Is where a finance rights is assigned to someone else for financial compensation. E.g. A loan from a bank may be assigned to a 3rd party and the bank will receive money from the 3rd for assigning them the loan. The 3rd party will then get payment from the loanee.
ASSIGNOR is the one assigning the rights to the 3rd party.
ASSIGNEE is the one receiving the rights.
OBLIGOR is the one who is obligated to perform the duties.
OBLIGEE the one who is owed the duty of obligation.
The effect of an assignment is that when the rights under a contract are assigned unconditionally to a 3rd party the rights of the assignor are extinguished. The assignee takes only the rights that the assignor originally had.
Rights Assigned Are Subject to the Same Defense
Assignments can be in either oral or written form.
Exception anything covering the statute of frauds must be in writing.
Rights that cannot be assigned:
WHEN A STATUTE PROHIBITS ASSIGNMENT
These may be assigning future benefits which state statute may prohibit.
WHEN A CONTRACT IS PERSONAL IN NATURE
Such services as tutoring which is personal in nature cannot be assigned elsewhere.
WHEN AN ASSIGNMENT WILL SIGNIFICANTLY CHANGE THE RISK OR DUTIES OF THE OBLIGATOR
A right cannot be assigned to another party if it has the potential of significantly increasing the risks or duties imposed on the obligator.
WHEN THE CONTRACT PROHIBITS ASSIGNMENT
When a contract specifically states that it cannot be assigned to a third party. An ANTIASSIGNMENT clause is effective dependent in parts on how it is phrased. This prohibition is not restrictive on operation of law pursuant to bankruptcy or death.
A contract cannot prevent an assignment of the rights to receive funds.
The assignment of rights in real estate cannot be prohibited. Prohibitions of these kinds are referred to as restraints against alienation.
The assignment of negotiable instruments cannot be prohibited (is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time).
A contract for the sale of goods, allows assignment of the rights to receive damages for breach of contract or payment even if prohibited in the assignment.
Notice of Assignment – once a valid assignment of rights has been made the assignee should notify the obligor of the assignment. Although not legally necessary.
If the assignor assigns the same right to two different persons the question arises as to which one has priority.
An obligor can discharge his obligation by performance to the assignor.
A delegation refers to the transferring of duties. Delegation of duties does not relieve the delegator from the performance of the duties.
Duties that cannot be delegated:
WHEN THE DUTIES ARE PERSONAL IN NATURE – when special trust has been placed on the obligor. The duty cannot be delegated as the contract was crafted in mind that the obligor would do the duty. Even if the delegated…