Assignment is the transfer of right of one person to another person. A person who transfers the right is an assignor, and a person who receives the right is an assignee. By assigning a contractual right the benefits of the contract is transferred to an assignee. Only an assignable right can be assigned.
Parties to the contract should have an intention to assign contractual rights to an assignee.[i] An assignor should intent to transfer his/her rights in a contract to another person. Restat 2d of Contracts, § 324 provides that it is essential to an assignment of a right that an obligee should express an intention to transfer the right to another person. The intention should be made orally, or in writing.[ii]
A valid assignment of a right requires intention of an assignor to transfer a right to an assignee. There should be manifestation of the intention clearly in the assignment agreement. A manifestation of an intention or promise to assign a right in the future it will not constitute a legal assignment.[iii] A present right should be transferred to constitute a valid assignment.
However, it is not necessary that the assignment of a right need not be put in writing. An oral assignment will also represent a valid assignment.[iv] When there is a clear expression of an assignor’s intention to assign contractual rights of the assignor, the assignment does not need any particular formalities.[v] There is no need of formal language in the assignment agreement.
An intention to assign a right can be expressed through a written agreement. The intention can also be understood from the acts of the parties or from surrounding circumstances.[vi] To decide upon the intention of the parties to an assignment agreement the facts and circumstances of the transfer of right should be considered.[vii]
The assignment agreement can also be made in informal language. However, courts consider use of traditional formal language as an intention to effect an assignment. Courts decide upon the intention of parties to an assignment as a question of fact.
[i] Hanu v. Yamaichi, 30 Haw. 959 (Haw. 1929)
[ii] Baker v. Eufaula Concrete Co., 557 So. 2d 1228 (Ala. 1990)
[iii] In re Duty, 78 B.R. 111 (Bankr. E.D. Va. 1987)
[iv] Am. Banana Co. v. Venezolana Internacional De Aviacion S.A. (VIASA), 67 A.D.2d 613 (N.Y. App. Div. 1st Dep’t 1979)
[v] H. K. PORTER CO. v. DELTA STAR, INC., 183 B.R. 96 (Bankr. W.D. Pa. 1995)
[vi] Evangelical Slovak Women’s Union v. Papanek, 8 Ill. App. 2d 298 (Ill. App. Ct. 1st Dist. 1956)
[vii] Mississippi Bank v. Nickles & Wells Constr. Co., 421 So. 2d 1056 (Miss. 1982)