assignment meaning legal terms

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ASSIGNMENT Definition & Legal Meaning

Definition & citations:.

In contracts. 1. The act by which one person transfers to another, or causes to vest in that other, the whole of the right, interest, or property which he has in any realty or personalty, in possession or in action, or any share, interest, or subsidiary estate therein. Seventh Nat. Bank v. Iron Co. (C. C.) 35 Fed. 440; Haug v. Riley, 101 Ga. 372, 29 S. E. 44, 40 L It A. 244. More particularly, a written transfer of property, as distinguished from a transfer by mere delivery. 2. In a narrower sense, the transfer or making over of the estate, right, or title which one has in lands and tenements; and, in an especially technical sense, the transfer of the unexpired residue of a term or estate for life or years. Assignment does not include testamentary transfers. The idea of an assignment is essentially that of a transfer by one existing party to another existing party of some species of property or valuable interest, except in the case of an executor. Ilight v. Sackett, 34 N. Y. 447. 3. A transfer or making over by a debtor of all his property and effects to one or more assignees in trust for the benefit of his creditors. 2 Story, Eq. Jur.

This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

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Assignment is a legal definition that refers to the transfer of rights, property, or other benefits between two parties. The party allocating the rights is known as the “assignor”, while the one receiving them is called the “assignee”. The other original party to the contract is known as the “ obligor ”.

A burden, duty, or detriment cannot be transferred as an assignment without the agreement of the assignee . Furthermore, the assignment can be carried out as a gift, or it may be paid for with a contractual consideration .

Keep reading to learn how this important legal term is used both in contract and property law and to see relevant examples.

• Assignment Examples

A common example of assignment within property law can be seen in rental agreements between landlords and tenants. For example, a tenant may be renting from a landlord but wants another party to take over the property . In this scenario, the tenant may be able to choose between assigning the lease to a new tenant or subleasing it.

If assigning it, the new tenant will be given the entire balance of the term, with no reversion to anyone else being possible. In other words, the new tenant would have a legal relationship with the landlord. On the other hand, if subleasing the property, the new tenant would be given a limited term and no legal responsibility towards the property owner, only towards the original tenant.

Another example of assignment can be seen within contract law . Let’s say that a school hires a piano teacher for a monthly employment contract with a salary of $2000 per month. As long as there is consent from all parties, the teacher could assign their contract to another qualified piano instructor.

This would be an assignment both of the piano teacher’s rights to receive $2000 per month, and a delegation of their duty to teach piano lessons. This illustrates the fact that under contract law, assignment always includes a transfer of both rights and duties between the parties. If a breach of contract is made by either party, for example for defective performance, then the new teacher or the school can sue each other accordingly.

• Legal Requirements for Assignment

For an assignment to be legally valid, it must meet certain requirements . If these are not met, a trial court can determine that the transfer of rights did not occur. The legal requirements for assignment are as follows:

• All parties must consent and be legally capable to carry out the assignment.
• The objects, rights, or benefits being transferred must be legal.
• The assignment is not against public policy or illegal.
• Some type of consideration is included if necessary.
• The contract in question must already be in place and doesn’t prohibit assignment.
• If a duty is being transferred, and it requires a rare genius or skill, then it cannot be delegated.
• The assignment doesn’t significantly change the expected outcome of a contract.
• Assignment Steps

To successfully assign a contract, certain steps must be followed to ensure the process is legally valid. The necessary assignment steps are listed below:

• Ensuring there is no anti-assignment clause in the contract.
• Executing the assignment by transferring the obligations and rights to a third party.
• Notifying the obligor of the transfer, which in turn relieves the assignor of any liability.
• Avoiding Assignment

In certain situations, one of the two parties may not want to allow their counterpart to assign the contract. This can be prevented by setting anti-assignment clauses in the original contract. An example of this is making it necessary for prior written consent to be attained from the other parties before the assignment is approved. Nevertheless, an anti-assignment clause cannot be included in an assignment that was issued or ordered by a court.

• Assignment vs. Novation

Novation occurs when a party would like to transfer both the benefits and burden of a contract to another party. This is similar to assignment in the sense that the benefits are transferred, but in this case, the burden is also passed on. When novation is finalized, the original contract is deleted and a new one is created, in which a third party becomes responsible for all the obligations and rights of the original contract.

• Assignment vs. Delegation

Although delegation and assignment are similar in purpose, they are two different concepts. Delegation refers to transferring the obligation to a third party without an assignment contract . While in assignment an entire contract and its rights and benefits can be passed on, in delegation only a particular contractual task or activity is transferred.

Let’s look at an example . Lisa is a homeowner that wants to hire Michael with an independent contractor agreement to remodel her garage. He plans to do all the work himself, but he’s not a painter, so he wants to delegate the painting work to his friend Valentina.

In this example, the contract is between Lisa, the obligor, and Michael, the delegator. Valentina would then be known as a delegatee, she doesn’t assume responsibility for the contract nor does she receive the contractual benefits, which in this case would be monetary compensation. However, Michael may have a separate agreement with Valentina to pay her in return for her work.

It’s also important to note that some duties are so specific in nature that it’s not possible to delegate them. In addition, if a party wants to avoid delegation , it’s recommended to add a clause to prevent the other party from delegating their duties.

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Assignment: Legal Concept Explained

Readers will likely agree that understanding legal concepts can be challenging.

This article promises to clearly explain the concept of assignment in legal contexts to help demystify this complex topic.

You'll learn the definition of assignment, its importance in areas like real estate, contract stipulations around assigning rights/obligations, and practical considerations when crafting assignment agreements.

Introduction to Assignment: Legal Concept Explained

Assignment is a legal concept that allows the transfer of rights or property from one party (the assignor) to another (the assignee). This article will provide an overview of assignment, defining key terminology and outlining the goals of explaining this concept.

Assignment Definition and Scope

Assignment refers to the transfer of rights, interests, or property from one party (the assignor) to another (the assignee). In contract law, it enables a contractual party to transfer the benefits and burdens of a contract to a third party. It also allows the transfer of property interests, like in real estate transactions.

