the assignment of contractual rights

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14.1: Assignment of Contract Rights

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LEARNING OBJECTIVES

Understand what an assignment is and how it is made.
Recognize the effect of the assignment.
Know when assignments are not allowed.
Understand the concept of assignor’s warranties.

The Concept of a Contract Assignment

Contracts create rights and duties. By an assignment , an obligee (one who has the right to receive a contract benefit) transfers a right to receive a contract benefit owed by the obligor (the one who has a duty to perform) to a third person ( assignee ); the obligee then becomes an assignor (one who makes an assignment).

The Restatement (Second) of Contracts defines an assignment of a right as “a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires the right to such performance.”Restatement (Second) of Contracts, Section 317(1). The one who makes the assignment is both an obligee and a transferor. The assignee acquires the right to receive the contractual obligations of the promisor, who is referred to as the obligor (see Figure 14.1 "Assignment of Rights" ). The assignor may assign any right unless (1) doing so would materially change the obligation of the obligor, materially burden him, increase his risk, or otherwise diminish the value to him of the original contract; (2) statute or public policy forbids the assignment; or (3) the contract itself precludes assignment. The common law of contracts and Articles 2 and 9 of the Uniform Commercial Code (UCC) govern assignments. Assignments are an important part of business financing, such as factoring. A factor is one who purchases the right to receive income from another.

Figure 14.1 Assignment of Rights

Method of Assignment

Manifesting assent.

To effect an assignment, the assignor must make known his intention to transfer the rights to the third person. The assignor’s intention must be that the assignment is effective without need of any further action or any further manifestation of intention to make the assignment. In other words, the assignor must intend and understand himself to be making the assignment then and there; he is not promising to make the assignment sometime in the future.

Under the UCC, any assignments of rights in excess of $5,000 must be in writing, but otherwise, assignments can be oral and consideration is not required: the assignor could assign the right to the assignee for nothing (not likely in commercial transactions, of course). Mrs. Franklin has the right to receive $750 a month from the sale of a house she formerly owned; she assigns the right to receive the money to her son Jason, as a gift. The assignment is good, though such a gratuitous assignment is usually revocable, which is not the case where consideration has been paid for an assignment.

Acceptance and Revocation

For the assignment to become effective, the assignee must manifest his acceptance under most circumstances. This is done automatically when, as is usually the case, the assignee has given consideration for the assignment (i.e., there is a contract between the assignor and the assignee in which the assignment is the assignor’s consideration), and then the assignment is not revocable without the assignee’s consent. Problems of acceptance normally arise only when the assignor intends the assignment as a gift. Then, for the assignment to be irrevocable, either the assignee must manifest his acceptance or the assignor must notify the assignee in writing of the assignment.

Notice to the obligor is not required, but an obligor who renders performance to the assignor without notice of the assignment (that performance of the contract is to be rendered now to the assignee) is discharged. Obviously, the assignor cannot then keep the consideration he has received; he owes it to the assignee. But if notice is given to the obligor and she performs to the assignor anyway, the assignee can recover from either the obligor or the assignee, so the obligor could have to perform twice, as in Exercise 2 at the chapter’s end, Aldana v. Colonial Palms Plaza . Of course, an obligor who receives notice of the assignment from the assignee will want to be sure the assignment has really occurred. After all, anybody could waltz up to the obligor and say, “I’m the assignee of your contract with the bank. From now on, pay me the $500 a month, not the bank.” The obligor is entitled to verification of the assignment.

Effect of Assignment

General rule.

An assignment of rights effectively makes the assignee stand in the shoes of the assignor. He gains all the rights against the obligor that the assignor had, but no more. An obligor who could avoid the assignor’s attempt to enforce the rights could avoid a similar attempt by the assignee. Likewise, under UCC Section 9-318(1), the assignee of an account is subject to all terms of the contract between the debtor and the creditor-assignor. Suppose Dealer sells a car to Buyer on a contract where Buyer is to pay $300 per month and the car is warranted for 50,000 miles. If the car goes on the fritz before then and Dealer won’t fix it, Buyer could fix it for, say, $250 and deduct that $250 from the amount owed Dealer on the next installment (called a setoff). Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the $250 from payment to Assignee.

The “shoe rule” does not apply to two types of assignments. First, it is inapplicable to the sale of a negotiable instrument to a holder in due course. Second, the rule may be waived: under the UCC and at common law, the obligor may agree in the original contract not to raise defenses against the assignee that could have been raised against the assignor.Uniform Commercial Code, Section 9-206. While a waiver of defenses makes the assignment more marketable from the assignee’s point of view, it is a situation fraught with peril to an obligor, who may sign a contract without understanding the full import of the waiver. Under the waiver rule, for example, a farmer who buys a tractor on credit and discovers later that it does not work would still be required to pay a credit company that purchased the contract; his defense that the merchandise was shoddy would be unavailing (he would, as used to be said, be “having to pay on a dead horse”).

For that reason, there are various rules that limit both the holder in due course and the waiver rule. Certain defenses, the so-called real defenses (infancy, duress, and fraud in the execution, among others), may always be asserted. Also, the waiver clause in the contract must have been presented in good faith, and if the assignee has actual notice of a defense that the buyer or lessee could raise, then the waiver is ineffective. Moreover, in consumer transactions, the UCC’s rule is subject to state laws that protect consumers (people buying things used primarily for personal, family, or household purposes), and many states, by statute or court decision, have made waivers of defenses ineffective in such consumer transactions . Federal Trade Commission regulations also affect the ability of many sellers to pass on rights to assignees free of defenses that buyers could raise against them. Because of these various limitations on the holder in due course and on waivers, the “shoe rule” will not govern in consumer transactions and, if there are real defenses or the assignee does not act in good faith, in business transactions as well.

When Assignments Are Not Allowed

The general rule—as previously noted—is that most contract rights are assignable. But there are exceptions. Five of them are noted here.

Material Change in Duties of the Obligor

When an assignment has the effect of materially changing the duties that the obligor must perform, it is ineffective. Changing the party to whom the obligor must make a payment is not a material change of duty that will defeat an assignment, since that, of course, is the purpose behind most assignments. Nor will a minor change in the duties the obligor must perform defeat the assignment.

Several residents in the town of Centerville sign up on an annual basis with the Centerville Times to receive their morning paper. A customer who is moving out of town may assign his right to receive the paper to someone else within the delivery route. As long as the assignee pays for the paper, the assignment is effective; the only relationship the obligor has to the assignee is a routine delivery in exchange for payment. Obligors can consent in the original contract, however, to a subsequent assignment of duties. Here is a clause from the World Team Tennis League contract: “It is mutually agreed that the Club shall have the right to sell, assign, trade and transfer this contract to another Club in the League, and the Player agrees to accept and be bound by such sale, exchange, assignment or transfer and to faithfully perform and carry out his or her obligations under this contract as if it had been entered into by the Player and such other Club.” Consent is not necessary when the contract does not involve a personal relationship.

Assignment of Personal Rights

When it matters to the obligor who receives the benefit of his duty to perform under the contract, then the receipt of the benefit is a personal right that cannot be assigned. For example, a student seeking to earn pocket money during the school year signs up to do research work for a professor she admires and with whom she is friendly. The professor assigns the contract to one of his colleagues with whom the student does not get along. The assignment is ineffective because it matters to the student (the obligor) who the person of the assignee is. An insurance company provides auto insurance covering Mohammed Kareem, a sixty-five-year-old man who drives very carefully. Kareem cannot assign the contract to his seventeen-year-old grandson because it matters to the insurance company who the person of its insured is. Tenants usually cannot assign (sublet) their tenancies without the landlord’s permission because it matters to the landlord who the person of their tenant is. Section 14.4.1 "Nonassignable Rights" , Nassau Hotel Co. v. Barnett & Barse Corp. , is an example of the nonassignability of a personal right.

Assignment Forbidden by Statute or Public Policy

Various federal and state laws prohibit or regulate some contract assignment. The assignment of future wages is regulated by state and federal law to protect people from improvidently denying themselves future income because of immediate present financial difficulties. And even in the absence of statute, public policy might prohibit some assignments.

