Key Takeaways

  • Assigns refers to parties who receive rights and obligations under a contract from another party (the assignor).
  • An assignment can apply to property leases, contractual duties, or financial agreements but may be limited by law, public policy, or contract clauses.
  • Anti-assignment clauses restrict or void transfers to protect the non-assigning party from increased risk or altered performance.
  • Some obligations, such as personal services, wages, or certain government claims, cannot be assigned by law.
  • The concept of successors and assigns in contracts ensures obligations and benefits extend to future owners, heirs, or entities.
  • In financial markets, “assignment” has a specific meaning: transferring obligations in options and futures trading.
  • An obligor’s consent is not always necessary for a valid assignment, unless prohibited by contract.

The definition of assigns refers to the assignment of a contract, and it is what happens when one party in the contract gives his or her rights to another party. The party giving away rights is the assignor and the one receiving the rights is the assignee. The assignor typically asks that the assignee perform all the contractual obligations and receive all the benefits of the agreement. The person assigned the contract has to be aware of this assignation.

Subleased Property is an Example of an Assignment

One easy way to show what an assignment is would be when a tenant in a leased property decides to move and assigns, or subleases the property to a third party. The new tenant then has the right to take up residence in the property along with the obligation to meet all terms from the original lease. There are times, however, when the contract language affects the ability to make this type of assignment. Contracts may prohibit assignment using a clause, while some contracts simply require the assignee to consent to the agreement.

Assigns in Financial Markets

Beyond contract and property law, the term “assign” also has a distinct meaning in financial markets. In options and futures trading, an assignment occurs when a clearinghouse randomly matches a seller of an option contract with a buyer who exercises the option. In this context, the seller (the assignor) is obligated to deliver the underlying asset or perform the financial obligation, while the buyer (the assignee) receives the right to complete the transaction. This usage highlights that “assigns” can apply not only in legal agreements but also in securities trading, where obligations and rights are formally transferred.

Contractual Assignment Issues

It isn't always possible to simply assign a contract. Some examples include:

  • When there is a clause in the contract that prohibits assignment
  • When the contract states the other party in the agreement has to accept or consent to the assignment
  • When an assignment is made, it doesn't necessarily relieve the assignor of the duty fulfill his or her obligations
  • When the contract states that even when assigned, the original parties must guarantee performance.

Successors and Assigns Clauses in Contracts

Many contracts include a “successors and assigns” clause to ensure that the agreement remains enforceable even if one party undergoes changes, such as mergers, acquisitions, or transfers of rights. This clause clarifies that obligations and benefits extend not only to the original parties but also to their heirs, corporate successors, or legally recognized assigns. For example, if a business sells its assets, the new owner (successor) can step into the shoes of the original party. Similarly, if rights are assigned, the assignee assumes those benefits and obligations. These clauses are particularly important in long-term agreements, ensuring continuity and avoiding disputes over who holds rights after organizational or ownership changes.

Anti-Assignment Clauses

An anti-assignment clause in a contract prohibits any assignment of the contract. If one of the parties tries to assign the contract, that assignment is void. This is common when an assignment:

  • Materially alters the scope of the agreement or what's expected
  • Impacts the performance or obligations that have been contracted
  • Reduces the value or expected return
  • Increases the risk faced by the other party
  • Violate public policy or involves breaking the law

Partial vs. Complete Assignments

Not all assignments transfer every obligation under a contract. A complete assignment occurs when the assignor transfers all rights and duties to the assignee. A partial assignment occurs when only certain rights are transferred, such as the right to receive payments but not the responsibility to perform obligations. While complete assignments are more common, partial assignments may be used in complex agreements where parties want to separate benefits from performance. Courts will typically uphold partial assignments as long as they do not materially alter the obligations of the non-assigning party.

Laws and Public Policies That Prohibit Assignment

Some examples of laws and public policies that prohibit contractual assignments include:

  • State regulations that prohibit an employee from assigning future wages
  • Federal regulations that prohibit some types of claims against the government from being assigned.
  • Personal injury claims that might encourage legal suits can't be assigned
  • Some types of personal duties, such as a performance by a celebrity, can't be assigned because they are extremely specific in regard to what must be done to complete the contractual obligation

An anti-assignment clause can be worded simply, stating that the parties involved can't assign or delegate rights under the contract's terms.

Privity of Contract

The term privity of contract tells you that if the assignee picks up the assignor's contractual duties, it indicates if the assignee has agreed to take on the assignment. For the assignee to be held to the legal duty to meet the contractual obligations, there has to be an expressed intention to take on the responsibility the assignor originally held in the agreement. The contract between the original parties wouldn't affect the issue, and a provision in the contract wouldn't be binding on the assignee in regard to rights to perform the assignor's obligations under the contract.

Notice Requirements for Assignments

Although the obligor’s consent is often not required for an assignment to be valid, most legal systems require that the obligor receive notice of the assignment. This ensures that the obligor knows to direct performance—such as payments or deliveries—to the new party. If proper notice is not given, the obligor may continue performing for the original assignor without penalty. For example, if a lender assigns a loan to another financial institution but fails to inform the borrower, payments made to the original lender may still be considered valid

Contractor Work as an Example of an Assignment

One way to envision the process of assignment is to imagine yourself as a housing contractor. Someone pays you a sum of money to do a job. You get hurt and can't do it, or maybe you decide you can make more on a different job. You hire someone, a third-party subcontractor, to do the job in your place. The person doing the work in your place is the assignee and you are the assignor. You might pay the person taking over the work the full amount, or you may take a cut and pay them a smaller amount.

Obligor's Agreement Not Required

The success of an assignment doesn't require the obligor's agreement. If the assignment is valid, and there is no clause in the original agreement prohibiting assignment, the obligor's duty shifts from the original contracting party, the assignor, to the assignee. The obligor, as the non-assigning party, is contractually obligated to fulfill his or her duty to the assignee.

Frequently Asked Questions

1. What does “assigns” mean in a legal contract?

“Assigns” refers to individuals or entities who receive contractual rights and obligations from another party, the assignor.

2. Are assigns the same as successors?

No. Assigns receive rights through transfer, while successors step into obligations due to events like mergers, inheritance, or restructuring.

3. Can all contracts be assigned?

No. Certain contracts cannot be assigned because of anti-assignment clauses, legal restrictions, or when obligations are personal in nature (e.g., artistic performances).

4. What is the difference between partial and complete assignment?

A complete assignment transfers all rights and duties, while a partial assignment transfers only some rights, such as the right to payments.

5. Do you need consent for an assignment to be valid?

Not always. Consent is only required if the contract includes an anti-assignment clause or the assignment would materially change the obligations of the non-assigning party.

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