Key elements of an assignment include:

• The assignor transfers their rights or property to the assignee
• The assignee acquires those rights and becomes the new holder
• Requires the consent of all original parties to the contract
• Rights transfer "as-is" from assignor to assignee

Assignment provisions are common in contracts to provide flexibility in the event of corporate restructures, mergers and acquisitions.

Understanding the Roles: Assignor, Assignee, and Obligor

There are three key roles in an assignment:

Assignor : The party who transfers the rights or property to another party. This could be an individual or a legal entity.

Assignee : The party who receives the rights or property from the assignor. They take on all transferred rights and obligations.

Obligor : The party who has the duty to perform the obligation that is being assigned. For example, in a contract assignment, the obligor is the counterparty.

So in a contract assignment scenario, the assignor transfers rights to the assignee, while the obligor must continue performing duties under the contract, but now to the assignee instead of the original counterparty.

The Importance of Assignment in Real Estate

Assignment is a critical concept in real estate transactions. It allows property interests to be transferred from a seller to a buyer.

Common real estate assignment scenarios include:

• Transferring rights under a purchase contract to a new buyer
• Assigning the interest in a mortgage note to another lender
• Transferring a lease agreement to another tenant

Overall, assignment facilitates the exchange of real property between parties. It provides flexibility to transfer interests as circumstances change. Understanding assignment is key for real estate professionals and property owners alike.

What is the concept of assignment?

An assignment is the transfer of rights or property from one party (the assignor) to another (the assignee). In legal terms, it is the transfer of contractual rights, property interests, or legal claims from one person to another.

Some key things to know about assignments:

An assignment transfers rights or property from one party to another. For example, a tenant's rights under a lease could be assigned from the current tenant to a new tenant.

Assignments are often used to transfer interests in contracts, intellectual property rights, securities, and real estate.

For an assignment to be valid, there must be a valid contract in place and the assignment must have consideration (something of value exchanged).

The assignor transfers the entirety of their rights or interests to the assignee. The assignee legally "stands in the shoes" of the assignor.

In real estate, an assignment of a lease transfers the lessee's entire interests to a new tenant for the remainder of the lease term.

For personal service contracts, duties cannot be assigned without the consent of the contracting parties. But rights under the contract can still be assigned.

So in summary, an assignment enables contractual rights, property interests, or legal claims to be transferred from one party to another through a contractual agreement and an exchange of consideration. The assignee then gains all rights that were held by the assignor.

What does assigns mean in legal terms?

The term "assigns" in legal contracts refers to the transfer of rights or property from one party (the assignor) to another party (the assignee).

An assignment is the act of legally transferring an existing right, benefit, or property interest from the assignor to the assignee. Common things that can be assigned include:

• Rights under a contract
• Ownership of property
• Rights to collect money owed
• Rights to take legal action

For example, Company A signs a contract with Company B. The contract states that "Company A and its assigns have the exclusive right to distribute Company B's products in the United States." This means Company A can legally transfer (assign) its distribution rights under the contract to another company, which would then become the assignee.

The words "and its assigns" are important in this example. They specify that the rights being granted under the contract can be transferred to another party in the future. Without this language, Company A would typically not be able to assign its contractual rights to a third party.

The assignee acquires all the rights, benefits, and property interests that were initially held by the assignor. The assignment puts the assignee in privity of contract with the obligor (the party who has the duty to perform under the contract). This means the assignee can enforce the contract directly against the obligor.

In property law, an assignment occurs when ownership of real estate or personal property is transferred from one party to another through a legal document like a bill of sale or quitclaim deed. The assignee becomes the new legal owner after the assignment.

So in legal terminology, an "assignment" refers to the transfer of contractual rights or property interests from an assignor to an assignee. The words "assigns" indicates such a transfer is permitted.

What is the meaning of assignment in court?

An assignment is a legal mechanism that transfers rights or property from one party (the assignor) to another party (the assignee). In a court context, an assignment most commonly refers to the transfer of legal claims or contractual rights.

Some key things to know about assignments in the legal system:

An assignment transfers legal ownership of a claim or right from the assignor to the assignee. This allows the assignee to step into the shoes of the assignor and assert the legal claim or enforce the contractual right.

For an assignment to be valid, the assignor must intend to transfer present ownership of the claim or right to the assignee. Also, the assignee must give consideration (something of value) in return for the assignment.

In litigation, the assignee becomes the real party in interest for a claim. This means the assignee has the legal right to bring a lawsuit based on that claim.

Assignments are commonly used in the context of contracts, judgments, mortgages, leases, insurance claims, and intellectual property rights.

Certain claims and rights cannot be legally assigned, such as personal injury claims or rights tied intrinsically to a person.

In summary, an assignment in the court system refers to the transfer of legal claims or contractual rights to another party. When valid, it gives the assignee standing to assert those claims or enforce those rights. Understanding assignments is important for plaintiffs, defendants, and counsel in civil litigation.

What is meant by assignment in company law?

Assignment in company law refers to the transfer of rights, obligations, interests, or property from one party to another. Some key things to know about assignment in the context of company law include:

The Ability to Assign Contracts

Many commercial contracts include assignment clauses allowing a party to assign or transfer the contract to a third party. For example, a tenant may assign their lease to another company, transferring the rights and obligations under the lease agreement.

Transferring Shares

Shareholders can assign or transfer their shares in a company to other parties. This transfers the ownership rights attached to those shares. There may be restrictions or conditions around assigning shares stipulated in a company's articles of association.

Assignment of Patents or IP

A company may assign ownership of a patent, trademark, or other intellectual property to another party. This transfers the proprietary rights to commercially exploit that IP. Assignments of IP must be formally registered.

This involves the substitution of a new contract for an existing one. The new contract extinguishes the rights and duties of the old one. All parties must agree to the novation.

So in summary, assignment allows the transfer of contractual rights, shares, IP, and other interests from one party to another through formal legal mechanisms. There are specific laws and procedures governing assignments in the context of company law.

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Fundamentals of assignment in contract law, contractual assignments: rights and obligations.

