Assignment/Delegation

Question 1

What is assignment?

Answer 1

Assignment is when a party to a contract transfers their rights under a contract to a third party.

Question 2

Does an assignee have the right to enforce a contract?

Answer 2

It depends.

An assignee may enforce a contract if:

• they have paid consideration for the assignment
• they detrimentally relied on the assignment
• the obligor completed their performance to the assignee
• the assignee has received a symbolic document or writing signed by the assignor confirming the assignment

Question 3

What is delegation?

Answer 3

Delegation is when a party assigns their duties under a contract to a third party. I.e. the third party delegatee will perform what the delegator promised.

Question 4

How do you interpret a contract provision that bars assignment generally?

Answer 4

If a contract bars assignment generally, without specifying whether it bars the assignments or rights, duties, or both, then the contract will be read to:

• allow the assignment of rights
• bar the assignment of duties

Question 5

What happens if a party violates a non-assignment or non-delegation provision in a contract?

Answer 5

Generally, the other party is no longer bound by the contract and does not have a duty to perform.

Question 6

Are requirements contracts assignable?

Answer 6

Yes. Requirement contracts are assignable so long as parties have not contracted otherwise.

Unless stated otherwise, “assignment” in the context of requirement contracts refers to both the assignment of rights and the delegation of duties.