Assignment Legal Definition: Everything You Need to Know
The legal definition of assignment is when a person transfers a piece of property or contractual rights to another person.3 min read
2. Delegation or Assignment?
3. Novation and Assignment
The legal definition of assignment is when a person transfers a piece of property or contractual rights to another person.
What is Assignment?
If you own a piece of property or have rights in a contract and would like to transfer either of these items to another person, you can make an assignment. For instance, if you own a trademark, you could transfer rights to your mark to someone else interested in using the mark.
Before an assignment will be legal, several requirements must be met:
- All parties must be legally capable.
- The objects being transferred must be legal.
- Consideration should be included.
- All parties must consent to the assignment.
One of the most common forms of assignment is a wage assignment. For instance, if you owe child support, alimony, back taxes, or some other form of debt, the court can require your employer to withhold a portion of your paycheck.
It is also possible to make an assignment for a mortgage. With a mortgage deed, you can give property interest to a lender in exchange for regular payments. Lenders frequently sell mortgages to other lenders. To complete the sale, a mortgage assignment document would need to be used. This document can clarify how payments will be made and can also be used to alter the terms of the mortgage.
Several factors can influence how assignment plays out. In particular, the language of the contract involved in the assignment can impact this process. Certain contracts, for instance, contain clauses that completely eliminate the possibility of assignment. In other contracts, assignment can only occur if the party being assigned the rights and responsibilities of the contract consents.
In some cases, the person making the assignment will still be liable for the performance of the contract. To make sure the contract is completed, a contract can include a provision that requires the original party to make sure the obligations of the contract are fulfilled, even if they have assigned their rights to a third party.
If the assignment significantly changes the terms of the contract, the agreement will usually not be enforceable. For instance, if assignment reduces the contract's value or exposes the other party to more risk, this would be a significant alteration, meaning the courts would not enforce the contract.
It's also possible that an assignment of contract would be restricted by the law. For instance, some states do not allow an employee's future wages to be assigned. Similarly, claims against the federal government usually cannot be assigned. Because it can increase the possibility of litigation, you are not allowed to assign a personal injury claim.
Delegation or Assignment?
In many cases, a person may want to find someone else to fulfill their contractual duties without having to assign the contract. In these cases, you would use a delegation instead of an assignment. Understand, however, that not all contractual obligations are eligible for delegation.
Personal services, for example, usually cannot be delegated. This is because these services are very specific. For instance, if you hired a musical act to play a party, the musician could not delegate their performance to another artist because they were hired with their specific style in mind. If one party wishes to eliminate the possibility of delegation, they should make sure the contract includes language restricting the practice.
Novation and Assignment
In regard to assignment, it's important to understand that only contractual benefits can be assigned. It is not possible to assign the burden of a contract. For example, if a contractor is hired for a construction project, they could assign their payment but not their obligation to complete the project.
Once an assignment has taken place, the assignee will be able to receive the contract's benefits. The assignee also has the ability to file a lawsuit to enforce their new contractual rights. If there are parts of the contract that still need to be completed, the assignor would be responsible for making sure that this occurs. If the contract is not fulfilled, the assignor would be legally liable since they cannot assign the burden.
Typically, when an assignment takes place, performance of the contract will be taken over from the assignee, and the assignor will request an indemnification for breach of contract.
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