The assignment of contractual rights refers to the transfer of rights, interests, and obligations from one party (the assignor) to another (the assignee). This allows the original party to the contract to essentially "assign" their role and associated rights and duties to another entity.

Some key points regarding contractual assignments:

Assignments can transfer all or just a portion of rights and obligations under a contract. For example, Party A may assign their right to receive payments under a supply agreement to Party B, but retain all other rights and duties.

Assignments require consideration to be valid. Usually the assignee provides payment or some other benefit to the assignor in exchange for the assigned rights or interests.

Unless stated otherwise, assignments do not release the assignor of their obligations. So if Party B defaults, the counterparty can still seek recourse from Party A.

Certain rights can not be assigned without permission, such as personal service contracts.

To execute an assignment, it is common to use an Assignment of Contract template or Agreement. This formally documents the transfer of rights between parties.

Interpreting 'Successors and Assigns' Meaning

The phrases "successors and assigns" and "successors and permitted assigns" are common in contractual agreements. These refer to:

Successors - Any entity that succeeds the original party due to events like mergers, acquisitions, reorganizations, etc.

Assigns - Any party that receives an assignment of rights/obligations from the original party.

Including this language states that the terms of the contract will continue to be binding on any successor or assign entities. This provides continuity of obligations even when parties change due to corporate events.

Contract Law Essentials: Offer, Acceptance, and Consideration

For an assignment to be legally valid, the fundamental elements of contract law must be met:

Offer and Acceptance - There must be an offer to assign rights/obligations and an acceptance of that offer on stated terms. This constitutes a "meeting of the minds".

Consideration - The assignee must provide consideration (payment or other benefit) to the assignor in exchange for the assignment. Past consideration is not sufficient.

If these essential components are not satisfied, the assignment can be challenged as invalid or void.

Privity of Contract and Third-Party Beneficiary Rights

Assignments create a concept called "privity of contract". This means the assignee gains enforceable rights under the contract despite not being an original party. However, the assignee's rights are subject to any defenses that could have been raised against the assignor.

Sometimes a third-party beneficiary has rights under an agreement they are not directly party to. However, their rights may be subject to more limitations compared to an assignee in privity.

Assignment Restrictions and Limitations

Assignments of contracts or property rights are not always valid or enforceable. There are several legal restrictions and limitations to be aware of:

Navigating Non-Assignment Clauses

Parties to a contract may include a non-assignment clause that prohibits or limits the ability to assign rights or obligations to third parties. These clauses are generally enforceable, with some exceptions. If an assignment occurs despite a non-assignment clause, the assignment may be considered invalid or breach the contract.

There are a few ways around a non-assignment clause, such as obtaining consent from the non-assigning party, arguing the clause is unreasonable or against public policy, or showing the contract has provisions that imply assignability. But these arguments don't always succeed, so non-assignment clauses should be taken seriously.

Legal Barriers: Illegality, Public Policy, and Unconscionability

Attempted assignments may fail if they involve illegal activities, violate public policy, or are deemed unconscionable by a court.

For example, assignments related to gambling debts, drug trafficking, and other illegal activities will not be enforced. And courts can refuse assignments that unfairly waive legal rights or place unreasonable burdens on one party.

Implications of Force Majeure and Frustration of Purpose

If extraordinary events beyond the parties' control occur, such as natural disasters, it may frustrate the purpose of the contract or trigger force majeure clauses. This can invalidate pending assignments or terminate the rights and duties under the contract.

So parties should be aware that assignments shortly before or during major unforeseen disruptions may not be enforceable. Carefully assessing the timing is prudent.

The Role of Equitable Interest in Assignments

Courts recognize equitable interests in addition to legal property rights. This allows more flexibility for assignments to succeed in equity, even if barred at common law.

Equitable doctrines like promissory estoppel can also create enforceable rights supporting assignments. So equitable arguments open additional avenues for validating assignments when other legal restrictions might block them.

In summary, assignments have limits under contract law, property law, public policy, and equity. But creatively navigating non-assignment clauses, equitable interest, and other barriers can sometimes permit assignments to succeed despite restrictions. Legal counsel helps fully assess options.

Practical Aspects of Assignment Agreements

Crafting an effective assignment of contract template.

When creating an assignment of contract template, it is important to clearly identify the parties and the rights and obligations being transferred. The template should include:

The full legal names of the assignor (the party transferring the rights), assignee (the party receiving the rights), and any other parties to the original agreement.

A description of the original contract or agreement being assigned. This includes the date, names of the original parties, and subject matter.

An effective date for the assignment.

The rights, interests, duties, and obligations under the original agreement that are being assigned from the assignor to the assignee. These should be clearly delineated.

Any rights or obligations that are not being assigned and will remain with the assignor.

The consideration (payment) provided in exchange for the assignment.

Signatures of assignor and assignee, dated on the effective date.

Having an effective template ensures all key information is captured to legally transfer the contractual rights and obligations.

Due Diligence in Assignment Transactions

Conducting due diligence is critical when acquiring rights through an assignment transaction. Key items to verify through due diligence include:

Title Search : Confirm the assignor validly holds the rights being transferred and there are no other claims, liens or encumbrances attached to those rights.

Contract Review : Carefully review the original contract to ensure the rights are assignable and fully understand any restrictions or obligations being taken on.

Credit Checks : Assess the financial condition and credibility of the assignor.

Regulatory Compliance : Confirm all legal and regulatory requirements related to the transfer are fulfilled.

While due diligence takes time upfront, it prevents costly problems down the road in an assignment transaction.

Assignment and Novation: Distinguishing the Differences

There are key differences between an assignment and a novation:

In an assignment , the assignor transfers rights and obligations to the assignee, but the assignor may retain residual rights and remains liable to the counterparty for performance of any ongoing obligations.

In a novation , the original party's rights and obligations are completely extinguished and the new party takes their place. All three parties must consent.

An assignment only requires consent of the assignor and assignee. A novation requires consent of all three parties.

A novation completely replaces a party to the contract with the new party. An assignment transfers rights to a new party but the original party may remain involved.

Understanding these differences is essential when transferring contractual rights.

