisa is a homeowner that wants to hire Michael with an independent contractor agreement to remodel her garage. He plans to do all the work himself, but he’s not a painter, so he wants to delegate the painting work to his friend Valentina.

In this example, the contract is between Lisa, the obligor, and Michael, the delegator. Valentina would then be known as a delegatee, she doesn’t assume responsibility for the contract nor does she receive the contractual benefits, which in this case would be monetary compensation. However, Michael may have a separate agreement with Valentina to pay her in return for her work.

It’s also important to note that some duties are so specific in nature that it’s not possible to delegate them. In addition, if a party wants to avoid delegation, it’s recommended to add a clause to prevent the other party from delegating their duties.

Assignment is a legal definition that refers to the transfer of rights, property, or other benefits between two parties. The party allocating the rights is known as the “assignor”, while the one receiving them is called the “assignee”. The other original party to the contract is known as the “obligor”.

A burden, duty, or detriment cannot be transferred as an assignment without the agreement of the assignee. Furthermore, the assignment can be carried out as a gift, or it may be paid for with a contractual consideration.

Keep reading to learn how this important legal term is used both in contract and property law and to see relevant examples.

Assignment Examples

A common example of assignment within property law can be seen in rental agreements between landlords and tenants. For example, a tenant may be renting from a landlord but wants another party to take over the property. In this scenario, the tenant may be able to choose between assigning the lease to a new tenant or subleasing it.

If assigning it, the new tenant will be given the entire balance of the term, with no reversion to anyone else being possible. In other words, the new tenant would have a legal relationship with the landlord. On the other hand, if subleasing the property, the new tenant would be given a limited term and no legal responsibility towards the property owner, only towards the original tenant.

Another example of assignment can be seen within contract law. Let’s say that a school hires a piano teacher for a monthly employment contract with a salary of $2000 per month. As long as there is consent from all parties, the teacher could assign their contract to another qualified piano instructor.

This would be an assignment both of the piano teacher’s rights to receive $2000 per month, and a delegation of their duty to teach piano lessons. This illustrates the fact that under contract law, assignment always includes a transfer of both rights and duties between the parties. If a breach of contract is made by either party, for example for defective performance, then the new teacher or the school can sue each other accordingly.

For an assignment to be legally valid, it must meet certain requirements. If these are not met, a trial court can determine that the transfer of rights did not occur. The legal requirements for assignment are as follows:

  • All parties must consent and be legally capable to carry out the assignment.
  • The objects, rights, or benefits being transferred must be legal.
  • The assignment is not against public policy or illegal.
  • Some type of consideration is included if necessary.
  • The contract in question must already be in place and doesn’t prohibit assignment.
  • If a duty is being transferred, and it requires a rare genius or skill, then it cannot be delegated.
  • The assignment doesn’t significantly change the expected outcome of a contract.

Assignment Steps

To successfully assign a contract, certain steps must be followed to ensure the process is legally valid. The necessary assignment steps are listed below:

  1. Ensuring there is no anti-assignment clause in the contract.
  2. Executing the assignment by transferring the obligations and rights to a third party.
  3. Notifying the obligor of the transfer, which in turn relieves the assignor of any liability.

Avoiding Assignment

In certain situations, one of the two parties may not want to allow their counterpart to assign the contract. This can be prevented by setting anti-assignment clauses in the original contract. An example of this is making it necessary for prior written consent to be attained from the other parties before the assignment is approved. Nevertheless, an anti-assignment clause cannot be included in an assignment that was issued or ordered by a court.

Assignment vs. Novation

Novation occurs when a party would like to transfer both the benefits and burden of a contract to another party. This is similar to assignment in the sense that the benefits are transferred, but in this case, the burden is also passed on. When novation is finalized, the original contract is deleted and a new one is created, in which a third party becomes responsible for all the obligations and rights of the original contract.

Assignment vs. Delegation

Although delegation and assignment are similar in purpose, they are two different concepts. Delegation refers to transferring the obligation to a third party without an assignment contract. While in assignment an entire contract and its rights and benefits can be passed on, in delegation only a particular contractual task or activity is transferred.

Let’s look at an example. Lisa is a homeowner that wants to hire Michael with an independent contractor agreement to remodel her garage. He plans to do all the work himself, but he’s not a painter, so he wants to delegate the painting work to his friend Valentina.

In this example, the contract is between Lisa, the obligor, and Michael, the delegator. Valentina would then be known as a delegatee, she doesn’t assume responsibility for the contract nor does she receive the contractual benefits, which in this case would be monetary compensation. However, Michael may have a separate agreement with Valentina to pay her in return for her work.

It’s also important to note that some duties are so specific in nature that it’s not possible to delegate them. In addition, if a party wants to avoid delegation, it’s recommended to add a clause to prevent the other party from delegating their duties.