What Is an Assignment Contract?

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What Is an Assignment Contract?

A contract assignment occurs when a party assigns, or transfers their contractual rights to an outside third party. The benefit that they would have received from a contract is said to be "assigned" to the other party. The party assigning their rights is called the "assignor", while the party receiving the rights is the assignee. The party responsible for performing the contract duties is called the "obligor". This party doesn’t change in an assignment.

An assignment contract therefore refers to a second contract created by the assignor and the assignee regarding the transfer of the obligor’s performance. This is a contract that is sometimes created in addition to the original one between the assignor and the obligor. The contract should contain important information such as the name of the parties, the rights to be assigned, and various other clauses.

When Is an Assignment Contract Needed?

In most cases, an oral agreement will suffice for an assignment contract. However, it is customary to create a written assignment contract in instances where:

Also, the obligor usually doesn’t need to be informed if there is going to be an assignment of contract rights. On the other hand, the obligor does need to inform the other party if they will be delegating their contractual duties to another party who will perform them. 

What If an Assignment Contract Is Violated?

If an assignment contract is violated, the assignee (the party receiving the transferred benefits or rights) can sometimes sue the obligor for their defective performance or for a breach of contract. However, breaches under these circumstances can be possible, and a determination of liability can depend on several factors (such as the degree of involvement by the assignor, and other facts).

Hence, it can also help to create a clause in an assignment contract that outlines the liabilities and responsibilities of all the parties involved. This can help prevent confusion in the future.

Do I Need a Lawyer for Help with an Assignment Contract?

Assignment contract (or assignment of contract rights) can sometimes involve detailed legal concepts and theories. You may need to hire a lawyer if you need help dealing with an assignment. Your attorney can provide you with advice and guidance on any contract matters, and can help you draft documents as needed. Also, your lawyer will be able to represent you in court if you need to file a claim for damages.

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Last Modified: 10-28-2013 12:21 PM PDT

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