Managing Assignments of Mortgage Notes and Equitable Interests

For an assignment of a mortgage note or equitable interest to be legally valid, certain key steps should be taken:

The assignment agreement must be in writing and include a description of the rights being transferred.

The assignee should take physical possession of the mortgage note or other documents conferring the equitable interest.

Proper notice should be provided to the obligor and any other affected parties.

The assignment should be duly recorded according to state laws to protect the assignee's interests.

Any necessary consents of other parties must be obtained.

Properly executing these formalities helps ensure the assignee can enforce its newly acquired rights.

Assignment in the Context of Real Property

Assignment can play an important role in real property transactions. When property interests are assigned from one party to another, it essentially transfers the rights, title, and obligations attached to that property.

Conveyancing Real Property through Assignment

The conveyance of real property interests through an assignment involves legally transferring ownership and title from the assignor to the assignee. This is typically done through a deed or other legal document that assigns and conveys the property rights. The deed serves as evidence of the assignment.

It's important that the assignment follow proper legal protocols to ensure clean title transfer. The assignor must have clear title to convey. And the assignment deed must be legally executed and recorded for the assignee to establish claim on the title.

Overall, assignment allows real property interests to change hands smoothly through conveyancing. When done properly, it provides continuity in property ownership.

Assignment and Leasing: Commercial and Residential Considerations

Assignment has implications in both commercial and residential leasing situations.

For commercial leases, assignment rights allow tenants to transfer their remaining lease obligations to another party. This provides flexibility to exit a lease early if business needs change. Landlords often restrict rights of assignment in commercial leases to control turnover.

In residential leasing, assignment occurs when a tenant transfers rental responsibility to another tenant. Landlords may prohibit assignment without consent to prevent disruption. Requirements around security deposits and maintenance of the unit can also complicate assignment.

Impact of Assignment on Security Deposits and Tenant Rights

When a lease is assigned, obligations around the security deposit must also transfer to the new tenant. Generally, the new tenant is entitled to the original security deposit, minus any amounts legally withheld by the landlord.

In some cases, landlords attempt to make new tenants pay an additional deposit. But legally, tenants are protected from having to "double deposit". Rights regarding fair housing, repairs, and other tenant protections also carry over to the assignee.

Assignment Clauses in Real Estate Contracts

Real estate purchase and sale contracts contain assignment clauses that dictate rights around transferring interest in the property to another party.

Standard assignment clauses allow buyers to assign the contract freely. Restrictive clauses only allow assignment with seller's prior written consent. Prohibitive clauses forbid assignment entirely.

Courts typically uphold restrictive/prohibitive assignment clauses. But "silent" contracts without an assignment clause generally allow free assignment rights.

Conclusion: Mastering the Assignment Legal Concept

The concept of assignment is an important one in contract and property law. It refers to the transfer of rights or property from one party to another. Key points about assignment include:

An assignment involves the transfer of contractual rights and obligations from one party (the assignor) to another (the assignee). It requires the consent of all original parties to the contract.

Assignments are often used to transfer interests in real property. This may involve transferring ownership rights via a deed, transferring a lease agreement, or transferring the right to collect mortgage payments.

There are some limits on what can be assigned. Personal service contracts generally cannot be assigned, for example. Some contracts also contain non-assignment clauses. Rights can only be assigned if they actually exist at the time of the assignment.

For an assignment to be valid, there must be a clear intention to assign, proper documentation of the assignment, delivery of the assignment documentation, and acceptance by the assignee. Valuable consideration is also typically required.

By properly understanding the legal requirements and processes for assignments, parties can effectively transfer contractual rights and property interests. Seeking legal advice is prudent to ensure assignments are valid and enforceable.

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Assignment of Contract

Jump to section, what is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

Nicholas M.

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

• Direct mailers
• Place newspaper ads
• Make posts in online forums
• Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

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Article III, Section 2, Clause 1:

The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;—to all Cases affecting Ambassadors, other public Ministers and Consuls;—to all Cases of admiralty and maritime Jurisdiction; to Controversies to which the United States shall be a Party;—to Controversies between two or more States; between a State and Citizens of another State, between Citizens of different States,—between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.

An assignment of a legal claim occurs when one party (the “assignor” ) transfers its rights in a cause of action to another party (the “assignee” ). 1 Footnote Black’s Law Dictionary 136 (9th ed. 2009) (defining “assignment” as “the transfer of rights or property” ). The Supreme Court has held that a private litigant may have standing to sue to redress an injury to another party when the injured party has assigned at least a portion of its claim for damages from that injury to the litigant. The Supreme Court in the 2000 case Vermont Agency of Natural Resources v. United States ex rel. Stevens held that private individuals may have Article III standing to bring a qui tam civil action in federal court under the federal False Claims Act (FCA) on behalf of the federal government if authorized to do so. 2 Footnote 529 U.S. 765, 768, 778 (2000) . The FCA imposes civil liability upon “any person” who, among other things, knowingly presents to the federal government a false or fraudulent claim for payment. 3 Footnote 31 U.S.C. § 3729(a) . To encourage citizens to enforce the Act, in certain circumstances, a private individual, known as a “relator,” may bring a civil action for violations of the Act. Such plaintiffs sue under the name of the United States and may receive a share of any recovered proceeds from the action. 4 Footnote Id. § 3730(d)(1)–(2) . Under the FCA, the relator is not merely the agent of the United States but an individual with an interest in the lawsuit itself. 5 Footnote Vt. Agency of Nat. Res. , 529 U.S. at 772 ( “For the portion of the recovery retained by the relator . . . some explanation of standing other than agency for the Government must be identified.” ) (citing 31 U.S.C. § 3730 ).

