Legal Definitions - assignment

Assignment is a legal term describing the transfer of rights, property, or other benefits from one party (the "assignor") to another party (the "assignee"). This transfer can involve various types of legal interests and is commonly encountered in both contract and property law.

When an assignment occurs, the assignor gives up their interest in the specific right, property, or benefit, and the assignee steps into their place, acquiring those same interests. The term "assignment" can refer to the act of transferring or to the rights/property/benefits themselves that are being transferred.

• In Contract Law:

  In the context of contracts, assignment typically involves transferring the rights and, often, delegating the duties from an existing contract to a new party. For instance, a party might assign their right to receive payment or delegate their duty to perform a service.

  There are some important considerations:

  • Generally, rights that have not yet been secured (e.g., a future contract that hasn't been signed) cannot be assigned.
  • An assignment cannot materially change the obligations or risks of the other party to the original contract.
  • Highly personal services or those requiring unique skills usually cannot be delegated without the consent of the other party to the contract.

  Here are some examples:

  • Example 1: Assignment of Accounts Receivable (Right to Payment)

    Imagine a small manufacturing company, "Widgets Inc.," has delivered products to several clients who now owe them money. To improve its immediate cash flow, Widgets Inc. enters into an agreement with "CashAdvance Finance," a company that specializes in buying outstanding invoices. Widgets Inc. assigns its right to collect these outstanding payments (known as accounts receivable) from its clients to CashAdvance Finance.

    How this illustrates assignment: Widgets Inc. (the assignor) transfers its legal right to receive money from its clients to CashAdvance Finance (the assignee). CashAdvance Finance now legally stands in Widgets Inc.'s place and has the right to collect those payments directly from Widgets Inc.'s clients. Widgets Inc. receives immediate funds, while CashAdvance Finance takes on the responsibility and risk of collecting the debts.

  • Example 2: Assignment of a Service Contract (Delegation of Duties)

    Consider "GreenThumb Landscaping," which has a two-year contract to maintain the grounds of a large corporate park. After one year, GreenThumb decides to focus exclusively on residential projects. With the corporate park owner's approval, GreenThumb assigns the remainder of the corporate park maintenance contract to another company, "LushLawns Inc."

    How this illustrates assignment: GreenThumb (the assignor) transfers its rights (to receive payment for services) and delegates its duties (to perform the landscaping work) to LushLawns Inc. (the assignee). LushLawns Inc. now assumes the responsibility to maintain the park and gains the right to receive payment from the corporate park owner. The corporate park owner now looks to LushLawns Inc. for the performance of the landscaping services. It's important to note that GreenThumb might remain secondarily responsible if LushLawns Inc. fails to perform, unless the corporate park owner specifically agrees to release GreenThumb from all future liability (a process sometimes called novation).

• In Property Law:

  In property law, assignment most commonly occurs in landlord-tenant relationships, particularly with leases. When a tenant assigns a lease, they transfer their entire remaining interest in the property to a new tenant.

  Here is an example:

  • Example 3: Assignment of an Apartment Lease

    Sarah has a two-year lease on an apartment, with 18 months remaining. She receives a job offer in another city and needs to move. With her landlord's consent, Sarah finds Mark, who wishes to take over the apartment for the entire remainder of her lease term. Sarah then assigns her apartment lease to Mark.

    How this illustrates assignment: Sarah (the assignor) transfers all her remaining rights and obligations under the lease for the entire 18-month period to Mark (the assignee). Mark now steps into Sarah's position as the tenant, becoming directly responsible to the landlord for rent and adhering to all other lease terms. Sarah no longer has a right to occupy the apartment and is typically no longer primarily responsible for the rent, though she might remain secondarily liable if Mark defaults, depending on the specific terms of the assignment agreement and local laws. This differs from a sublease, where Sarah would remain the primary tenant and Mark would be her subtenant for only a portion of the remaining term.