Contracts That Prohibit Assignment

Assignability of contract rights is useful, and prohibitions against it are not generally favored. Many contracts contain general language that prohibits assignment of rights or of “the contract.” Both the Restatement and UCC Section 2-210(3) declare that in the absence of any contrary circumstances, a provision in the agreement that prohibits assigning “the contract” bars “only the delegation to the assignee of the assignor’s performance.”Restatement (Second) of Contracts, Section 322. In other words, unless the contract specifically prohibits assignment of any of its terms, a party is free to assign anything except his or her own duties.

Even if a contractual provision explicitly prohibits it, a right to damages for breach of the whole contract is assignable under UCC Section 2-210(2) in contracts for goods. Likewise, UCC Section 9-318(4) invalidates any contract provision that prohibits assigning sums already due or to become due. Indeed, in some states, at common law, a clause specifically prohibiting assignment will fail. For example, the buyer and the seller agree to the sale of land and to a provision barring assignment of the rights under the contract. The buyer pays the full price, but the seller refuses to convey. The buyer then assigns to her friend the right to obtain title to the land from the seller. The latter’s objection that the contract precludes such an assignment will fall on deaf ears in some states; the assignment is effective, and the friend may sue for the title.

Future Contracts

The law distinguishes between assigning future rights under an existing contract and assigning rights that will arise from a future contract. Rights contingent on a future event can be assigned in exactly the same manner as existing rights, as long as the contingent rights are already incorporated in a contract. Ben has a long-standing deal with his neighbor, Mrs. Robinson, to keep the latter’s walk clear of snow at twenty dollars a snowfall. Ben is saving his money for a new printer, but when he is eighty dollars shy of the purchase price, he becomes impatient and cajoles a friend into loaning him the balance. In return, Ben assigns his friend the earnings from the next four snowfalls. The assignment is effective. However, a right that will arise from a future contract cannot be the subject of a present assignment.

Partial Assignments

An assignor may assign part of a contractual right, but only if the obligor can perform that part of his contractual obligation separately from the remainder of his obligation. Assignment of part of a payment due is always enforceable. However, if the obligor objects, neither the assignor nor the assignee may sue him unless both are party to the suit. Mrs. Robinson owes Ben one hundred dollars. Ben assigns fifty dollars of that sum to his friend. Mrs. Robinson is perplexed by this assignment and refuses to pay until the situation is explained to her satisfaction. The friend brings suit against Mrs. Robinson. The court cannot hear the case unless Ben is also a party to the suit. This ensures all parties to the dispute are present at once and avoids multiple lawsuits.

Successive Assignments

It may happen that an assignor assigns the same interest twice (see Figure 14.2 "Successive Assignments" ). With certain exceptions, the first assignee takes precedence over any subsequent assignee. One obvious exception is when the first assignment is ineffective or revocable. A subsequent assignment has the effect of revoking a prior assignment that is ineffective or revocable. Another exception: if in good faith the subsequent assignee gives consideration for the assignment and has no knowledge of the prior assignment, he takes precedence whenever he obtains payment from, performance from, or a judgment against the obligor, or whenever he receives some tangible evidence from the assignor that the right has been assigned (e.g., a bank deposit book or an insurance policy).

Some states follow the different English rule: the first assignee to give notice to the obligor has priority, regardless of the order in which the assignments were made. Furthermore, if the assignment falls within the filing requirements of UCC Article 9 (see Chapter 22 "Secured Transactions and Suretyship" ), the first assignee to file will prevail.

Figure 14.2 Successive Assignments

Assignor’s Warranties

An assignor has legal responsibilities in making assignments. He cannot blithely assign the same interests pell-mell and escape liability. Unless the contract explicitly states to the contrary, a person who assigns a right for value makes certain assignor’s warranties to the assignee: that he will not upset the assignment, that he has the right to make it, and that there are no defenses that will defeat it. However, the assignor does not guarantee payment; assignment does not by itself amount to a warranty that the obligor is solvent or will perform as agreed in the original contract. Mrs. Robinson owes Ben fifty dollars. Ben assigns this sum to his friend. Before the friend collects, Ben releases Mrs. Robinson from her obligation. The friend may sue Ben for the fifty dollars. Or again, if Ben represents to his friend that Mrs. Robinson owes him (Ben) fifty dollars and assigns his friend that amount, but in fact Mrs. Robinson does not owe Ben that much, then Ben has breached his assignor’s warranty. The assignor’s warranties may be express or implied.

KEY TAKEAWAY

Generally, it is OK for an obligee to assign the right to receive contractual performance from the obligor to a third party. The effect of the assignment is to make the assignee stand in the shoes of the assignor, taking all the latter’s rights and all the defenses against nonperformance that the obligor might raise against the assignor. But the obligor may agree in advance to waive defenses against the assignee, unless such waiver is prohibited by law.

There are some exceptions to the rule that contract rights are assignable. Some, such as personal rights, are not circumstances where the obligor’s duties would materially change, cases where assignability is forbidden by statute or public policy, or, with some limits, cases where the contract itself prohibits assignment. Partial assignments and successive assignments can happen, and rules govern the resolution of problems arising from them.

When the assignor makes the assignment, that person makes certain warranties, express or implied, to the assignee, basically to the effect that the assignment is good and the assignor knows of no reason why the assignee will not get performance from the obligor.

If Able makes a valid assignment to Baker of his contract to receive monthly rental payments from Tenant, how is Baker’s right different from what Able’s was?
Able made a valid assignment to Baker of his contract to receive monthly purchase payments from Carr, who bought an automobile from Able. The car had a 180-day warranty, but the car malfunctioned within that time. Able had quit the auto business entirely. May Carr withhold payments from Baker to offset the cost of needed repairs?
Assume in the case in Exercise 2 that Baker knew Able was selling defective cars just before his (Able’s) withdrawal from the auto business. How, if at all, does that change Baker’s rights?
Why are leases generally not assignable? Why are insurance contracts not assignable?

assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

Founded in 1939, our law firm combines the ability to represent clients in domestic or international matters with the personal interaction with clients that is traditional to a long established law firm.

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Assessing Assignability: Transferring Contractual Rights or Obligations | Practical Law

Assessing Assignability: Transferring Contractual Rights or Obligations

Practical law legal update 5-546-6326 (approx. 7 pages).

An intended transfer is of the type that is prohibited by law or public policy (see Practice Note, Assignability of Commercial Contracts: Statutory and Public Policy Exceptions ).
The parties expressly agree to restrict transferability (see Practice Note, Assignability of Commercial Contracts: Contractual Anti-assignment and Anti-delegation Clauses ).
Breaching the contract.
Making an ineffective and invalid transfer.

Distinguishing Between Assignment and Delegation

The assignment of rights to receive performance.
The delegation of duties to perform.

Characteristics of Assignments

The right to receive performance from the assignor.
Its remedies against the assignor for any failure to perform.

Characteristics of Delegation

The general rule governing assignment and delegation.

Most assignments of contractual rights.
Many delegations of contractual performance.
Assignments and delegations that violate public policy or law.
Assignments of rights or delegations of performance that are personal in nature.
Contracts with anti-assignment or anti-delegation clauses.

Contracts That Present the Greatest Challenges

Personal services contracts (see Personal Services Contracts ).
Non-exclusive intellectual property licenses (see Intellectual Property Licenses ).
Contracts with anti-assignment and anti-delegation clauses (see Contracts With Anti-assignment and Anti-delegation Contract Clauses ).

Personal Services Contracts

Intellectual property licenses, contracts with anti-assignment and anti-delegation clauses, is a change of control an assignment.

Contains an anti-assignment and anti-delegation clause expressly restricting a change of control.
States that a change in management or equity ownership of the contracting party is deemed to be an assignment.

When Does an Involuntary Transfer Trigger a Restricted Transfer?

A contractual anti-assignment and anti delegation clause applies to a specific type or transfer.
The transfer is permissible, with or without a contractual anti-assignment and anti-delegation provision.

Drafting and Negotiating Anti-assignment and Anti-delegation Clauses

Directly addressing assignment of rights and delegation of performance.
Clarifying the universe of restricted transfers.
Designating the non-transferring party's consent rights.
Specifying any exceptions to non-transferability.
Requiring notification of a permitted transfer.
Including a declaration that impermissible transfers are void.
Adding a novation to the anti-assignment and anti-delegation provision.

