Assignment of rights and delegation of duties

The Transfer Gate: Separate the Right From the Performance

An assignment transfers a contractual right, while a delegation transfers the performance of a contractual duty; each transfer is limited by the nature of the obligation and the parties’ agreement. The first question is therefore not “Was the contract transferred?” but “What interest moved?” A right to payment, delivery, or damages is analyzed as an assignment. A promise to manufacture, deliver, pay, or provide services is analyzed as a delegation. A transaction may contain both.

Under common law, a right is generally assignable if the assignment manifests present intent to transfer an identifiable right. No particular words are necessary, and consideration is not generally required. The assignment can generally be oral unless applicable law requires a writing for the assignment itself or the parties’ agreement requires one. An assignment of a future right can work if the right is sufficiently identifiable, but an expectancy that is too indefinite cannot be transferred as though it were an existing claim.

The right cannot be assigned if doing so would materially increase the obligor’s burden or risk, materially impair the obligor’s chance of receiving the expected return performance, or transform an obligation that depends on personal trust, skill, judgment, or confidence. A right closely tied to a personal relationship is the near miss: the right to receive money may be assignable even when the duty to provide personal services is not. Public-policy limits may also matter, but do not assume that every contractual claim is nonassignable merely because litigation would follow the assignment.

A delegation requires an indication that another person will perform the delegator’s duty. The obligee’s consent is not ordinarily necessary. But delegation is ineffective or prohibited when the contract bars it, when the obligee has a substantial interest in the original promisor’s performance, or when substitution would materially change the expected performance. A contractor may often delegate routine work; a client who hired a particular artist, surgeon, lawyer, or consultant has a stronger argument that personal performance matters.

Delegation does not itself discharge the original obligor. If the delegate performs, the original duty is satisfied; if the delegate fails, the obligee ordinarily may pursue the original obligor for breach. Release requires a novation: an agreement among the original obligor, the substitute, and the obligee that the substitute replaces the original obligor and the original obligor is discharged.

Use the following sequence when the facts say “assign,” “transfer,” “sell,” “factor,” “direct payment,” “delegate,” “subcontract,” “substitute,” or “perform through another.” The same issue is live when an assignee sues, an obligor pays the assignor after receiving notice, an assignor attempts to revoke a gift, or an obligee rejects a substitute performer.

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This topic is not starred: legal resources may be supplied when it is tested, and where they are not, you need only demonstrate recognition that the topic is at issue. You are not required to hold this topic cold because resources may be supplied; the floor you must still hold is the vocabulary, the right-versus-duty classification, the order of the analysis, and the consequences of assignment, delegation, notice, and novation.

The Floor: Recognize the Trigger and Reach the Rule

The floor is a usable structure, not a catalogue of exact wording. Hold these questions in order:

1. What moved? Identify a right, a duty, or both.

2. What law governs? Article 2 governs a contract predominantly for the sale of goods. Common law governs services, real estate, employment, and other non-goods contracts. For a hybrid transaction, identify the predominant subject or use the supplied rule.

3. Is the right or duty transferable in this setting? Check personal performance, material change in burden or risk, and any contractual restriction.

4. Was the transfer effective? For an assignment, look for present intent and an identifiable right. For a delegation, look for a proposed substitute performer and ask whether the obligee has a substantial interest in the original promisor.

5. Who remains liable? Assignment ordinarily changes who may enforce the right; delegation ordinarily changes who will perform. Neither ordinarily releases the transferor.

6. What defenses and payment rules apply? The assignee takes the right subject to contract-based defenses and qualifying claims against the assignor. Notice determines whether payment to the assignor still protects the obligor.

7. Was the assignment prohibited or revocable? Read the exact anti-assignment language, then ask whether a gratuitous assignment was revoked before it became protected by consideration, reliance, performance, or sufficient formality.

The vocabulary itself is part of the floor: assignor transfers a right; assignee receives it; obligor owes the assigned right; delegator transfers performance; delegate is the proposed performer; obligee is entitled to performance; and novation is the three-party release. The sibling chapter owns the separate question whether a nonparty is an intended or incidental beneficiary.

What you do not have to hold without a supplied resource is the exact wording of every exception, the precise statutory subsection, or every formal circumstance that can make a gratuitous assignment irrevocable. Those are the contents a supplied provision can provide. What must be available quickly is recognition that a payment right, substitute performer, “no assignment” clause, attempted revocation, notice, or assignee’s lawsuit has activated this analysis.

The Enforcement Lock: Defenses, Clauses, Revocation, and Article 2

An assignee generally enforces the assigned right against the obligor, but the assignment does not improve the right. The obligor may assert defenses that could have been asserted against the assignor, such as failure of consideration, fraud, duress, a condition that was not satisfied, or the assignor’s prior breach. Claims and setoffs connected to the transaction may also follow the right under the applicable assignment rules. The assignee cannot obtain better contract rights merely by being a new claimant.

