To transfer rights, property, or other benefits to another party (the “assignee”) from the party who holds such benefits under contract (the “assignor”). This concept is used in both contract and property law.
Under contract law, when one party assigns a contract, the assignment represents both: (1) an assignment of rights; and (2) a delegation of duties. For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C. Here, A has both: (1) assigned A’s rights under the contract to the $50; and (2) delegated A’s duty to teach guitar, to C. In this example, A is both the “assignor” and the “delegee” who delegates the duties to another (C), C is known as the “obligor” who must perform the obligations to the assignee, and B is the “assignee” who is owed duties and is liable to the “obligor”.
(1) Assigning of Rights/Duties Under Contract Law
There are a few notable rules regarding assignments under contract law. First, if an individual has not yet secured the contract to perform duties to another, he/she cannot assign his/her future right to an assignee. That is, if A has not yet contracted with B to teach B guitar, A cannot assign his/her rights to C. Second, rights cannot be assigned when they materially change the obligor’s duty and rights. Third, the obligor can sue the assignee directly if the assignee does not pay him/her. Following the previous example, this means that C (obligor) can sue B (assignee) if C teaches guitar to B, but B does not pay C $50 in return.
(2) Delegation of Duties
If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor. It can only be delegated if the promised performance is more commonplace. Further, an obligee can sue if the assignee does not perform. However, the delegee is secondarily liable unless there has been an express release of the delegee. That is, if B does want C to teach guitar but C refuses to, then B can sue C. If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.
Lastly, a related concept is novation, which is when a new obligor substitutes and releases an old obligor. If novation occurs, then the original obligor’s duties are wiped out. However, novation requires an original obligee’s consent.
Under property law, assignment typically arises in landlord-tenant situations. For example, A might be renting from landlord B but wants to another party (C) to take over the property. In this scenario, A might be able to choose between assigning and subleasing the property to C. If assigning, A would be giving C the entire balance of the term, with no reversion to anyone whereas if subleasing, A would be giving C for a limited period of the remaining term. Significantly, under assignment C would have privity of estate with the landlord while under a sublease, C would not.
[Last updated in May of 2020 by the Wex Definitions Team]