The terms of a contract may change without invalidating or modifying the current agreement. A prime example is an assignment of a contract that can either assign rights or delegate duties associated with performance.
Whether assignment or delegation is allowable will depend on several factors. Working with an assignment of corporation lawyer can help you determine both your rights and the validity of an assignment. To discuss this matter further, contact Anderson Estate Planning in Texas at (469) 207-1529.
What Is an Assignment of Contract?
An assignment of contract occurs when someone assigns or hands over their rights or benefits to another party. For example, if Sally enters into an agreement to sell her car to Billy, she can assign the right to receive money to another party, such as a creditor to whom she owes a debt.
Assignments can occur in virtually any contract scenario, including service and real estate contracts. Another example is a corporate assignment of a mortgage. Here, the loan for a piece of real property or personal property is taken over by another party, often a lender. The term corporation comes in when that third party is a corporate entity.
On the opposite end of the spectrum is a delegation of a contract. Instead of assigning a right or benefit, the burden or duty is delegated to another party. For example, if Corporation A manufactures widgets and sells them to X Corp., Corporation A may decide to charge supplying the widgets to Corporation B.
Requirements for a Valid Assignment
For an assignment to be valid and enforceable, it must meet the following requirements:
- The assignment must have clear language that shows an intent to transfer rights to the assignee (the party to whom the rights are assigned).
- There can be no request for additional action by the assignee.
It’s important to note that the word “assign” does not need to be present in an assignment. Also, the assignee may or may not be an existing party to the contract.
When Is an Assignment Not Enforceable?
Not all assignments can be enforced, including the following:
- An assignment cannot be enforced when it materially changes the terms of a contract.
- Assignments cannot be enforced when the contract prohibits them.
- Assignments cannot be enforced when they violate a law or go against public policy.
Delegation of Duties
Delegating the duties in a contract is different than assigning a right. Specifically, as stated above, the obligor (also referred to as the delegating party) delegates its obligations to another party. In this situation, even though a party who has been delegated the duty to perform is obligated to fulfill the term(s) of the contract, the original party who delegated the duty may still be liable. Liability can be enforced in the event of non-performance or another breach of contract.
There are also some duties that cannot be delegated, such as:
- Some personal services. For example, if Tom Brady is contracted to be a quarterback for a season, he cannot delegate that duty to another football player because Brady’s services are personal to the contract. Depending on the nature and personalization of the performance, some personal services may be delegated.
- Delegation against public policy. An illegal act, for example, cannot be delegated.
Contact an Experienced Assignment of Corporation Lawyer Today
If you need help creating or refuting an assignment or delegation in a contract, Anderson Estate Planning in Texas can help. With nearly two decades of experience and a successful track record in this area, our team can provide you with expert legal advice to guide you in the appropriate next steps. Contact (469) 207-1529 to schedule a consultation.