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Cheshire, Fifoot, and Furmston's Law of Contract (17th edn)

Preface to the Seventeenth Edition
New to this Edition
Table of Cases
Table of Statutes
Table of Statutory Instruments
Table of European Union Legislation
1. Historical Introduction
2. Some Factors Affecting Modern Contract Law
3. The Phenomena of Agreement
4. Consideration
5. Intention to Create Legal Relations
6. The Contents of the Contract
7. Unenforceable Contracts
9. Misrepresentation, Duress, and Undue Influence
10. Contracts Rendered Void by Statute
11. Contracts Illegal by Statute or at Common Law
12. Contracts Void at Common Law on Grounds of Public Policy
13. Capacity of Parties
14. Privity of Contract
15. Privity of Contract Under the Law of Agency
16. The Voluntary Assignment of Contractual Rights and Liabilities
17. The Involuntary Assignment of Contractual Rights and Liabilities
18. Performance and Breach
19. Discharge by Agreement
20. Discharge Under the Doctrine of Frustration
21. Remedies for Breach of Contract

p. 629 16. The Voluntary Assignment of Contractual Rights and Liabilities

M P Furmston M P Furmston Late Bencher of Gray's Inn, Emeritus Professor of Law at University of Bristol and Singapore Management University, and Professor of Law at Sunway
https://doi.org/10.1093/he/9780198747383.003.0016
Published in print: 06 April 2017
Published online: September 2017

This chapter discusses the assignment of contractual rights and liabilities. It covers the assignability of contractual rights; rules that govern assignments, whether statutory or equitable; novation distinguished from assignment; and negotiability distinguished from assignability.

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Assignment of Rights Agreement: Everything You Need to Know

An assignment of rights agreement refers to a situation in which one party, known as the assignor, shifts contract rights to another party, known as assignee. 3 min read updated on February 01, 2023

An assignment of rights agreement refers to a situation in which one party, known as the assignor, shifts contract rights to another party. The party taking on the rights is known as the assignee.

An Assignment of Rights Agreement

The following is an example of an assignment of rights agreement. Dave decides to buy a bicycle from John for $100 and after agreeing on the price, Dave and John draw up a written agreement. Let's suppose that there will be a one week wait before the bicycle is ready for delivery to Dave and before anything is passed between them.

Meanwhile, John accepts that he will transfer his right to be paid $100 from Dave to Rob, in exchange for Rob paying John $90 immediately. Let's assume that John's motivation is an immediate need for cash. In this context, John is regarded as the assignor and Rob is the assignee.

John is the assignor as he is giving the assignment to Rob and Rob is the assignee because he is acquiring the assignment from John. To put it simply, the assignee is the party who gets something. In this case, Rob will receive $100.

Rules of Assignments

Assignments frequently occur in contracts. It's important to note the following points:

The assignor (e.g. John) is accountable according to the contract unless the parties make an agreement that states otherwise.
This means that if Dave does not receive the bicycle, he can sue John for it.
Assignments are allowed in almost every type of agreement unless the contract includes an explicit ban on assignments or unless a specific exception is applicable.
The assignor does not need to speak to the other contract party in order to create the assignment. For example, John would not need to ask Dave if John can transfer his right to be paid to Rob.

Exceptions Where a Contract Cannot be Assigned

Some exceptions dictate that a contract cannot be assigned .
Unenforceable assignments include the following: a personal services agreement, changing the contract duties, changing the material provisions of the agreement (e.g. time, amount, location, etc.).
An example of a personal services agreement, which cannot be assigned, would be if you decided to employ a particular professional writer to write a book for you.
That writer would not be allowed to take your payment and then give the work to another writer because you employed that particular writer to write the book, rather than someone else.
Some kinds of assignments have to be in writing in order to be enforceable such as assignments of actual property (e.g. selling your house), loans, or debts.
It's best to look at the statute of frauds for more information on the kinds of agreements that must be in writing.

Delegations and Novations

A delegation is very similar to an assignment in terms of what it involves. A delegation takes place when a party moves his or her obligations (or liabilities) under an agreement to a different party. Assignments, on the other hand, involve the transfer of rights.

If the parties in our previous example had created a novation , Rob would be entirely accountable to Dave and John would be clear of responsibility. A novation replaces the earliest party with a new party.

Contract Assignment

An Assignment Agreement can also be called a Contract Assignment. Another example of this would be if you're a contractor who needs assistance finishing a job. You could give those tasks and rights to a subcontractor, but only if the original agreement does not prohibit the assignment of these rights and responsibilities.

Creating an Assignment Agreement

In an Assignment Agreement, it is important to include details such as:

The name of the person assigning the responsibilities (known as the assignor)
The name of the of the party who is taking the rights and responsibilities (the assignee)
The other party to the first agreement (known as the obligor)
The name of the agreement and its expiration date
Whether the first contract necessitates the obligor's approval before assigning rights
The date of the obligor's consent
When the contract will be put into effect
Which state's laws will regulate the contract

If you need help with an assignment of rights agreement, you can post your legal need 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.

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Contract Assignments

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What is a Contract Assignment?

In a contract assignment, one of the two parties to a contract may transfer their right to the other’s performance to a third party. This is known as “contract assignment.” Generally, all rights under a contract may be assigned. A provision in the contract that states the contract may not be assigned usually refers to the delegation of the assignor’s (person who assigns) duties under that contract, not their rights under the contract.

In modern law, the phrase “assignment of contract” usually means assignment of both rights and duties under a contract.

Who are the Various Parties Involved in a Contract Assignment?

How is a contract assignment created, when is a contract assignment prohibited, which parties are liable to each other in a contract assignment, are there issues with multiple assignments, should i hire a lawyer for contract assignments.

In a contract, there are two parties to the agreement, X and Y. The parties may agree to let X assign X’s rights to a third party . Once the third party enters the picture, each party has a special name. For instance, suppose X, a seller of bookmarks, contracts with Y, a purchaser of bookmarks. Y desires to have Y’s right to X’s performance (the sale of bookmarks on a monthly basis) to another person.

This third person, Z, is called the assignee. X is called the obligor , and Y is called the assignor , since Y has assigned its right to X’s performance . X, the obligor, is obligated to continue to perform its duties under the agreement.

There are no “magic words” needed to create an assignment. The law simply requires that the would-be assignor have an intent to immediately and completely transfer their rights in the agreement. In addition, writing is typically not required to create an assignment. As long as X and Y both adequately understand what right is being assigned, an assignment is created.

Words that indicate a transfer is to take place suffice, such as “I intend to transfer my rights under this agreement,” or, “I intend to give my rights to Z,” or “I intend to confer an assignment on Z.” In addition,consideration,which is a bargained-for exchange required for a contract to be valid, is not required for assignment.

In certain instances, an assignment of contract rights can be prohibited. If the contract contains a clause prohibiting assignment of “the contract,” without specifying more, the law construes this language as barring only delegation of the assignor’s duties, not their rights. If the assignment language states “assignment of contractual rights are prohibited,” the obligor may sue for damages if the assignor attempts to assign the agreement. If the contract language states that attempts to assign “will be void,” the parties can bar assignment.of rights.

Under modern contract law, the phrase “I assign the contract” is usually interpreted to mean that one is assigning rights and duties. What is an assignment of duties? An assignment of duties occurs where Y, called the obligor or delegator, promises to perform for X, the obligee. Y then delegates their duty to perform to Z, the delegate. Under the law, most duties can be delegated.

