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Question 1

A contract right cannot be assigned when it will materially what?

Answer 1

Increase the burden or risk of the obligor. Ie: if you give a loan to someone with a great job, and then he assigns it to a bum, that materially increases your chances of not being repaid, so the assignment is not effective.

Question 2

What are two situations when an assignment would not be effective?

Answer 2

• insurance policies

- extending credit

Question 3

Why is an assignment not effective for an insurance policy?

Answer 3

Because those contracts are done according to the risk of the insurance company relating to the person insured. So the risk of insuring different people is different.

Question 4

The right to be insured is not assignable, but what is assignable in an insurance contract?

Answer 4

The right to benefits of the insurance contract (payment if someone dies or property is destroyed). Reasoning: it doesn’t materially increase in the insurer’s burden or risk

Question 5

Why can’t personal credit be assigned?

Answer 5

Because that could materially increase the obligor’s risk since some people are a bigger credit risk than others. For the same reason mortgages can’t be assigned

Question 6

Is it possible to just have a partial assignment?

Answer 6

Yes, rights can be transferred or divided among several people, or only some rights can be assigned.

Question 7

How can an assignment be revoked?

Answer 7

• assignor tells assignee of revocation
• assignor later assigns the same right to someone else
• assignor dies
• assignor goes bankrupt
• assignor receives the obligor’s performance

Question 8

How can an assignor lose the power to revoke?

Answer 8

When he delivers a token chose to the assignee as evidence of the assignment

Question 9

What is a token chose?

Answer 9

Physical symbol of an intangible right, like a certificate

Question 10

If someone revokes an assignment after losing the right to revoke, what happens?

Answer 10

The revocation is still valid, but the revokor breaches and is subject to liability

Question 11

If an assignor subsequently assigns the same right to someone else, that creates a revocation, but what other problems are involved?

Answer 11

The assignor must pay for his wrongful act, but then there is a question of which assignee has priority

Question 12

What are the four views on priority for assignees?

Answer 12

• English view: LAST assignee wins
• New York rule: FIRST assignee wins. The second only wins if the first was avoidable/uncompleted gift/estoppel was present/a statute says so
• Four Horsemen rule: restatement says FIRST wins UNLESS second is BFP and takes all steps proper
• UCC: filing system of notice in a public record office so the FIRST THAT FILES prevails
• *** regardless of which one is followed, an assignee that gets payment has a stronger equity and therefore prevails

Question 13

When can an assignor not revoke?

Answer 13

• if the assignment is supported by consideration
• if the assignment is in writing and delivered to the assignee
• if it was a gratuitous assignment
• if it was an oral assignment that materially changed the assignor’s position

Question 14

When does a gratuitous assignment become irrevocable?

Answer 14

• on delivery of the gift (when possession is taken)
  OR
• on delivery of a tangible token, reasonable reliance, payment or performance from the obligor, novation

Question 15

If there is a second or later assignment of the same right, who has priority?

Answer 15

If the assignment is:

• irrevocable: the party that was FIRST has priority and the next one gets nothing
• revocable: the party that was LAST has priority because it revoked the previous assignment