Key Takeaways

  • Assignment vs Delegation in Contract Law: Assignment transfers rights (such as the right to payment), while delegation transfers duties (such as the obligation to perform services).
  • Assignment rules: Assignments are generally easier and require no third-party consent, unless the contract restricts them or the assignment increases the obligor’s burden.
  • Delegation rules: Delegation is more restricted—especially when the duty involves personal skill, trust, or discretion—and typically requires the delegatee’s consent.
  • Liability: Assignors are generally released from rights once assigned, but delegators remain liable if the delegatee fails to perform.
  • Consent considerations: Third-party consent is not needed for assignment but is essential for delegation since duties cannot be forced on someone without their agreement.
  • Practical implications: Businesses often limit both assignment and delegation to control who they must deal with, especially when performance quality or confidential relationships are at stake.

The difference between assignment and delegation is that an assignment can't increase another party's obligations. Delegation, on the other hand, is a method of using a contract to transfer one party's obligations to another party. Assigning rights is usually easier than delegating, and fewer restrictions are in place.

The Process of Assignment

With a contract, each party involved holds certain rights. When the party referred to as the assignor gives his or her rights to the party known as the assignee, this is called the process of assignment. For example, if you are a contractor doing house repairs and have agreed to perform a job for a specific amount of pay, you can assign your right to receive that specific amount of pay to another person. If you do this, it means your rights under the contract have been assigned, by you, to that other person.

Common Examples of Assignment

Assignments frequently arise in everyday transactions. For example, lenders regularly assign rights to receive loan payments to other financial institutions. Similarly, landlords may assign their rights under a lease to a new property owner, transferring the right to collect rent. These examples highlight how assignments allow for flexibility in shifting financial benefits without altering the underlying obligations of the contract

When You Can't Assign Contractual Obligations

Most of the time, the parties involved in a contract are able to freely assign their rights, but there are times when that isn't an option. One example is if a company enters into an enforceable agreement, also called a contract, to provide a specific amount of merchandise to a store or boutique. The store or boutique can't have the products delivered to a location that's farther away because that would increase the original company's obligation and delivery costs without their permission or agreement. Contracts are also sometimes written to prohibit assignment.

Legal Limits on Assignments

Courts generally restrict assignments when they would:

  • Substantially increase the burden or risk for the other party.
  • Alter the contract’s original intent or involve personal trust and confidence.
  • Violate a contractual clause expressly prohibiting assignment.

For instance, a contract with a musician to perform at an event cannot be assigned to another performer, since the promise relies on that specific individual’s unique talent.

Defining Delegation

When you transfer duties, you have contractually agreed to perform, that's the delegation of your obligations, with the difference between delegation and assignment being that you aren't transferring rights, you're delegating obligations to a different party. Delegating duties you have contractually agreed to is typically permitted, but there are times when delegation isn't allowed.

  • When the delegation of obligations would alter the scope of the agreement, it isn't allowed.
  • A promise to repay a debt usually can't be delegated.
  • Delegation isn't allowed if the parties involved in the contract draft that into the agreement.

Delegable vs. Non-Delegable Duties

Not all contractual duties can be delegated. Duties considered routine, mechanical, or non-personal—such as delivering goods or completing simple repairs—are often freely delegable. By contrast, non-delegable duties include obligations requiring personal skill, artistic judgment, or a relationship of trust, such as legal representation, medical care, or custom artistic work

Is Third-Party Consent Required for Assignment and Delegation?

Third-party consent isn't a requirement for a contractual assignment, which is linked to rights in an enforceable agreement. A delegation, however, does require that the person being assigned the task be not only aware, but they must explicitly accept the responsibility being assigned. The term for this type of delegation is the delegation of the performance of a duty. While the consequences of assignment and delegation aren't the same, the terms can be used in an interchangeable manner when consequences aren't involved.

Consequences of Assignment

Consequences of assignments include:

  • The assignee's right to file a suit against the obligor if performance falls short.
  • The obligor gets the same protection against the assignee the assignor gets.
  • The obligor's payments to the assignor stay in effect until the obligor knows about the assignment.
  • A contractual modification set up between the obligor and assignor remains in effect if the obligor was unaware of the assignment.

Rights and Remedies of the Assignee

Once an assignment is made, the assignee effectively steps into the shoes of the assignor. This means:

  • The assignee can enforce the contract directly against the obligor.
  • Any defenses or claims the obligor had against the assignor may also be raised against the assignee.
  • If the obligor was unaware of the assignment and continues performance to the assignor, those actions may still discharge the obligor’s duty until notice is given.

Consequences of Delegation

Delegation's consequences include:

  • The liability falls to the party delegating the obligation to another party.
  • The delegatee only has an obligation to the Obligees when consideration, or some form of payment, is received from the delegating party.

Assignments and delegation can only happen if the boundaries set by the contract allow it. Businesses often restrict the ability to assign rights or delegate duties because of not being sure who the rights or duties might be assigned to if not stopped contractually. This especially applies to delegation.

Liability After Delegation

Even if duties are delegated, the delegator usually remains ultimately responsible for performance. If the delegatee fails to perform, the delegator can be sued for breach of contract. This distinction makes delegation riskier than assignment, because liability cannot be avoided simply by passing the duty along. In some cases, novation—a separate agreement where the obligee formally releases the original party—can relieve the delegator from further liability.

Delegation of Performance

No delegation of performance is able to relieve the delegating party's obligation to perform as contracted, and it doesn't remove liability for breach of contract. The right to receive damages in the event of a breach of contract can, however, be assigned regardless of an agreement that states otherwise. If the other party in the agreement designates performance as a factor that creates a sense of insecurity, they can then treat an assignment as a reason to demand assurances from the assignee. The original promise to perform is then enforceable by the assignor to the other party who was part of the original agreement.

Frequently Asked Questions

1. What is the main difference between assignment and delegation?

Assignment transfers contractual rights, while delegation transfers contractual duties. Assignment is generally easier and less restricted than delegation.

2. Can all contractual rights be assigned?

No. Assignments are invalid if they increase the obligor’s burden, change the contract’s intent, or violate a non-assignment clause.

3. Are delegators released from liability after delegation?

No. Unless a novation occurs, the delegator remains liable if the delegatee fails to perform.

4. Do assignments require third-party consent?

Usually not. Assignments are effective once notice is given to the obligor, though some contracts may require consent.

5. What are examples of non-delegable duties?

Services involving personal skill, trust, or discretion—such as legal representation, surgery, or custom artistic work—are typically non-delegable.

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