There are exceptions to this rule. Delegation can be prohibited when:

The duties to be performed involve personal judgment and special skill (e.g., a portrait, creation of a custom-made dress).
“Personal judgment” is the exercise of some kind of superior judgment when it comes to determining how, when, or where to do something. Examples of individuals who exercise personal judgment include talent scouts and financial advisors. Special skill is the unique ability to create a good or perform a service. A delegator can be prohibited from delegating duties when it is that specific delegator’s services are sought. For example, if the services of a specific famous chef are sought, and the original agreement was entered into on the understanding that the chef was hired for their specific talent, the delegator may not delegate the services;
The assignment fundamentally changes risks or responsibilities under the agreement;
The assignment is over future rights associated with a future contract that does not currently exist;
Delegation would increase the obligation of the obligee. For example, if a shoe manufacturer contracts to deliver soles to a store in the same town as the shoe factory, the other party cannot assign the delivery to a different store in another state. Doing so would impose a greater obligation on the obligee than was originally contemplated;
The obligee had placed special trust in the delegator. For example, assume that you have hired a patent attorney, based on that attorney’s significant skill and expertise, to obtain a valuable patent. You have placed special trust in this person, hiring them instead of other patent attorneys, because of their unique expertise. In such a situation, the attorney may not delegate his duties to another attorney (delegate), since the attorney was hired because of one person’s special capabilities;
The delegation is of a promise to repay a debt; or
The contract itself restricts or prohibits delegation. If the contract states, “any attempt to delegate duties under this contract is void,” a delegation will not be permitted.

In a contract involving assignment of rights, the assignee may sue the obligor. This is because the assignee, once the assignee has been assigned rights, is entitled to performance under the contract. If the obligor had a defense that existed in the original contract between obligor and assignor, the obligor may assert that defense against the assignee. Examples of such defenses include the original contract was not valid because of lack of consideration, or because there was never a valid offer or acceptance).

An assignee may also sue an assignor. Generally, if an assignment is made for consideration,it is irrevocable. Assignments not made for consideration, but under which an obligor has already performed, are also irrevocable. If an assignor attempts to revoke an irrevocable assignment,the assignee may sue for “wrongful revocation.”

In circumstances involving delegation of duties,an obligee must accept performance from the delegate of all duties that may be delegated. The delegator remains liable on the agreement. Therefore, the obligee may sue the delegator for nonperformance by the delegate. The obligee may sue the delegate for nonperformance, but can only require the delegate to perform if there has been an assumption by the delegate. An assumption by the delegate is a promise that the delegate will perform the delegated duty, which promise is supported by consideration.

Assignments that are not supported by consideration are revocable. If an initial assignment is revocable, a subsequent assignment can revoke it. If a first assignment is irrevocable, because consideration was present,the first assignment will usually prevail over a subsequent assignment. This means the person who can claim the assignment was first made to them will prevail over someone who claims a subsequent assignment.

If, however, the second person paid value for the assignment, and entered into the assignment without knowing of the first assignment, the “subsequent”assignee is entitled to proceeds the first judgment against the obligor (the original party who still must perform), in the event such a judgment is issued,

If you have an issue with assignment of rights or duties under a contract, you should contact a contract lawyer for advice. An experienced business lawyer near you can review the facts of your case, advise you of your rights, and represent you in court proceedings.

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Assignment Of Rights Agreement

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What is an assignment of rights agreement.

An assignment of rights agreement is a written document in which one party, the assignor, assigns to another party all or part of their rights under an existing contract. The most common example of this would be when someone wants to sell their shares of stock in a company.

When you buy shares from someone else (the seller), they agree to transfer them over and give up any control they had on that share. This way, another party can take ownership without going through the trouble of trying to buy the whole company themselves.

Common Sections in Assignment Of Rights Agreements

Below is a list of common sections included in Assignment Of Rights Agreements. These sections are linked to the below sample agreement for you to explore.

Assignment Of Rights Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-99.(H)(7) 5 dex99h7.htm FORM OF ASSIGNMENT AGREEMENT , Viewed December 20, 2021, View Source on SEC .

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Lawyers with backgrounds working on assignment of rights agreements work with clients to help. Do you need help with an assignment of rights agreement?

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I'm an employment lawyer. I counsel and represent employees in all professions, from hourly workers to doctors and executives, and all in between. I also counsel and represent employers in many aspects of employment law.

Small firm offering business consultation and contract review services.

Scott graduated from Cardozo Law School and also has an English degree from Penn. His practice focuses on business law and contracts, with an emphasis on commercial transactions and negotiations, document drafting and review, employment, business formation, e-commerce, technology, healthcare, privacy, data security and compliance. While he's worked with large, established companies, he particularly enjoys collaborating with startups. Prior to starting his own practice in 2011, Scott worked in-house for over 5 years with businesses large and small. He also handles real estate leases, website and app Terms of Service and privacy policies, and pre- and post-nup agreements.

Michelle F.

I provide comprehensive legal and business consulting services to entrepreneurs, startups and small businesses. My practice focuses on start-up foundations, business growth through contractual relationships and ventures, and business purchase and sales. Attorney with a demonstrated history of working in the corporate law industry and commercial litigation. Member of the Bar for the State of New York and United States Federal Courts for the Southern and Eastern Districts of New York, Southern and eastern District Bankruptcy Courts and the Second Circuit Court of Appeals. Skilled in business law, federal court commercial litigation, corporate governance and debt restructuring.

I am a corporate and business attorney in Orange County, CA. I advise start-ups, early-growth companies, investors, and entrepreneurs in various sectors and industries including technology, entertainment, digital media, healthcare, and biomedical.

Oscar is a St. Petersburg native. He is a graduate of the University of Florida and Stetson University, College of Law. A former US Army Judge Advocate, Oscar has more than 20 years of experience in Estate Planning, Real Estate, Small Business, Probate, and Asset Protection law. A native of St. Petersburg, Florida, and a second-generation Gator, he received a B.A. from the University of Florida and a J.D. from Stetson University’s College of Law. Oscar began working in real estate sales in 1994 prior to attending law school. He continued in real estate, small business law, and Asset Protection as an associate attorney with the firm on Bush, Ross, Gardner, Warren, & Rudy in 2002 before leaving to open his own practice. Oscar also held the position of Sales & Marketing Director for Ballast Point Homes separately from his law practice. He is also a licensed real estate broker and owner of a boutique real estate brokerage. As a captain in the US Army JAG Corps, he served as a Judge Advocate in the 3rd Infantry Division and then as Chief of Client Services, Schweinfurt, Germany, and Chief of Criminal Justice for the 200th MP Command, Ft. Meade, Maryland. He is a certified VA attorney representative and an active member of VARep, an organization of real estate and legal professionals dedicated to representing and educating veterans. Oscar focuses his practice on real small business and asset protection law.

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14.1 Assignment of Contract Rights

Learning objectives.

Understand what an assignment is and how it is made.
Recognize the effect of the assignment.
Know when assignments are not allowed.
Understand the concept of assignor’s warranties.

The Concept of a Contract Assignment

Contracts create rights and duties. By an assignment The passing or delivering by one person to another of the right to a contract benefit. , an obligee One to whom an obligation is owed. (one who has the right to receive a contract benefit) transfers a right to receive a contract benefit owed by the obligor One who owes an obligation. (the one who has a duty to perform) to a third person ( assignee One to whom the right to receive benefit of a contract is passed or delivered. ); the obligee then becomes an assignor One who agrees to allow another to receive the benefit of a contract. (one who makes an assignment).

The Restatement (Second) of Contracts defines an assignment of a right as “a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires the right to such performance.” Restatement (Second) of Contracts, Section 317(1). The one who makes the assignment is both an obligee and a transferor. The assignee acquires the right to receive the contractual obligations of the promisor, who is referred to as the obligor (see Figure 14.1 "Assignment of Rights" ). The assignor may assign any right unless (1) doing so would materially change the obligation of the obligor, materially burden him, increase his risk, or otherwise diminish the value to him of the original contract; (2) statute or public policy forbids the assignment; or (3) the contract itself precludes assignment. The common law of contracts and Articles 2 and 9 of the Uniform Commercial Code (UCC) govern assignments. Assignments are an important part of business financing, such as factoring. A factor A person who pays money to receive another’s executory contractual benefits. is one who purchases the right to receive income from another.

Figure 14.1 Assignment of Rights

Method of Assignment

Manifesting assent.

Acceptance and Revocation

Effect of Assignment

General rule.

