Consent by Obligor

An assignment is the expression of an obligee’s intention to transfer to an assignee his/her right to receive performance from an obligor.  An obligor is a person who binds himself to another by contract.  Generally, an obligor’s consent is not necessary to make an effective assignment.  However, where the rights to be assigned involve the performance of a unique personal service, the obligor’s consent is required.  Moreover, an obligor’s consent prohibits objection based on a change in duty, burden or risk, or in the chance of obtaining return performance.[i]

Although consent by an obligor is not necessary to make an assignment effective, the obligor’s consent can:

  • permit a separate action by a partial assignee;
  • operate as an offer of a new contract by novation;
  • operate as acceptance of an offer of novation;
  • terminate the assignor’s power to revoke a gratuitous assignment;[ii]
  • discharge or modify a duty of the assignor or a condition of the right assigned.[iii]

An obligor can give his consent to an assignment subsequent to the contract.  Although consent is given subsequent to the contract, it has the same effect as a term in the contract.[iv] An obligor’s assent after the formation of a contract is effective, when:

  • consent is made for consideration;
  • consent is made in circumstances in which a promise would be binding without consideration; or
  • a material change of position takes place in reliance on the manifestation.[v]

However, consent by the obligor does not discharge an assignor from his duties.

Rights which cannot be delegated because of their personal character can also be assigned if the contract so provides, or if the other party consents.[vi] An obligor can also withdraw his/her consent before someone acts upon  his/her promise.

However, an obligor’s consent to an assignment is irrevocable under the following circumstances:

  • when it is made before the assignment; or
  • when a material change of position has taken place in reliance on the obligor’s consent.[vii]

[i] Restat 2d of Contracts, § 323(1)

[ii] Restat 2d of Contracts, § 332

[iii] Restat 2d of Contracts, §§ 318-19

[iv] Uniform Commercial Code § 2-208

[v] Restat 2d of Contracts, § 323(2)

[vi] Wolbert v. Rief, 194 Md. 642, 650 (Md. 1950)

[vii] Restat 2d of Contracts, § 323

Inside Consent by Obligor