HackMD
title: 28 Week Contracts Slides slideOptions: transition: slide theme: solarized image: https://i.imgur.com/PWOPZbH.png tags: Slides, PCL, Law School –-
PCL 1L Contracts
Assignment and Delegation
In contrast to third party rights, which are defined in the contract, assignments and delegations occur after a contract is formed.
A party…
Assigns rights — performance owed to the assigning party
Delegates duties — performance due by the delegating party
Assignment
An assignment is a present transfer of rights under a contract.
Concepts
Promisor and Promisee
Promisor and Promisee
↕️
Obligor and Assignor
Assignor ➡️ Assignee
Obligor and Assignee
are now
Promisor and Promisee
Novation?
This is different than a novation in that novation requires agreement by all parties
(see full rule barbi VI.E.8).
Here, the obligor is not part of the agreement to transfer rights from assignor to assignee.
General Rule: all contracts are assignable.
Exceptions:
- substantially change obligor's duty, increase their risk, or reduce contract value
- doesn't disproportionally alter quantities in output or requirements contracts
- personal services requiring judgment, skill, or special trust
- contract expressly prohibits assignment
Requirements
- an existing valid contract
- a promisee (assignor) making present words of assignment (assign, transfer, sell, convey, etc.)
- no writing required except interest in land, wages, security interests
- no consideration required
Revocation
Gratuitous assignments are always revocable:
- assignor dies or goes bankrupt
- assignor makes a subsequent assignment (to another assignee)
- assignor notifies obligor or assignee of revocation
- assignor takes direct performance from obligor
Irrevocable
The following are irrevocable assignments:
- assignments for value
- for consideration
- as security for or as payment for preexisting debt
Irrevocable
The following are also irrevocable assignments:
- detrimental reliance on a gratuitous assignment
- foreseeable reliance; and actual reliance (change of position)
- performance or payment tendered by obligor
- special evidence of the assignment (token chose or writing of same)
Party Rights and Liabilities
Assignee v. Obligor
- recover from the obligor directly
- obligor has same defenses as against assignor (assignee steps into shoes)
- payment by obligor to assignor prior to notice exempted
Party Rights and Liabilities
Assignor v. Obligor
- assignor has no rights in the contract after an effective assignment
Party Rights and Liabilities
Assignee v. Assignor
- gratuitous assignment, no recovery
- assignment for value subject to implied warranties of assignment, if breached allow recover for damages
- right assigned exists
- right assigned not subject to defenses
- assignor will not impair of defeat value of the right
Multiple Successive Assignments
gratuitous: last assignment prevails, unless a previous assignment was made irrevocable
value: first assignee for consideration prevails, unless a later, good faith assignee obtains payment or judgement first, obtains a novation with obligor, or obtains evidence of ownership (e.g. a deed or other document)
Delegation
A delegation is a present transfer of duties under a contract.
Concepts
Promisor and Promisee
Promisor and Promisee
↕️
Delegator (Obligor) and Obligee
Delegator ➡️ Delegatee
Delegatee and Obligee
are now
Promisor and Promisee
General Rule: all contracts are delegable.
Exceptions:
- duties involving personal judgment, skill, or special trust
- materially changes obligee's expectancy of performance
- contract expressly prohibits delegation or assignment
Requirements
- an existing valid contract
- a promisor (delegator) making present words of intent to delegate
- no writing required
Party Rights and Liabilities
Obligee
- must accept duties from delagatee, unless those duties were nondelegable
Party Rights and Liabilities
Delagator
- remains liable for duties under contract, but is secondarily liable
Party Rights and Liabilities
Delagatee
Was there a delegation, or a delegation plus an assumption of the duty?
- delegation creates power for another to perform for delegator
- assumption occurs when delagatee's promise is supported by consideration (third party)
Novation?
See previous discussion on novation under assignment.
However, if an obligee expressly consents to the transfer of duties, it may be construed as a novation.
No Assignment Clauses
- clause prohibiting assignment of "the contract" generally construed to bar delegation
- clause prohibiting assignment of rights provide obligor ground for suit, but assignment is still valid (power v. right)
- clause stating attempts to assign with be VOID render void (power v. right)
Prior FYLSX
Assignment and Delegation
Third Party
- The image file may be corrupted
- The server hosting the image is unavailable
- The image path is incorrect
- The image format is not supported
- The image file may be corrupted
- The server hosting the image is unavailable
- The image path is incorrect
- The image format is not supported
- The image file may be corrupted
- The server hosting the image is unavailable
- The image path is incorrect
- The image format is not supported
- The image file may be corrupted
- The server hosting the image is unavailable
- The image path is incorrect
- The image format is not supported
