Key Takeaways

  • An assignment on law refers to the legal transfer of rights or benefits from one party to another.
  • Assignments must meet contract requirements, often including written documentation and consent when necessary.
  • Not all rights or obligations can be assigned; public policy and contract clauses may restrict this.
  • Anti-assignment and non-delegation clauses provide legal tools to restrict assignments.
  • Assignments in real estate, intellectual property, and commercial law follow unique rules and often require formality.
  • Notice to the obligor (the party who owes performance) is critical for enforceability.
  • The differences between legal and equitable assignments affect how courts recognize and enforce them.

The term assignment law is used in the law of real estate and in the law of contracts. In both instances, it relates to the transfer of rights held by one party (the assignor) to another party (the assignee).

Assignment Law

In legal terms, the meaning of an assignment is a contractual obligation to transfer a property title or right from one party to another. Generally, the assignment is transferred based on an entire interest in the property, chattel, estate, or other item assigned.

A grant is different from an assignment in that an assignment refers to the right to transfer the property. This is considered an intangible right. On the other hand, the grant is concerned about the physical transfer of property. This is a tangible right. For example, a payee can assign their rights to collect a note payment to a bank. 

The terms of the contract must be analyzed to determine if the right of assignment is prohibited. For example, a property owner may allow a lease to be assigned, ordinarily along with an assumption agreement, where the new tenant is now responsible for the payments and duties of the lease.

The holder of a trademark may transfer it, either by giving or selling their interest in the trademark to another party. This is referred to as an assignment. The party that receives the benefit is called the assignee. Once transferred, the assignee has the ability to exclude others from using their trademark.

In order for the assignment to be enforceable, it must be in writing and have the goodwill of the company attached to the mark. For an assignment to be effective, it must contain the fundamental aspects of a contract, such as:

  • Parties with legal capacity
  • Legality of object
  • Consideration consent

A contract assignment occurs when a party assigns their contractual rights to a third party. The benefit the issuing party would have received from the contract is now assigned to the third party. The party appointing their rights is referred to as the assignor, while the party obtaining the rights is the assignee. Essentially, the assignor prefers that the assignee reverses roles and assumes the contractual rights and obligations as stated in the contract. Before this can occur, all parties to the original contract must be notified.

Legal Foundations of Assignmen

At its core, an assignment on law involves the transfer of an existing right or interest from one party (assignor) to another (assignee). This transfer can apply to a broad range of legal contexts, including real estate, contract law, and intellectual property. Assignments can be either legal or equitable:

  • Legal assignments require written documentation, notice to the obligor, and transfer of all rights without conditions.
  • Equitable assignments may lack formal writing or notice but still convey beneficial interests that courts may enforce under equity.

To be effective, most legal systems require the assignee to step into the shoes of the assignor—meaning they accept both rights and potential limitations associated with the assigned interest.

How Assignments Work

The specific language used in the contract will determine how the assignment plays out. For example, one contract may prohibit assignment, while another contract may require that all parties involved agree to it before proceeding. Remember, an assignment of contract does not necessarily alleviate an assignor from all liability. Many contracts include an assurance clause guaranteeing performance. In other words, the initial parties to the contract guarantee the assignee will achieve the desired goal.

Common Types of Assignments

Assignments appear in several key legal areas:

  • Contract Assignments: Transfer of rights under a contract, such as payment collection or service entitlements.
  • Real Estate Assignments: Common in leasing, where tenants assign their leasehold rights to new tenants.
  • Intellectual Property Assignments: Ownership of copyrights, patents, or trademarks can be assigned to another party, usually in writing.
  • Security Assignments: Often seen in financial transactions, where rights are assigned as collateral for loans.

Each type may have its own statutory requirements and may require different formalities to be enforceable.

When Assignments Will Not Be Enforced

The following situations indicate when an assignment of a contract is not enforced:

  • The contract specifically prohibits assignment
  • The assignment drastically changes the expected outcome
  • The assignment is against public policy or illegal

Legal Restrictions on Assignments

Certain assignments are invalid under law due to public policy or statutory limitations. Common restrictions include:

  • Personal Service Contracts: Rights tied to unique personal skills generally cannot be assigned.
  • Prohibited by Statute: Some government benefits, like veterans' benefits or certain tax credits, cannot legally be assigned.
  • Material Burden on Obligor: If the assignment imposes a greater burden on the obligor, courts may deem it unenforceable.

In some jurisdictions, courts will assess whether the assignment alters the nature or value of the contract too substantially to be fair to the other parties.

Delegation vs. Assignment

Occasionally, one party in a contract will desire to pass on or delegate their responsibility to a third party without creating an assignment contract. Some duties are so specific in nature that they cannot be delegated. Adding a clause in the contract to prevent a party from delegating their responsibilities and duties is highly recommended.

Three Steps to Follow if You Want to Assign a Contract

There are three main steps to take if you're looking to assign a contract:

  1. Make sure the current contract does not contain an anti-assignment clause
  2. Officially execute the assignment by transferring the parties' obligations and rights
  3. Notify the obligor of the changes made

Once the obligor is notified, the assignor will effectively be relieved of liability.

Anti-Assignment Clauses

If you'd prefer not to allow the party you're doing business with to assign a contract, you may be able to prevent this from occurring by clearly stating anti-assignment clauses in the original contract. The three most common anti-assignment clauses are:

  1. Consent required for assignment
  2. Consent not needed for new owners or affiliates
  3. Consent not unreasonably withheld

Based on these three clauses, no party in the contract is allowed to delegate or assign any obligations or rights without prior written consent from the other parties. Any delegation or assignment in violation of this passage shall be deemed void. It is not possible to write an anti-assignment clause that goes against an assignment that is issued or ordered by a court.

Enforceability and Notice Requirements

Even when assignment is legally allowed, notice must usually be given to the obligor to make the transfer fully enforceable. Without proper notice, the obligor may continue to fulfill their obligations to the original assignor, which can complicate enforcement.

Courts generally favor assignments when:

  • The assignor has clearly relinquished all rights.
  • There is written evidence of the assignment.
  • The assignee gives notice to the obligor in a timely manner.

However, anti-assignment clauses are typically enforced unless the assignment is mandated by law (e.g., by court order or statute).

Frequently Asked Questions

  1. What is an assignment on law?
    An assignment on law refers to the legal transfer of rights or interests from one party to another, such as contractual benefits or property rights.
  2. Can all contractual rights be assigned?
    No. Some rights, like those tied to personal services or restricted by contract clauses or law, cannot be assigned.
  3. What is the difference between delegation and assignment?
    Assignment transfers rights, while delegation transfers duties. Some obligations, especially personal ones, cannot be delegated.
  4. Is a written document always required for an assignment?
    Not always, but a written assignment is typically required for legal enforceability, especially for legal assignments.
  5. Do I need to notify anyone after assigning my rights?
    Yes. Providing notice to the obligor is crucial to ensure the assignee can enforce the assigned rights.

If you need help with assignment law, you can post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.