Acceptance by Assignee

An assignee is the party to whom something is assigned.  For an assignment to be valid, acceptance of the right/interest by the assignee is necessary.

In order to make an assignment effective, an assignee must convey his/her assent to the assignment.[i].  However, acceptance by an assignee is not essential when consideration by third parties is involved or in the case of an irrevocable assignment.  An assignee is entitled to reject the right conferred by assignment.  He/she can render an assignment inoperative through a disclaimer.  No particular form is prescribed for making a disclaimer by the assignee.  When an assignee makes a disclaimer, it is as if no assignment has been made.

An acceptance to an assignment can be made either by express terms or by implication.  An implied acceptance can be inferred:

  • when a seller knows of an assignment and still accepts payment from the assignee;
  • when an assignee institutes a law suit against the obligor; or
  • where the assignment is beneficial to the assignee.

Acceptance of an assignment may be either actual or constructive and may be shown by the actions or conduct of the assignee.[ii]

In a sale of a contractual right, mutual assent to exchange is evident from the bargaining.  In such a transaction, the transferee furnishes the consideration.  However, in an assignment, the assignee is unaware of the assent between the parties.  Acceptance by an assignee is necessary due to assignee’s lack of awareness of mutual assent.

[i] Restat 2d of Contracts, § 327

[ii] Mott v. German Hospital, 55 N.J. Eq. 722 (Ch. 1897)

Inside Acceptance by Assignee