Ordinarily, if the relator’s financial interest in the outcome of the case were merely a byproduct of the suit itself, there would be no injury sufficient for standing. 6 Footnote Id. at 772–73 ( “An interest unrelated to injury in fact is insufficient to give a plaintiff standing. . . . A qui tam relator has suffered no [invasion of a legally protected right]—indeed, the ‘right’ he seeks to vindicate does not even fully materialize until the litigation is completed and the relator prevails.” ) (citations omitted). The Supreme Court has held that a litigant’s interest in recovering attorneys’ fees or the costs of bringing suit by itself normally does not confer standing to sue. E.g. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 107 (1998) ( “The litigation must give the plaintiff some other benefit besides reimbursement of costs that are a byproduct of the litigation itself.” ); Diamond v. Charles, 476 U.S. 54, 70–71 (1986) ( “[T]he mere fact that continued adjudication would provide a remedy for an injury that is only a byproduct of the suit itself does not mean that the injury is cognizable under Art. III.” ). In Stevens , however, the Supreme Court recognized a distinction that confers standing upon qui tam plaintiffs in FCA cases. Justice Antonin Scalia, writing for the Court, determined that assignments of claims are distinguishable from cases in which a litigant has a mere financial interest in the outcome of the suit because the assignee-plaintiff actually owns a stake in the dispute as a legal matter. 7 Footnote Vt. Agency of Nat. Res. , 529 U.S. at 773 . Justice Scalia drew support for this distinction from the long-standing historical practice of the government assigning a portion of its damages claim to a private party and allowing that party to assert the injury suffered by the federal government as a representative of the United States. 8 Footnote Id. at 774, 778 The Court noted the “long tradition of qui tam actions in England and the American colonies,” 9 Footnote Id. concluding that “Article III’s restriction of the judicial power to ‘Cases’ and ‘Controversies’ is properly understood to mean ‘cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process.’” 10 Footnote Id. Although the Court held that the relator had standing to sue under the qui tam provision, it ultimately determined that the plaintiff could not maintain the action against a state agency for allegedly submitting false grant claims to the EPA because states were not “persons” subject to liability under the False Claims Act. Id. at 787 .

Eight years after deciding Stevens , the Supreme Court again found that an assignee of a claim had standing, even when the assignee had promised to remit all of the money it recovered in the proceedings to the assignor. 11 Footnote Sprint Commc’ns Co. v. APCC Servs., Inc. , 554 U.S. 269 , 271 (2008) . In Sprint Communications Co. v. APCC Services, Inc. , payphone operators had assigned their legal claims for money owed to them by long-distance communications carriers to third-party collection agencies. 12 Footnote Id. at 271–72 . The agencies were authorized to bring suit on behalf of the payphone operators and promised to pay all of the proceeds of the litigation to the payphone operators for a fee. 13 Footnote Id. at 272 . The Court held that these collection agencies had standing to pursue the operators’ claims because of the long history of courts’ acceptance of such claims. 14 Footnote Id. at 273–75 . The Court noted that “federal courts routinely entertain suits which will result in relief for parties that are not themselves directly bringing suit. Trustees bring suits to benefit their trusts; guardians ad litem bring suits to benefit their wards; receivers bring suit to benefit their receiverships; assignees in bankruptcy bring suit to benefit bankrupt estates; executors bring suit to benefit testator estates; and so forth.” Id. at 287–88 . Assignment was sufficient to transfer the injury to the collections agencies, and the injury to the operators that had been transferred to the collection agencies would be redressed by a favorable judicial decision, even if the agencies would subsequently pay all of the proceeds to the operators. 15 Footnote Id. at 286–87 ( “[I]f the [collection agencies] prevail in this litigation, the long-distance carriers would write a check to [them] for the amount of dial-around compensation owed. What does it matter what the [agencies] do with the money afterward?” ).

The Stevens and Sprint cases could have broader implications for Article III standing doctrine, as they suggest a way in which the constitutional limitations on standing may be bypassed through the assignment of rights to a third party. 16 Footnote See also ArtIII.S2.C1.6.4.3 Particularized Injury. For instance, if Congress enacts a federal statute recognizing an injury to the federal government that otherwise satisfies Article III’s requirements, it may assign a portion of its claim to a private party, thereby potentially giving that plaintiff standing to sue as a representative of the United States. 17 Footnote See Vt. Agency of Nat. Res. , 529 U.S. at 773 . This is essentially the operation of the False Claims Act. 18 Footnote 31 U.S.C. §§ 3729–3733 . However, it is unclear whether every such statute would necessarily resolve all Article III standing concerns. In Stevens and Sprint , the Court gave significant weight to the lengthy history of courts recognizing the types of assignments at issue when determining that the litigants in those cases had standing to sue. 19 Footnote See id. at 774, 778 ; Sprint Commc’ns Co. , 554 U.S. at 273–75 . Moreover, there may be a number of concerns about the constitutionality and practicality of using assignments to delegate core government functions (e.g., criminal prosecutions) to private parties when courts have not historically recognized claims based on such assignments, including concerns about interference with the Executive Branch’s Article II powers and prosecutorial discretion. 20 Footnote See Heather Elliott , Congress’s Inability to Solve Standing Problems , 91 B.U. L. Rev. 159 , 195–204 (2011) (questioning whether Congress’s assignment of claims to citizen suitors in order to confer standing would be constitutional or practical).

Assignment Law: Everything You Need to Know

In legal terms, the meaning of an assignment is a contractual obligation to transfer a property title or right from one party to another. 3 min read updated on February 01, 2023

The term assignment law is used in the law of real estate and in the law of contracts. In both instances, it relates to the transfer of rights held by one party (the assignor) to another party (the assignee).

Assignment Law

In legal terms, the meaning of an assignment is a contractual obligation to transfer a property title or right from one party to another. Generally, the assignment is transferred based on an entire interest in the property, chattel, estate, or other item assigned.

A grant is different from an assignment in that an assignment refers to the right to transfer the property. This is considered an intangible right. On the other hand, the grant is concerned about the physical transfer of property. This is a tangible right. For example, a payee can assign their rights to collect a note payment to a bank. 

The terms of the contract must be analyzed to determine if the right of assignment is prohibited. For example, a property owner may allow a lease to be assigned, ordinarily along with an assumption agreement, where the new tenant is now responsible for the payments and duties of the lease.

The holder of a trademark may transfer it, either by giving or selling their interest in the trademark to another party. This is referred to as an assignment. The party that receives the benefit is called the assignee. Once transferred, the assignee has the ability to exclude others from using their trademark.