An assignment of rights effectively makes the assignee stand in the shoes of An assignee takes no greater rights than his assignor had. the assignor. He gains all the rights against the obligor that the assignor had, but no more. An obligor who could avoid the assignor’s attempt to enforce the rights could avoid a similar attempt by the assignee. Likewise, under UCC Section 9-318(1), the assignee of an account is subject to all terms of the contract between the debtor and the creditor-assignor. Suppose Dealer sells a car to Buyer on a contract where Buyer is to pay $300 per month and the car is warranted for 50,000 miles. If the car goes on the fritz before then and Dealer won’t fix it, Buyer could fix it for, say, $250 and deduct that $250 from the amount owed Dealer on the next installment (called a setoff). Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the $250 from payment to Assignee.

The “shoe rule” does not apply to two types of assignments. First, it is inapplicable to the sale of a negotiable instrument to a holder in due course (covered in detail Chapter 23 "Negotiation of Commercial Paper" ). Second, the rule may be waived: under the UCC and at common law, the obligor may agree in the original contract not to raise defenses against the assignee that could have been raised against the assignor. Uniform Commercial Code, Section 9-206. While a waiver of defenses Surrender by a party of legal rights otherwise available to him or her. makes the assignment more marketable from the assignee’s point of view, it is a situation fraught with peril to an obligor, who may sign a contract without understanding the full import of the waiver. Under the waiver rule, for example, a farmer who buys a tractor on credit and discovers later that it does not work would still be required to pay a credit company that purchased the contract; his defense that the merchandise was shoddy would be unavailing (he would, as used to be said, be “having to pay on a dead horse”).

For that reason, there are various rules that limit both the holder in due course and the waiver rule. Certain defenses, the so-called real defenses (infancy, duress, and fraud in the execution, among others), may always be asserted. Also, the waiver clause in the contract must have been presented in good faith, and if the assignee has actual notice of a defense that the buyer or lessee could raise, then the waiver is ineffective. Moreover, in consumer transactions, the UCC’s rule is subject to state laws that protect consumers (people buying things used primarily for personal, family, or household purposes), and many states, by statute or court decision, have made waivers of defenses ineffective in such consumer transactions A contract for household or domestic purposes, not commercial purposes. . Federal Trade Commission regulations also affect the ability of many sellers to pass on rights to assignees free of defenses that buyers could raise against them. Because of these various limitations on the holder in due course and on waivers, the “shoe rule” will not govern in consumer transactions and, if there are real defenses or the assignee does not act in good faith, in business transactions as well.

When Assignments Are Not Allowed

The general rule—as previously noted—is that most contract rights are assignable. But there are exceptions. Five of them are noted here.

Material Change in Duties of the Obligor

Assignment of Personal Rights

When it matters to the obligor who receives the benefit of his duty to perform under the contract, then the receipt of the benefit is a personal right The right or duty of a particular person to perform or receive contract duties or benefits; cannot be assigned. that cannot be assigned. For example, a student seeking to earn pocket money during the school year signs up to do research work for a professor she admires and with whom she is friendly. The professor assigns the contract to one of his colleagues with whom the student does not get along. The assignment is ineffective because it matters to the student (the obligor) who the person of the assignee is. An insurance company provides auto insurance covering Mohammed Kareem, a sixty-five-year-old man who drives very carefully. Kareem cannot assign the contract to his seventeen-year-old grandson because it matters to the insurance company who the person of its insured is. Tenants usually cannot assign (sublet) their tenancies without the landlord’s permission because it matters to the landlord who the person of their tenant is. Section 14.4.1 "Nonassignable Rights" , Nassau Hotel Co. v. Barnett & Barse Corp. , is an example of the nonassignability of a personal right.

Assignment Forbidden by Statute or Public Policy

Contracts That Prohibit Assignment

Assignability of contract rights is useful, and prohibitions against it are not generally favored. Many contracts contain general language that prohibits assignment of rights or of “the contract.” Both the Restatement and UCC Section 2-210(3) declare that in the absence of any contrary circumstances, a provision in the agreement that prohibits assigning “the contract” bars “only the delegation to the assignee of the assignor’s performance.” Restatement (Second) of Contracts, Section 322. In other words, unless the contract specifically prohibits assignment of any of its terms, a party is free to assign anything except his or her own duties.

Future Contracts

Partial Assignments

Successive Assignments

Some states follow the different English rule: the first assignee to give notice to the obligor has priority, regardless of the order in which the assignments were made. Furthermore, if the assignment falls within the filing requirements of UCC Article 9 (see Chapter 28 "Secured Transactions and Suretyship" ), the first assignee to file will prevail.

Figure 14.2 Successive Assignments

Assignor’s Warranties

An assignor has legal responsibilities in making assignments. He cannot blithely assign the same interests pell-mell and escape liability. Unless the contract explicitly states to the contrary, a person who assigns a right for value makes certain assignor’s warranties Promises, express or implied, made by an assignor to the assignee about the merits of the assignment. to the assignee: that he will not upset the assignment, that he has the right to make it, and that there are no defenses that will defeat it. However, the assignor does not guarantee payment; assignment does not by itself amount to a warranty that the obligor is solvent or will perform as agreed in the original contract. Mrs. Robinson owes Ben fifty dollars. Ben assigns this sum to his friend. Before the friend collects, Ben releases Mrs. Robinson from her obligation. The friend may sue Ben for the fifty dollars. Or again, if Ben represents to his friend that Mrs. Robinson owes him (Ben) fifty dollars and assigns his friend that amount, but in fact Mrs. Robinson does not owe Ben that much, then Ben has breached his assignor’s warranty. The assignor’s warranties may be express or implied.

Key Takeaway

If Able makes a valid assignment to Baker of his contract to receive monthly rental payments from Tenant, how is Baker’s right different from what Able’s was?
Able made a valid assignment to Baker of his contract to receive monthly purchase payments from Carr, who bought an automobile from Able. The car had a 180-day warranty, but the car malfunctioned within that time. Able had quit the auto business entirely. May Carr withhold payments from Baker to offset the cost of needed repairs?
Assume in the case in Exercise 2 that Baker knew Able was selling defective cars just before his (Able’s) withdrawal from the auto business. How, if at all, does that change Baker’s rights?
Why are leases generally not assignable? Why are insurance contracts not assignable?

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The Assignment of Contractual Rights 2nd Edition

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ISBN-10 1849463328
ISBN-13 978-1849463324
Edition 2nd
Publisher Hart Publishing
Publication date June 16, 2016
Language English
Dimensions 6.69 x 1.19 x 9.61 inches
Print length 544 pages
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Assignment of Contract Rights