Notice is a separate question from validity. An assignment may be effective before the obligor learns of it. Until receiving reliable notice, an obligor who pays the assignor in the ordinary way is generally protected. After notice, payment to the assignor ordinarily does not discharge the obligation, so the obligor should pay the assignee or seek clarification. Notice does not by itself supply consideration, cure an invalid assignment, or release the assignor.

At common law, read an anti-assignment clause precisely. A promise that a party “will not assign” commonly makes an unauthorized transfer a breach without automatically making the transfer void. Language that the assignment is “void,” “invalid,” or ineffective more directly prevents the assignment from operating. A clause aimed at “rights to payment” is narrower than a clause barring assignment of “the contract” or prohibiting transfer of both rights and performance. A broad clause may also bar delegation, but do not treat every reference to assignment as automatically releasing the original obligor.

A gratuitous assignment is different from a paid assignment. A gift assignment does not fail merely because the assignee gave no consideration, but it is generally revocable until the assignment is protected by circumstances such as reliance, performance by the obligor, or sufficient written-and-delivered formality under the applicable law. Revocation may be shown by direct notice, a later inconsistent assignment, or conduct inconsistent with the gift. Once the assignee has materially changed position in reliance, or the assignment has become irrevocable through consideration or another recognized protection, a later change of mind is not enough. Notice to the obligor can matter because the obligor’s payment or reliance may make revocation unfair, but notice alone is not a substitute for every requirement.

The common-law and Article 2 comparisons are easiest when the same questions are placed beside one another:

Under Article 2, distinguish the ordinary transfer of a right from the special rights that require the other party’s consent. The provision is especially important when a party assigns a right to damages for breach of the whole contract or a right arising from the assignor’s complete performance. Also distinguish assignment from delegation: Article 2 generally permits performance through a delegate, but an agreement can change that default, and a substantial interest in the original promisor can block substitution.

Article 2 also supplies a useful interpretation rule. Unless the circumstances indicate otherwise, a prohibition against assigning “the contract” is construed as barring delegation of the assignor’s performance to the assignee. Conversely, an assignment of “the contract” or “all my rights under the contract” is an assignment of rights and, unless language or circumstances indicate otherwise, also a delegation of the assignor’s duties. The phrase may therefore do two jobs, but the consequences remain separate: the right may move, the duty may be delegated, and the original party may remain liable.

The recurring errors are concrete:

• Treating an assignment of the right to payment as a delegation of the duty to perform ignores that a right and a duty are different interests.

• Treating a delegate’s failure to perform as automatically releasing the original promisor ignores the absence of a novation.

• Treating notice to the obligor as what creates the assignment confuses validity with the rule governing payment after notice.

• Treating every “no assignment” clause as voiding the transfer overlooks the difference between a promise against assignment and language making assignment invalid.

• Treating a gratuitous assignment as permanently irrevocable when the assignee has neither relied nor received performance misses the revocation issue.

For the following item, locate operative language before reading the answer choices. “Unless” introduces a default and its exception; “except” narrows the default; “only with consent” identifies a required condition; and “does not relieve” answers the liability question. Then map each fact to those phrases rather than importing a common-law rule into an Article 2 problem.

A party may perform his duties through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform those duties. No delegation of performance relieves the delegating party of any duty or liability for breach.

Unless otherwise agreed, all rights of either seller or buyer can be assigned except that an assignment of a right to damages for breach of the whole contract or an assignment of a right arising out of the assignor’s due performance of his entire obligation can be made only with the consent of the other party.

Unless the circumstances indicate the contrary, a prohibition against assignment of “the contract” is to be construed as barring the delegation to the assignee of the assignor’s performance.

An assignment of “the contract” or of “all my rights under the contract” is an assignment of rights and, unless the language or the circumstances indicate the contrary, a delegation of performance of the duties of the assignor.

A restaurant bought 1,000 standard ceramic mugs from a manufacturer under a contract providing, “Buyer may not assign this contract.” Before delivery, the restaurant assigned “all rights under the contract” to a financially sound distributor and directed the distributor to pay the remaining price. The manufacturer had no personal or commercial interest in having the restaurant itself perform, but refused to deliver solely because of the assignment. The assigned rights were not rights to damages for breach of the whole contract and did not arise from the restaurant’s complete performance.

What the Fact Pattern Tests: Three Fast Applications

High-Yield Points - ⚡ Biggest Takeaways

Classify the transfer as a right, a duty, or both before applying any assignment rule. Notice controls safe payment, not whether the assignment was initially created. An assignment or delegation does not release the original party without a novation. Under Article 2, read “the contract” language separately for rights assignment and duty delegation.