Assignment of Rights: Transferring What a Contract Gives You
What Is Assignment of Rights?
Assignment of rights is the transfer of one party's contractual benefits — such as the right to receive payment, goods, or services — to a third party. After a valid assignment, the third party (assignee) steps into the shoes of the original party (assignor) and can enforce those rights directly against the other contracting party.
How Assignment Works
- Party A has rights under a contract with Party B (e.g., right to receive $10,000)
- Party A assigns those rights to Party C
- Party C can now collect the $10,000 directly from Party B
- Party A no longer has the right to collect (the assignment is typically irrevocable once the assignee's rights vest)
When Assignment Is Restricted
Assignment is generally permitted, but several exceptions apply:
- Anti-assignment clauses — the contract explicitly prohibits assignment (though UCC Section 9-406 invalidates some anti-assignment clauses for payment rights)
- Material change in obligation — if the assignment would substantially change what the other party must do
- Personal rights — rights under personal service contracts or insurance policies may not be freely assignable
- Public policy — certain rights (like government benefits) cannot be assigned
Assignment vs. Delegation
- Assignment transfers your right to receive something (benefits)
- Delegation transfers your duty to perform something (obligations)
When someone says they are "assigning a contract," they often mean both — assigning rights and delegating duties.
Practical Considerations
- Written notice to the other party protects the assignee from the obligor paying the original party
- The assignee receives only the rights the assignor had — no more
- The other party can raise any defenses against the assignee that they could have raised against the assignor
When to Consult a Lawyer
Consider seeking legal advice before assigning contract rights, or if you receive notice that your contracting partner has assigned their rights to someone else.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.