In order for the assignment to be enforceable, it must be in writing and have the goodwill of the company attached to the mark. For an assignment to be effective, it must contain the fundamental aspects of a contract, such as:

• Parties with legal capacity
• Legality of object
• Consideration consent

A contract assignment occurs when a party assigns their contractual rights to a third party. The benefit the issuing party would have received from the contract is now assigned to the third party. The party appointing their rights is referred to as the assignor, while the party obtaining the rights is the assignee. Essentially, the assignor prefers that the assignee reverses roles and assumes the contractual rights and obligations as stated in the contract. Before this can occur, all parties to the original contract must be notified.

How Assignments Work

The specific language used in the contract will determine how the assignment plays out. For example , one contract may prohibit assignment, while another contract may require that all parties involved agree to it before proceeding. Remember, an assignment of contract does not necessarily alleviate an assignor from all liability. Many contracts include an assurance clause guaranteeing performance. In other words, the initial parties to the contract guarantee the assignee will achieve the desired goal.

When Assignments Will Not Be Enforced

The following situations indicate when an assignment of a contract is not enforced:

• The contract specifically prohibits assignment
• The assignment drastically changes the expected outcome
• The assignment is against public policy or illegal

Delegation vs. Assignment

Occasionally, one party in a contract will desire to pass on or delegate their responsibility to a third party without creating an assignment contract. Some duties are so specific in nature that they cannot be delegated. Adding a clause in the contract to prevent a party from delegating their responsibilities and duties is highly recommended.

Three Steps to Follow if You Want to Assign a Contract

There are three main steps to take if you're looking to assign a contract:

• Make sure the current contract does not contain an anti-assignment clause
• Officially execute the assignment by transferring the parties' obligations and rights
• Notify the obligor of the changes made

Once the obligor is notified, the assignor will effectively be relieved of liability.

Anti-Assignment Clauses

If you'd prefer not to allow the party you're doing business with to assign a contract, you may be able to prevent this from occurring by clearly stating anti-assignment clauses in the original contract. The three most common anti-assignment clauses are:

• Consent required for assignment
• Consent not needed for new owners or affiliates
• Consent not unreasonably withheld

Based on these three clauses, no party in the contract is allowed to delegate or assign any obligations or rights without prior written consent from the other parties. Any delegation or assignment in violation of this passage shall be deemed void. It is not possible to write an anti-assignment clause that goes against an assignment that is issued or ordered by a court.

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• Legal Assignment
• Assignment Contract Law
• Assignment of Rights and Obligations Under a Contract
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• Assignment Legal Definition
• What Is the Definition of Assigns
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• Assignment Of Contracts
• Delegation vs Assignment
• Assignment of Contract Rights

• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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Understanding an assignment and assumption agreement

Need to assign your rights and duties under a contract? Learn more about the basics of an assignment and assumption agreement.

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by   Belle Wong, J.D.

Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She ...

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Updated on: November 24, 2023 · 3min read

The assignment and assumption agreement

The basics of assignment and assumption, filling in the assignment and assumption agreement.

While every business should try its best to meet its contractual obligations, changes in circumstance can happen that could necessitate transferring your rights and duties under a contract to another party who would be better able to meet those obligations.

If you find yourself in such a situation, and your contract provides for the possibility of assignment, an assignment and assumption agreement can be a good option for preserving your relationship with the party you initially contracted with, while at the same time enabling you to pass on your contractual rights and duties to a third party.

An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting the assignment is known as the assignee.

In order for an assignment and assumption agreement to be valid, the following criteria need to be met:

• The initial contract must provide for the possibility of assignment by one of the initial contracting parties.
• The assignor must agree to assign their rights and duties under the contract to the assignee.
• The assignee must agree to accept, or "assume," those contractual rights and duties.
• The other party to the initial contract must consent to the transfer of rights and obligations to the assignee.

A standard assignment and assumption contract is often a good starting point if you need to enter into an assignment and assumption agreement. However, for more complex situations, such as an assignment and amendment agreement in which several of the initial contract terms will be modified, or where only some, but not all, rights and duties will be assigned, it's a good idea to retain the services of an attorney who can help you draft an agreement that will meet all your needs.

When you're ready to enter into an assignment and assumption agreement, it's a good idea to have a firm grasp of the basics of assignment:

• First, carefully read and understand the assignment and assumption provision in the initial contract. Contracts vary widely in their language on this topic, and each contract will have specific criteria that must be met in order for a valid assignment of rights to take place.
• All parties to the agreement should carefully review the document to make sure they each know what they're agreeing to, and to help ensure that all important terms and conditions have been addressed in the agreement.
• Until the agreement is signed by all the parties involved, the assignor will still be obligated for all responsibilities stated in the initial contract. If you are the assignor, you need to ensure that you continue with business as usual until the assignment and assumption agreement has been properly executed.

Unless you're dealing with a complex assignment situation, working with a template often is a good way to begin drafting an assignment and assumption agreement that will meet your needs. Generally speaking, your agreement should include the following information:

• Identification of the existing agreement, including details such as the date it was signed and the parties involved, and the parties' rights to assign under this initial agreement
• The effective date of the assignment and assumption agreement
• Identification of the party making the assignment (the assignor), and a statement of their desire to assign their rights under the initial contract
• Identification of the third party accepting the assignment (the assignee), and a statement of their acceptance of the assignment
• Identification of the other initial party to the contract, and a statement of their consent to the assignment and assumption agreement
• A section stating that the initial contract is continued; meaning, that, other than the change to the parties involved, all terms and conditions in the original contract stay the same

In addition to these sections that are specific to an assignment and assumption agreement, your contract should also include standard contract language, such as clauses about indemnification, future amendments, and governing law.

Sometimes circumstances change, and as a business owner you may find yourself needing to assign your rights and duties under a contract to another party. A properly drafted assignment and assumption agreement can help you make the transfer smoothly while, at the same time, preserving the cordiality of your initial business relationship under the original contract.

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Assignment meaning in law and legal documents

In legal terms, "assignment" refers to the transfer of rights or property from one party to another.

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What does assignment mean in legal documents?

