Assignee’s Liability On Contract Assigned

An assignor is one who transfers property rights or powers to another, whereas an assignee is a person or entity to which property rights or powers are transferred by another.  A court will not presume the assumption of obligations from an assignment; instead, the party asserting such a personal obligation must prove the existence of an express assumption by clear and unequivocal proof.[i]

Generally, mere assignment of rights under an executory contract will not cast any obligations upon the assignee imposed by the assignor if there is no agreement by the assignee to assume those liabilities.  In other words, mere assignment of a contract cannot be interpreted as a promise by the assignee to the assignor and no liability can be created for the performance of those duties.[ii]

However, if the assignee assumes such obligations either expressly [iii] or impliedly, then he/she will be held liable.[iv] In other words, after the assignment is made, if the actions of the assignee hold him/her personally liable and he/she recognizes the original contract as binding upon him/her, then he/she will be liable to the other party equally with the assignor.[v]

It was observed in Haarmann v. Davis, 651 S.W.2d 134 (Mo. 1983) that mere acceptance of benefits under the contract of sale is not sufficient while an assignee’s assumption of contractual obligations can be implied from clear and convincing evidence.

An assignment of a contract alone will not imply a delegation or assumption of duties.[vi] If an assignor delegates his/her duties under a contract and makes an absolute and complete assignment of his/her rights, then the assignee impliedly undertakes the performance of those duties.  In such circumstances, the assignor can recover from the assignee any damages he/she sustains because the assignee failed to comply with the contract.[vii]

However, an assignee acquires rights similar to those of an assignor.  It was observed in Nashville Lodging Co. v. FDIC, 934 F. Supp. 449 (D.D.C. 1996) that this includes the right to sue for damages for defendant’s repudiation of a refinancing agreement dating from the execution of the agreement.

[i] Headwaters Constr. Co. v. Nat’l City Mortg. Co., 2009 U.S. Dist. LEXIS 125348 (D. Idaho Nov. 17, 2009)

[ii] Amalgamated Tr. Union Local 1181, AFL-CIO v. City of New York, 2007 NY Slip Op 9349 (N.Y. App. Div. 2d Dep’t 2007)

[iii] New Eng. Dairies, Inc. v. Dairy Mart Convenience Stores, Inc., 2002 U.S. Dist. LEXIS 2596 (D. Conn. 2002)

[iv] Nat’l Retail Dev. Partners I, LLC v. Maness (In re Mortgs. Ltd.), 405 B.R. 669 (Bankr. D. Ariz. 2009) see also Enter. Leasing Corp. v. Shugart Corp., 231 Cal. App. 3d 737 (Cal. App. 2d Dist. 1991), see also Barberich v. Pooshichian, 59 Cal. App. 507 (Cal. App. 1922)

[v] Fanning v. Yoland Productions, Inc., 150 Cal. App. 2d 444 (Cal. App. 2d Dist. 1957)

[vi] Nat’l Retail Dev. Partners I, LLC v. Maness (In re Mortgs. Ltd.), 405 B.R. 669 (Bankr. D. Ariz. 2009)

[vii] Imperial Refining Co. v. Kanotex Refining Co., 29 F.2d 193 (8th Cir. Kan. 1928)

Inside Assignee’s Liability On Contract Assigned