Assignment Contract Law

Assignment Contract Law-25
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.” 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 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.” 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").

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Assignments won’t stand up in court if the assignment significantly changes the terms of the contract.

For example, if Karrie’s business is tree trimming, not lawn mowing, the contract can’t be assigned to her.

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.

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.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.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, .Of course, an obligor who receives notice of the assignment from the assignee will want to be sure the assignment has really occurred.The contract includes an assignment clause, so when Ken goes out of business, he assigns the contract to his sister-in-law Karrie, who also owns a lawn mowing service.Rights and obligations of specific people can’t be assigned because special skills and abilities can’t be transferred. For example, Billy Joel can’t transfer (assign) a contract to perform at Madison Square Garden to anyone else.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 0 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, 0 and deduct that 0 from the amount owed Dealer on the next installment (called a setoff).

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