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 determines some additional rights and liabilities that accompany the act. The assignment of rights under a contract 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.[i]
An assignment will generally be permitted unless there is an express prohibition against assignment in the contract. Where assignments are permitted, the assignor need not consult the other party to the contract. 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 always remains liable unless there is an agreement to the contrary.
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.[ii] Further, for the assignment to be effective, it must occur in the present. No specific language is required to create an assignment. However, the assignor must make clear his/her intent to assign identified contractual rights to the assignee. A promise to assign in the future has no legal effect. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.[iii]
[i] Merchants Service Co. v. Small Claims Court, 35 Cal. 2d 109, 113-114 (Cal. 1950).
[ii] Id.
[iii] Id.