LEARNING OBJECTIVES

Understand what an assignment is and how it is made.
Recognize the effect of the assignment.
Know when assignments are not allowed.
Understand the concept of assignor’s warranties.
The Concept of a Contract Assignment
Method of Assignment
Effect of Assignment
When Assignments Are Not Allowed
Partial Assignments
Successive Assignments
Assignor’s Warranties
Learning Objectives LEARNING OBJECTIVES
Functions of the Law
Law and Politics KEY TAKEAWAY EXERCISES
Legal Positivism: Law as Sovereign Command
Natural Law The Unanimous Declaration of the Thirteen United States of America
Other Schools of Legal Thought KEY TAKEAWAY EXERCISES
Law: The Moral Minimums in a Democratic Society
The Common Law: Property, Torts, and Contracts
State Courts and the Domain of State Law
Civil versus Criminal Cases
Substance versus Procedure KEY TAKEAWAY EXERCISES
Constitutions
Statutes and Treaties in Congress
Delegating Legislative Powers: Rules by Administrative Agencies
State Statutes and Agencies: Other Codified Law
Judicial Decisions: The Common Law
The Constitution as Preemptive Force in US Law
Statutes and Cases
Treaties as Statutes: The “Last in Time” Rule
Causes of Action, Precedent, and KEY TAKEAWAY EXERCISES
Comparing Common-Law Systems with Other Legal Systems
Civil-Law Systems KEY TAKEAWAY EXERCISES
A Sample Case Note to Students CASE QUESTIONS
Summary and Exercises Summary EXERCISES SELF-TEST QUESTIONS SELF-TEST ANSWERS
How Do Law and Ethics Differ?
Why Should an Individual or a Business Entity Be Ethical? KEY TAKEAWAY EXERCISES
Utilitarianism
Rules and Duty: Deontology
Social Justice Theory and Social Contract Theory
Aristotle and Virtue Theory
Josephson’s Core Values Analysis and Decision Process KEY TAKEAWAY EXERCISES
Josephson’s Core Values Model The Core Values KEY TAKEAWAY EXERCISES
Legal Organization of the Corporation
Maximizing Profits: Milton Friedman “The Social Responsibility of Business Is to Increase Its Profits”
Stakeholder Theory
Ethical Leadership Is Top-Down
Accountability Is Often Weak
Killing the Messenger
Ethics Codes
Ethics Hotlines and Federal Sentencing Guidelines
Managing by the Numbers Managing by Numbers: The Sears Auto Center Story
Conscious Capitalism
Learning Objectives LEARNING OBJECTIVES Robinson v. Audi
Limited Jurisdiction Courts
General Jurisdiction Courts
Appellate Courts
District Courts
Courts of Appeal
United States Supreme Court KEY TAKEAWAY EXERCISES
The Federal-State Balance: Federalism
Exclusive Jurisdiction in Federal Courts
Concurrent Jurisdiction Summary of Rules on Subject Matter Jurisdiction Robinson v. Audi
Legal Procedure, Including Due Process and Personal Jurisdiction
Complaint and Summons
Jurisdiction and Venue
Service of Process and Personal Jurisdiction Summary of Rules on Personal Jurisdiction
Choice of Law and Choice of Forum Clauses KEY TAKEAWAY EXERCISES
Initial Pleadings, and Motions to Dismiss
Discovery KEY TAKEAWAY EXERCISES
Pretrial Conference
Posttrial Motions KEY TAKEAWAY EXERCISES
Judgment or Order
Judgment and Order KEY TAKEAWAY EXERCISES
Case or Controversy: Standing to Sue
Class Actions KEY TAKEAWAY EXERCISES
Costs KEY TAKEAWAY EXERCISES
Arbitration
Mediation KEY TAKEAWAY EXERCISES
Summary CASE QUESTIONS
Ferlito v. Johnson & Johnson CASE QUESTIONS
The Constitution as Reflecting American Values
General Structure of the Constitution
Separation of Powers and Judicial Review KEY TAKEAWAY EXERCISES
Early Commerce Clause Cases
From the New Deal to the New Frontier and the Great Society:1930s–1970
The Substantial Effects Doctrine: World War II to the 1990s KEY TAKEAWAY EXERCISES
Dormant Commerce Clause LEARNING OBJECTIVES Dealing with Unwelcome Waste KEY TAKEAWAY EXERCISES
Preemption: The Supremacy Clause LEARNING OBJECTIVES The Supremacy Clause KEY TAKEAWAY EXERCISES
First Amendment
Fourth Amendment
Fifth Amendment
Fourteenth Amendment: Due Process and Equal Protection Guarantees KEY TAKEAWAY EXERCISES
Griswold v. Connecticut CASE QUESTIONS
Wickard v. Filburn
Kassel v. Consolidated Freightways Corp. CASE QUESTIONS
Hunt v. Washington Apple Advertising Commission CASE QUESTIONS
Citizens United v. Federal Election Commission CASE QUESTIONS
Why Have Administrative Agencies?
Why Regulate the Economy at All? Ideal Conditions for a Free Market
History of Federal Agencies
Classification of Agencies
Powers of Agencies
The Constitution and Agencies KEY TAKEAWAY EXERCISES
Legislative Control
Executive Control
Judicial Review of Agency Actions KEY TAKEAWAY EXERCISES
Trial-Type Hearings
Rulemaking KEY TAKEAWAY EXERCISES
The Paperwork Burden
Inspections
Access to Business Information in Government Files KEY TAKEAWAY EXERCISES
Exhaustion of Administrative Remedies
Strategies for Obtaining Judicial Review
Suing the Government KEY TAKEAWAY EXERCISES
Marshall v. Barlow’s, Inc. CASE QUESTIONS
American Textile Manufacturers Institute v. Donovan CASE QUESTIONS
The Nature of Criminal Law KEY TAKEAWAY EXERCISES
Assault and Battery
Theft: Larceny, Robbery, Embezzlement, False Pretenses
Receiving Stolen Property
Mail and Wire Fraud
Violations of the Food and Drug Act
Environmental Crimes
Violations of the Foreign Corrupt Practices Act
Violations of the Racketeering Influenced and Corrupt Organizations Act
Computer Crime KEY TAKEAWAY EXERCISES
Impossibility
Agency and Corporations KEY TAKEAWAY EXERCISES
Mistake of Fact and Mistake of Law
Other Excuses
Lack of Capacity KEY TAKEAWAY EXERCISES
Procedure LEARNING OBJECTIVES KEY TAKEAWAY EXERCISES
Search and Seizure
Double Jeopardy
Self-Incrimination
Speedy Trial
Cross-Examination
Assistance of Counsel
Cruel and Unusual Punishment
Presumption of Innocence KEY TAKEAWAY EXERCISES
False Pretenses CASE QUESTIONS
White-Collar Crimes CASE QUESTIONS
Definition of Tort
Kinds of Torts
Dimensions of Tort Liability
Dimensions of Tort: Fault
Dimensions of Tort: Nature of Injury
Dimensions of Tort: Excuses
Damages KEY TAKEAWAY EXERCISES
False Imprisonment
Intentional Infliction of Emotional Distress
Trespass and Nuisance
Intentional Interference with Contractual Relations
Malicious Prosecution
Absolute Privilege
Qualified Privilege
Invasion of Privacy
Appropriation of Name or Likeness
Personal Space
Public Disclosure of Embarassing Facts
False Light KEY TAKEAWAY EXERCISES
Elements of Negligence
Standard of Care
Duty of Care and Its Breach
Causation: Actual Cause and Proximate Cause
Problems of Proof
Contributory and Comparative Negligence
Assumption of Risk
Vicarious Liability KEY TAKEAWAY EXERCISES
Historical Basis of Strict Liability: Animals and Ultrahazardous Activities
Strict Liability for Products KEY TAKEAWAY EXERCISES
Intentional Torts: False Imprisonment CASE QUESTIONS
Negligence: Duty of Due Care CASE QUESTIONS
Negligence: Proximate Cause CASE QUESTIONS
Klein v. Pyrodyne Corporation CASE QUESTIONS
The Role of Contracts in Modern Society
The Definition of Contract
Overview of the Contracts Chapter KEY TAKEAWAY EXERCISES
History of the UCC
Organization of the UCC
The Convention on Contracts for the International Sale of Goods KEY TAKEAWAY EXERCISES
Express Contract
Implied Contract (Implied in Fact)
Quasi-Contract
Bilateral Contract
Unilateral Contract
Unenforceable
Degree of Completion
Terminology: Suffixes Expressing Relationships KEY TAKEAWAY EXERCISES
Explicitness: Implied Contract CASE QUESTIONS
Mutuality of Contract: Unilateral Contract CASE QUESTIONS
Unilateral Contract and At-Will Employment CASE QUESTIONS
The Significance of Agreement
The Objective Test KEY TAKEAWAY EXERCISES
The Definition of Offer
Advertisements
Invitations to Bid
Communication
Definiteness
The UCC Approach
Revocability
Irrevocable Offers
Revocability under the UCC
Irrevocability by Law
Rejection by the Offeree
Counteroffer
Acceptance with Counteroffer
The UCC and Counteroffers
Lapse of Time
Death or Insanity of the Offeror
Destruction of Subject Matter Essential to the Offer
Postoffer Illegality KEY TAKEAWAY EXERCISES
General Definition of Acceptance
When Is Acceptance Effective?
Instantaneous Communication
Stipulations as to Acceptance
The “Mailbox Rule”
Acceptance “Outruns” Rejection
Electronic Communications
General Rule: Silence Is Not Acceptance
Exceptions KEY TAKEAWAY EXERCISES
Objective Intention CASE QUESTIONS
Advertisements as Offers CASE QUESTIONS
Silence as Acceptance CASE QUESTIONS
Summary and Exercises Summary EXERCISES SELF-TEST QUESTIONS SELF-TEST ANSWERS SELF-TEST ANSWERS
Physical Duress
Duress by Threat
Undue Influence KEY TAKEAWAY EXERCISES
General Description
Misstatement of Fact
Concealment
Nondisclosure
Statement Made False by Subsequent Events
Statements of Opinion
Misstatement of Law
Assertions of Intention
Intentionally Made Misrepresentation
Negligent Misrepresentation
Materiality
Justifiable Reliance
Innocent Misrepresentation
Remedies KEY TAKEAWAY EXERCISES
Unilateral Mistake
Mutual Mistake
Material Effect on the Agreed-to Exchange of Performance
Party Seeking Relief Does Not Bear the Risk of the Mistake KEY TAKEAWAY EXERCISES
The General Rule
Exceptions and Complications
Necessities
Nonvoidable Contracts
Misrepresentation of Age
Ratification
Duty to Return Consideration Received
Tort Connected with a Contract
Mentally Ill Persons
Intoxicated Persons KEY TAKEAWAY EXERCISES
Undue Influence CASE QUESTIONS
Discussion CASE QUESTIONS
