When Is a Contract Assignment Agreement Binding?

A contract assignment agreement is used to transfer the rights and responsibilities of an existing party, known as the Assignor, to another party, known as the Assignee. The Assignee takes over the role of the assignor.

For example, Tom is developing a website for Deborah, but Tom becomes overwhelmed with other projects. Tom can assign the development of the site to Mark, given that Mark can create a website that is reasonably equivalent to the website that Tom would have built.

When Is a Contract Assignment Agreement Binding?

Under common law, acontract assignment agreement is legally assignable by default. However, the assignment can be waived under certain circumstances. The original may require that consent be obtained from the Obligor. The Obligor is the party who is obligated to transfer an asset when the duties of the contract have been fulfilled by the Assignor or the Assignee. Even if the original contract does not require explicit consent for assignment, the Assignor should, at a minimum, inform the Obligor of the intent to assign the contract.

When Is Assignment Non-Binding?

As mentioned above, there are circumstances in which assignment may be non-binding. Commonly, a contract will include an assignment of rights and duties provision that prohibits assignments. If the original contract prohibits assignment, then the Assignor is still responsible for fulfilling the duties of the contract. Additionally, a contract cannot be assigned if the assignment would materially alter the contractual performance. The assignee must be able to reasonably perform the duties of the original contract. For example, if the contract states that Joe, a mechanic with 20 years of experience, will fix Sally’s car, assigning this task to a doctor will materially alter the result.

If you have determined that the original contract assignment agreement does not prohibit assignment, then you can complete this Contract Assignment Agreement template to transfer your rights and responsibilities to an Assignee.