An assignment in legal terms refers to the transfer of rights or property from one party to another. This concept is fundamental in contract law and extends to various aspects of both personal and commercial law. When an individual or business entity assigns their rights, they enable the recipient, known as the assignee, to step into their shoes and receive the benefits of the contract or agreement. It is important to note that while rights can be assigned, the assignor's obligations under the contract cannot be transferred without the consent of the other contracting party.

The scope of an assignment can vary greatly depending on the context. It could involve something as simple as transferring a lease to another tenant or as complex as assigning the rights to royalties from a creative work. In real estate transactions, for example, an assignment may occur when a buyer transfers their interest in a property contract to another buyer before the original transaction is completed. In intellectual property, an inventor might assign patent rights to a company in exchange for royalties or a lump sum payment.

For an assignment to be effective, it generally must be in writing and include clear terms that delineate what is being transferred. Certain rights or types of property may require more formalized procedures; for instance, assignments of real estate interests typically must be recorded with the appropriate government office to put third parties on notice. Furthermore, some contracts contain prohibitions or restrictions on assignments, requiring the assignor to obtain permission from the other contracting party before making an assignment.

It's also crucial to distinguish between an assignment and other similar legal concepts. For instance, a novation is not merely an assignment of rights but a replacement of one of the parties to the contract with a new party, thereby creating a new contractual relationship. Unlike an assignment, a novation requires the consent of all parties involved. Additionally, while an assignment transfers rights or benefits, it does not inherently transfer the burden of obligations unless the other party to the original contract agrees to such a transfer.

Understanding assignments is essential for anyone entering into contractual agreements. An assignment clause can significantly impact the control a party has over their contractual rights and can affect how those rights can be utilized or capitalized upon in the future. When considering an assignment, it is advisable to consult with a legal professional to ensure that the rights are transferred in compliance with the law and that the assigning party understands the extent and implications of the transfer.

What are some examples of assignment in legal contracts?

• Lease Agreement : "The lessee acknowledges the receipt of the assignment of the lease and agrees to be bound by its terms."
• Intellectual Property License : "This license agreement includes an assignment of all intellectual property rights from the creator to the licensee."
• Business Sale Agreement : "The seller shall provide an assignment of all contracts related to the business to the buyer at closing."
• Employment Contract : "Employee hereby agrees to an assignment of any inventions created during the term of employment to the employer."
• Loan Agreement : "Upon default of the loan, assignment of the collateral to the lender will be immediately effected."
• Debt Assignment : "The creditor hereby gives notice of the assignment of the debt to an external collections agency."
• Insurance Policy : "In the event of the policyholder's death, there will be an assignment of benefits to the designated beneficiary."
• Mortgage Agreement : "The mortgage includes a clause that prohibits the assignment of the borrower's rights without the lender's consent."

Learn about the definition for this legal term.

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What is Assignment?

The act of transferring an interest in property or some right (such as contract benefits) to another. A contract may prohibit an assignment by a party to the contract and it may grant the right to assign to another party. Some contracts are specified to be non-assignable by any party.

Related Contracts Terms

• Restatement of Contracts
• Lost Profit Damages
• Beneficial Interest
• Severable Contract

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Definition of assignment

task , duty , job , chore , stint , assignment mean a piece of work to be done.

task implies work imposed by a person in authority or an employer or by circumstance.

duty implies an obligation to perform or responsibility for performance.

job applies to a piece of work voluntarily performed; it may sometimes suggest difficulty or importance.

chore implies a minor routine activity necessary for maintaining a household or farm.

stint implies a carefully allotted or measured quantity of assigned work or service.

assignment implies a definite limited task assigned by one in authority.

Examples of assignment in a Sentence

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'assignment.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

see assign entry 1

14th century, in the meaning defined at sense 1

Phrases Containing assignment

• self - assignment

Dictionary Entries Near assignment

Cite this entry.

“Assignment.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/assignment. Accessed 2 Apr. 2024.

Legal Definition

Legal definition of assignment, more from merriam-webster on assignment.

Nglish: Translation of assignment for Spanish Speakers

Britannica English: Translation of assignment for Arabic Speakers

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Florida’s DeSantis signs one of the country’s most restrictive social media bans for minors

Florida Gov. Ron DeSantis signs a bill that will ban social media accounts for children under 14 and require parental permission for 14- and 15-year-olds.

FILE 0 Florida Gov. Ron DeSantis applauds during a press conference at the Central Florida Tourism Oversight District headquarters at Walt Disney World, in Lake Buena Vista, Fla., Thursday, Feb. 22, 2024. Florida will have one of the country’s most restrictive social media bans for minors — if it withstands expected legal challenges — under a bill signed by Republican Florida Gov. Ron DeSantis on Monday, March 25, 2024. (Joe Burbank/Orlando Sentinel via AP, File)

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TALLAHASSEE, Fla. (AP) — Florida will have one of the country’s most restrictive social media bans for minors — if it withstands expected legal challenges — under a bill signed by Republican Florida Gov. Ron DeSantis on Monday.

The bill will ban social media accounts for children under 14 and require parental permission for 14- and 15-year-olds. It was slightly watered down from a proposal DeSantis vetoed earlier this month , a week before the annual legislative session ended.

The new law was Republican Speaker Paul Renner’s top legislative priority. It takes effect Jan. 1.

“A child in their brain development doesn’t have the ability to know that they’re being sucked into these addictive technologies and to see the harm and step away from it, and because of that we have to step in for them,” Renner said at the bill-signing ceremony held at a Jacksonville school.

The bill DeSantis vetoed would have banned minors under 16 from popular social media platforms regardless of parental consent. But before the veto, he worked out compromise language with Renner to alleviate the governor’s concerns and the Legislature sent DeSantis a second bill.

Several states have considered similar legislation. In Arkansas, a federal judge in August blocked enforcement of a law that required parental consent for minors to create new social media accounts.

AP AUDIO: Florida’s DeSantis signs one of the country’s most restrictive social media bans for minors

At a signing ceremony, Florida Governor Ron DeSantis says being a dad has informed his views on Florida House Bill 3, which bans social media accounts for children under 14 and require parental permission for 15- and 16-year-olds.