Misrepresentation by Assertions of Opinion CASE QUESTIONS
Mutual Mistake CASE QUESTIONS
The Purpose of Consideration
A Definition of Consideration KEY TAKEAWAY EXERCISES
Actual versus Legal Detriment
Adequacy of Consideration
Threat of Litigation: Covenant Not to Sue
Accord and Satisfaction Generally
Settling an Unliquidated Debt
Settling a Disputed Debt
The “In-Full-Payment” Check Situation
Unforeseen Difficulties
Creditors’ Composition
Preexisting Duty
Illusory Promises
Exclusive Dealing Agreement
Outputs Contracts and Needs Contracts KEY TAKEAWAY EXERCISES
Past Consideration
Promise Revived after Statute of Limitations Has Passed
Voidable Duties
Promissory Estoppel
Moral Obligation
Under the UCC
International Contracts KEY TAKEAWAY EXERCISES
Consideration for an Option CASE QUESTIONS
Consideration: Preexisting Obligation CASE QUESTIONS
Consideration: Required for Contract Modification CASE QUESTIONS
General Perspectives on Illegality LEARNING OBJECTIVES KEY TAKEAWAY EXERCISES
Gambling Contracts
Sunday Contracts
Licensing Statutes KEY TAKEAWAY EXERCISES
Common-Law Restraint of Trade
Sale of a Business
Employment Noncompete Agreements
Unconscionable Contracts
Exculpatory Clauses
Obstructing the Administration of Justice or Violating a Public Duty
Family Relations KEY TAKEAWAY EXERCISES
Effect of Illegality
Party Withdrawing before Performance
Party Protected by Statute
Party Not Equally at Fault
Excusable Ignorance
Partial Illegality KEY TAKEAWAY EXERCISES
Extension of Statutory Illegality Based on Public Policy CASE QUESTIONS
Unlicensed Practitioner Cannot Collect Fee CASE QUESTIONS
Unconscionability CASE QUESTIONS
Overview of the Statute of Frauds
Promises to Pay the Debt of Another
Agreements of Executor or Administrator
The Marriage Provision
Contracts Affecting an Interest in Real Estate
The One-Year Rule
Other Writing Requirements
Exceptions under the UCC
The Ten-Day-Reply Doctrine
“Specially Manufactured Goods”
The “Admission” Exception
The “Payment or Delivery and Acceptance” Exception
At Common Law
Full Performance
Detrimental Reliance
Oral Rescission
Contract Modification KEY TAKEAWAY EXERCISES
The Purpose of the Rule
Not an Integrated Contract
Void or Voidable Contracts
Contracts Subject to a Condition Precedent
Untrue Recital or Errors
Postcontract Modification
The UCC Approach KEY TAKEAWAY EXERCISES
The General Problem
The Basic Rule of Interpretation
Tools of Interpretation KEY TAKEAWAY EXERCISES
The Statute of Frauds’ Main Purpose Doctrine CASE QUESTIONS
The Statute of Frauds’ One-Year Rule CASE QUESTIONS
The Parol Evidence Rule: Postcontract Modification CASE QUESTIONS
Manifesting Assent
Acceptance and Revocation
General Rule
Material Change in Duties of the Obligor
Assignment of Personal Rights
Assignment Forbidden by Statute or Public Policy
Contracts That Prohibit Assignment
Future Contracts
Assignor’s Warranties KEY TAKEAWAY EXERCISES
Effect on Obligor
Personal Services
Public Policy
Delegations Barred by Contract KEY TAKEAWAY EXERCISES
Creditor Beneficiary
Donee Beneficiary
Modification of the Beneficiary’s Rights
Government Contracts KEY TAKEAWAY EXERCISES
Nonassignable Rights CASE QUESTIONS
Assignment Includes Delegation CASE QUESTIONS
Third party Beneficiaries and Foreseeable Damages CASE QUESTIONS
Nonperformance, Material Breach
Substantial Performance
Anticipatory Breach and Demand for Reasonable Assurances KEY TAKEAWAY EXERCISES
Conditions Classified Based on How They Are Created
Conditions Classified Based on Their Effect on Duty to Perform
Condition of Timeliness
Condition That a Party Must Be Satisfied KEY TAKEAWAY EXERCISES
Mutual Rescission
Substituted Agreement
Accord and Satisfaction KEY TAKEAWAY EXERCISES
Death or Incapacity of a Personal Services Contractor
Destruction or Deterioration of a Thing Necessary for Performance
Performance Prohibited by Government Regulation or Order
Impracticability
Common-Law Impracticability
Commercial Impracticability
Frustration of Purpose KEY TAKEAWAY EXERCISES
Cancellation, Destruction, or Surrender
Power of Avoidance
Statute of Limitations
Bankruptcy KEY TAKEAWAY
Substantial Performance; Conditions Precedent CASE QUESTIONS
Waiver of Contract Rights; Nonwaiver Provisions CASE QUESTIONS
Impossibility as a Defense CASE QUESTIONS
Purpose of Remedies
Parties Have the Power—but Not the Right—to Breach KEY TAKEAWAY EXERCISES
Promisee’s Interests Protected by Contract LEARNING OBJECTIVE KEY TAKEAWAY EXERCISE
Compensatory Damages
Incidental Damages
Consequential Damages
Nominal Damages
Liquidated Damages
Punitive Damages KEY TAKEAWAY EXERCISES
Specific Performance
Restitution
Total Nonperformance by Breaching Party
Part Performance and Then Breach
Restitution in Other Cases KEY TAKEAWAY EXERCISES
Foreseeability
Mitigation of Damages
Certaintymages
Affirmation
Rights of Third Parties
Agreement of the Parties Limiting Remedies
Tort versus Contract
Legal versus Extralegal Remedies KEY TAKEAWAY EXERCISES
Consequential Damages CASE QUESTIONS
Liquidated Damages CASE QUESTIONS
Injunctions and Negative Covenants CASE QUESTIONS
Limitation on Damages: Mitigation of Damages CASE QUESTIONS
Summary and Exercises Summary EXERCISES SELF-TEST QUESTIONS SELF-TEST ANSWERS
History of Products-Liability Law
Current State of the Law KEY TAKEAWAY EXERCISES
Express Warranties
Implied Warranties
Implied Warranty of Merchantability
Fitness for a Particular Purpose
Other Warranties
Exclusion or Modification of Warranties
Exclusion of Express Warranties
Exclusion of Implied Warranties in General
Implied Warranty of Fitness
Conflict between Express and Implied Warranties
The Magnuson-Moss Act and Phantom Warranties
Horizontal Privity
Vertical Privity
Contributory Negligence, Comparative Negligence, and Assumption of Risk KEY TAKEAWAY EXERCISES
Design Defects
Warning Defects
Common-Law Defenses against Negligence
Preemption KEY TAKEAWAY EXERCISES
Strict Liability Defined
Product in a Defective Condition
Unreasonably Dangerous
Engaged in the Business of Selling
Reaches the User without Change in Condition
Liability Despite Exercise of All Due Care
Liability without Contractual Relation
Disclaimers
Plaintiff’s Conduct
Misuse or Abuse of the Product
Limited Remedy
The Third Restatement KEY TAKEAWAY EXERCISES
The Cry for Reform
Statutes of Repose
State-of-the-Art Defense
Failure to Warn
Comparative Fault for Consumer Misuse
Criminal Penalties
Federal Reform KEY TAKEAWAY EXERCISES
Implied Warranty of Merchantability and the Requirement of a “Sale” CASE QUESTIONS
Strict Liability and Bystanders
Failure to Warn CASE QUESTIONS
Patents LEARNING OBJECTIVES
What May Be Patented
What May Not Be Patented
Tests for Patentability
Procedures for Obtaining a Patent
Patent Ownership
Infringement and Invalidity Suits
Patent Misuse KEY TAKEAWAY EXERCISES
Definition of Trade Secrets
Originality
Economic Espionage Act
Right of Employees to Use Trade Secrets KEY TAKEAWAY EXERCISES
Definition and Duration
Protected Expression
Preventing Copying
Infringement
Copyrightability Standards
Who May Obtain a Copyright?
Obtaining a Copyright
Computer Downloads and the Digital Millennium Copyright Act KEY TAKEAWAY EXERCISES
Definitions of Trademarks
Kinds of Marks
Limitations on Marks
Dilution, Tarnishment, and Blurring
Acquiring Trademark Rights
Loss of Rights KEY TAKEAWAY EXERCISES
Fair Use in Copyright CASE QUESTIONS
Trademark Infringement and Dilution CASE QUESTIONS
Public and Private Insurance
Life Insurance
Health Insurance
Disability Insurance
Homeowner’s Insurance
Automobile Insurance
Other Liability Insurance
Workers’ Compensation
Property Insurance
Malpractice Insurance
Business Interruption Insurance
Liability Insurance KEY TAKEAWAY EXERCISES
Insurable Interest in Property
Subrogation
Intentional Losses
Coinsurance Clause
Liability Insurance
No-Fault Trends
Insurable Interest
Change of Beneficiary and Assignment
Murder KEY TAKEAWAY EXERCISES
Representation
Incontestable Clause
Requirement of Insurer’s Good Faith KEY TAKEAWAY EXERCISES
Misrepresentation to Insurer CASE QUESTIONS
Why Is Agency Law Important, and What Is an Agent?
Recurring Issues in Agency Law
Recurring Issues in Agency
General Agent
Special Agent
Agency Coupled with an Interest
Independent Contractor
Agency Created by Agreement
Consideration
Formalities
Agency Created by Operation of Law
Implied Agency
Apparent Agency KEY TAKEAWAY EXERCISES
Fiduciary Duty
Duty to Avoid Self-Dealing
Duty to Preserve Confidential Information
Other Duties
Duty of Skill and Care
Duty of Good Conduct
Duty to Keep and Render Accounts
Duty to Act Only as Authorized
Duty Not to Attempt the Impossible or Impracticable
Duty to Obey
Duty to Give Information
“Shop Rights” Doctrine
Contract Duties
General Contract Duties
Employment at Will
Duty to Indemnify
Tort and Workers’ Compensation Duties
Background to Workers’ Compensation
The System in General Kansas Workers’ Compensation Benefits for Specific Injuries
Paying for Workers’ Compensation
Recurring Legal Issues KEY TAKEAWAY EXERCISES
Creation of Agency: Liability of Parent for Contracts Made by “Agent” Child CASE QUESTIONS
Employee versus Independent Contractor CASE QUESTIONS
Breach of Fiduciary Duty CASE QUESTIONS
Workers’ Compensation: What “Injuries” Are Compensable? CASE QUESTIONS
Principal’s Contract Liability Requires That Agent Had Authority

