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Contracts Involving Personal Skill Or Confidential Relationship

Generally, all ordinary business contracts are assignable.  However, contracts for personal services or those involving a relationship of confidence are not assignable by either party.  Such contracts are assignable if a specific provision in the contract provides so.[i]  The other party to the contract should also agree to the assignment in a personal or confidential contract.  The assignment should not change the nature of the performance or the obligation.  Contracts for personal services are exempted from assignment because in such contracts, an obligor undertakes to serve only the original obligee.  However, money due under a personal service contract can be assigned.

Whether a contract is assignable depends on the right the person privy to the contract has to choose another party for the contract.  The intention of the parties can determine whether a contract is assignable.  If the contract provides services that are very personal, it cannot be assigned.  The intention of the parties can be determined by the nature of the contract as a whole and the surrounding circumstances.  When the personal preferences/judgment of either party to a contract forms the matter of the contract, the contract cannot be assigned without consent from both parties.[ii] Before assigning a contract to another party and shifting the trust and confidence placed by the party entitled to performance under the contract to someone else, party entitled to performance should be consulted.  This is important to decide whether the contract can be assigned to another person.[iii]

Personal and confidential contracts include a contract to furnish a complete correspondence course, a contract to furnish an abstract of title, an agreement to render professional services as a physician, lawyer, or architect, an option to purchase stock given to an employee, an agreement whereby the vendee of realty was not to erect buildings without the consent of the vendor, an agency for the sale of land, and a contract for employment as a beauty operator.  Such contracts are unassignable without the consent of the parties to the contract.[iv]

However, a contract for a corporate responsibility that could be performed by anyone within a corporation or a contract for dancing lessons that specifies that the studio will furnish the purchaser with a qualified instructor cannot be considered as personal contracts.  Such contracts are assignable.[v]

Generally, an employer cannot assign a contract for the performance of personal duties when employee has not consented.  This is because the right to labor of a person who has not agreed to serve him/her will be vested in the assignee.  However, if an employee consents, the employment contract can be assigned to another person.[vi]

[i] Kingston v. Markward & Karafilis, Inc., 134 Mich. App. 164 (Mich. Ct. App. 1984)

[ii] Houston v. Wilhite, 224 Mo. App. 695 (Mo. Ct. App. 1930)

[iii] Southern Concrete Co. v. Carter Constr. Co., 121 Ga. App. 573 (Ga. Ct. App. 1970)

[iv] Kaufung v. Doric Shop, Inc., 11 N.Y.S.2d 67 (N.Y. City Ct. 1939)

[v] Rumbin v. Utica Mut. Ins. Co., 254 Conn. 259 (Conn. 2000)

[vi] Boyd v. Rumsey, 28 Ky. 42 (Ky. 1830)

Inside Contracts Involving Personal Skill Or Confidential Relationship