Supporters in Florida hope the bill will withstand legal challenges because it would ban social media formats based on addictive features such as notification alerts and auto-play videos, rather than on their content.

Renner said he expects social media companies to “sue the second after this is signed. But you know what? We’re going to beat them. We’re going to beat them and we’re never, ever going to stop.”

DeSantis also acknowledged the law will be challenged on First Amendment issues, and bemoaned the fact the “Stop Woke Act” he signed into law two years ago was recently struck down by an appeals court with a majority of Republican-appointed judges. They ruled it violated free speech rights by banning private business from including discussions about racial inequality in employee training.

“Any time I see a bill, if I don’t think it’s constitutional, I veto it,” said DeSantis, a lawyer, expressing confidence that the social media ban will be upheld. “We not only satisfied me, but we also satisfied, I think, a fair application of the law and Constitution.”

Khara Boender, a state policy director for the Computer & Communications Industry Association, said in a news release that she understands the concern for online safety but expressed doubt the law will “meaningfully achieve those goals without infringing on the First Amendment rights of younger users.”

She also anticipated a legal challenge.

“This law could create substantial obstacles for young people seeking access to online information, a right afforded to all Americans regardless of age,” Bonder said.

The bill overwhelmingly passed both chambers, with some Democrats joining a majority of Republicans who supported the measure. Opponents argued it is unconstitutional and government shouldn’t interfere with decisions parents make with their children.

“This bill goes too far in taking away parents’ rights,” Democratic Rep. Anna Eskamani said in a news release. “Instead of banning social media access, it would be better to ensure improved parental oversight tools, improved access to data to stop bad actors, alongside major investments in Florida’s mental health systems and programs.”

This story has been corrected to show that parental permission is required for 14- and 15-year-olds, not 16-year-olds.

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U.S.-Funded Broadcaster Leaves Hong Kong, Citing Security Law

Radio Free Asia, which ran a small operation in Hong Kong, said its staff was at risk because of the law’s sweeping definition of “external interference.”

By David Pierson

Reporting from Hong Kong

The United States-funded news service Radio Free Asia said on Friday that it has closed its office in Hong Kong because of concerns about the city’s recently enacted national security law that targets so-called foreign interference.

Hong Kong’s new national security law, which was passed with unusual speed earlier this month, raised “serious questions about our ability to operate in safety,” the broadcaster’s president and chief executive, Bay Fang, said in a statement . Radio Free Asia said that it had relocated some employees from Hong Kong to Taiwan, the United States or elsewhere and laid others off.

The authorities in China have long accused Radio Free Asia, also known as R.F.A., of being a front for the U.S. government. In its statement, the news organization noted that officials in Hong Kong had also recently referred to R.F.A. as a “foreign force” in the context of how it covered the discussion over the new security law.

Hong Kong enacted the security law on March 23 , giving the city’s authorities more power to investigate such offenses as “external interference” and the theft of state secrets. The city’s officials, including its security chief, Chris Tang, have insisted that freedoms would be protected and the law would target only national security threats. The government declined a request to comment on Radio Free Asia’s departure, pointing instead to national security laws in other countries to justify legislation in Hong Kong.

“To single out Hong Kong and suggest that journalists would only experience concerns when operating here but not in other countries would be grossly biased, if not outrageous,” a government spokesman said in an emailed statement.

But advocates of press freedom say the laws significantly raise the risks for journalists operating in the city. Its vague definition of external interference can be broadly applied to regular journalistic work, the activists say .

Hong Kong’s status as one of Asia’s most vibrant capitals of free and independent media has eroded precipitously since Beijing imposed a sweeping crackdown on the city in response to antigovernment protests that erupted there in 2019.

In 2020, China directly imposed a national security law on the city that effectively silenced dissent there. Newsrooms were raided and editors arrested, forcing the closure of Apple Daily, a popular pro-democracy newspaper, as well as smaller, independent outlets such as Stand News and Citizen News.

The founder of Apple Daily, Jimmy Lai, is currently on trial on national security charges and is accused of masterminding the 2019 demonstrations. Two senior editors for Stand News are also on trial, accused of publishing what the authorities have called seditious material, which includes profiles of pro-democracy activists.

The government also imposed an overhaul of Radio Television Hong Kong, a public broadcaster that once was known for reporting critically on officials; programs were canceled and staff members replaced.

This year, as Hong Kong moved swiftly to pass its own security laws, the Hong Kong Journalists Association warned of a chilling effect. Leaks from government sources regarding personnel changes, financial budgets, police investigations and other matters in the public interest could be subject to national security laws, the group warned.

Officials say those concerns are misplaced and that there are sufficient safeguards in the laws to protect regular reporting.

In the past months, the Hong Kong government has taken a far more adversarial stance against foreign media. Officials have lashed out about a guest essay published in The New York Times and an editorial by The Washington Post as well as news articles by the BBC and Bloomberg about the national security legislation, describing the reports as scaremongering. (In 2020, The Times announced it would relocate its Hong Kong-based digital news operation to Seoul after the first security law was imposed.)

Cédric Alviani, the Asia-Pacific bureau director of Reporters Without Borders, said Hong Kong’s national security laws were placing pressure on local journalists to censor themselves to avoid crossing the government’s “blurry red lines.”

“What we’re seeing is the Chinese system of repression against the right to information and independent journalism is being applied more and more in Hong Kong,” Mr. Alviani said.

Radio Free Asia said its audience for content in Cantonese, the main language spoken in the city, grew sharply after the closures of Apple Daily and Stand News in 2021. Even so, it had already been suspending some of its Cantonese reports and programming because of concerns over China’s national security law.

The news outlet ran a small operation in Hong Kong; Ms. Fang, the president, said that it would retain its media license there and would cover Hong Kong remotely.

Radio Free Asia denies that it serves as a proxy for Washington. Though it is funded by the U.S. government’s Agency for Global Media, it says it maintains a legislative firewall that bars journalistic interference from U.S. officials.

Olivia Wang contributed research.

David Pierson covers Chinese foreign policy and China’s economic and cultural engagement with the world. He has been a journalist for more than two decades. More about David Pierson