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Brewers Select Tobias Myers, Designate Vladimir Gutierrez For Assignment

By Darragh McDonald | April 17, 2024 at 12:55pm CDT

The Brewers announced that they have selected the contract of right-hander Tobias Myers . In corresponding moves, they optioned left-hander Jared Koenig to Triple-A Nashville and designated right-hander Vladimir Gutierrez for assignment.

Myers, 25, will be making his major league debut as soon as he gets into a game, though he took quite a circuitous route to get here. Drafted by the Orioles way back in 2016, he was traded to the Rays the following year as the O’s acquired Tim Beckham . Ahead of the 2021 Rule 5 deadline, he was flipped to Cleveland in exchange for Junior Caminero and then added to Cleveland’s 40-man roster. Myers was designated for assignment in July of 2022, getting traded to the Giants for cash. He was later claimed off waivers by the White Sox, though that club outrighted him off their roster towards the end of the 2022 season. He reached minor league free agency and signed a minor league deal with the Brewers prior to 2023.

Along that winding road, he saw his prospect stock rise and fall. Baseball America considered him the Rays’ #15 prospect going into 2018, which was on the heels of a strong 2017 performance wherein Myers tossed 56 minors league innings with a 3.54 earned run average, 31.9% strikeout rate and 4.4% walk rate. Were in not for a very unlucky 52.1% strand rate, his performance would have been even better, which is why his FIP was a tiny 1.81.

But his strikeout-to-walk ratios were less impressive in the two following two seasons. He had a combed 3.05 ERA over 2018 and 2019 but with a subpar 18.7% strikeout rate and average-ish 8.1% walk rate. The minors were canceled by the pandemic in 2020 but Myers bounced back somewhat in 2021. He tossed 117 2/3 innings over 25 outings, 22 starts, with a 3.90 ERA, 30.5% strikeout rate and 5.8% walk rate. It was then that he was traded to the Guards for Caminero and BA ranked him the #23 prospect in Cleveland’s system.

But in 2022, as he bounced to the Guardians, Giants and White Sox, he tossed 76 innings on the farm with a ghastly 7.82 ERA, striking out just 14.2% of opponents while giving them free passes at a 13.5% clip.

With the Brewers last year, he improved in terms of strikeouts and walks but the long ball was an issue. He threw 140 2/3 frames with a 29.3% strikeout rate and 7.7% walk rate, but the 30 home runs allowed led to a 4.93 ERA. So far this year, he’s made three Triple-A starts with a 1.84 ERA in that small sample.

Given the inconsistency, it’s hard to know what to expect from Myers at this point, but the Brewers have largely been getting decent results out of him in the past year-plus. Since he’s stretched out, he can give the club a bit of length. He has a couple of options and can provide the club with some roster flexibility well into the future if he continues to hang onto his 40-man spot.

Gutierrez, 28, was claimed off waivers by the Brewers less than two weeks ago. He was optioned to Triple-A and made two appearances on the farm before getting bumped off the 40-man roster today. Milwaukee will have one week to trade him or pass him through waivers.

He was once a highly-touted prospect himself but has a 5.47 ERA through 154 2/3 major league innings thus far, mostly with the Reds. He missed most of 2023 while recovering from Tommy John surgery and was outrighted by the Reds at season’s end. He signed a minor league deal with the Marlins this winter and was selected to the roster but was designated for assignment after one appearance, which led him to the Brewers via the aforementioned waiver claim.

He could perhaps garner interest from other clubs, either due to his previous prospect pedigree or the various injuries piling up around the league or both. The fact that Gutierrez still has a couple of options means he won’t even need an active roster spot.

As a Guardians fan, I would prefer to never see the name Tobias Myers ever again

The Guardians traded Junior Caminero for him.

Thank you for the concise summary.

Wow… He must have hurt you badly. Remember that time heals the pain.

In all seriousness I actually wish the best for him but with the benefit of hindsight that was a terrible trade lol

14.1: Assignment of Contract Rights

LEARNING OBJECTIVES

The Concept of a Contract Assignment

Method of Assignment

Acceptance and Revocation

Effect of Assignment

When Assignments Are Not Allowed

Material Change in Duties of the Obligor

Assignment of Personal Rights

Assignment Forbidden by Statute or Public Policy

Contracts That Prohibit Assignment

Future Contracts

Partial Assignments

Successive Assignments

Assignor’s Warranties

KEY TAKEAWAY

Assignments: The Basic Law

Assignment of contractual rights

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14.1 Assignment of Contract Rights

The Concept of a Contract Assignment

Method of Assignment

Acceptance and Revocation

Effect of Assignment

When Assignments Are Not Allowed

Material Change in Duties of the Obligor

Assignment of Personal Rights

Assignment Forbidden by Statute or Public Policy

Contracts That Prohibit Assignment

Future Contracts

Partial Assignments

Successive Assignments

Assignor’s Warranties

Key Takeaway

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