Some agreements, such as assignments that are subject to the statute of frauds, are only capable of being assigned via a valid writing.
: Cleo is a party to a contract with ABC Corp to provide consulting services.
Cleo verbally assigns her rights to receive payment to Austin.
If, however, the delegatee and the obligee under the contract enter into a novation, the delegator is relieved of responsibility.: How do you feel about treating assignments of rights and delegation of duties under contracts differently?
Which of the assignment priority rules do you believe is most fair to the parties? Should a party be able to modify a contract after assigning her benefits?
Still other jurisdictions follow the rule that the first assignee has priority, unless: Purchaser in Good Faith for Value – If an assignee pays value for the assignment in good faith without notice of a prior assignment (and the prior assignee did not receive the assignment in good faith and for value), she has priority over prior assignments.
Court Action – If an assignee receives a judgment against the obligor.If a court adjudicates the matter, the assignee winning at court may be vested with the authority to establish priority in performance of assigned rights.Novations – If the assignee executes a novation, the novation establishes priority.Delegation of duties pursuant to contract is more limited.The following contracts are not capable of delegation: Material Changes of Responsibility – A contract that materially alters the obligor’s duties under the agreement is not transferable.A novation is a new contract between individuals that replaces a party to the contract or obligations or rights under the agreement.Written Assignment – If a later assignee receives a written assignment capable of transfer that is not in writing, she will have rights superior to those of an earlier assignee.If, however, a modification does not affect the assignee’s rights, it may be modified.Continued Delegator Responsibilities – The party delegating the contract is still potentially liable under the contract if the delegatee fails to perform.Modification after Assignment – Generally, a contract cannot be modified after assignment.As previously discussed, once a contract has vested, the parties generally cannot modify the contract in a way that impairs the assignee’s rights.