assignment of contract

Unless a contract provides otherwise, the liabilities and duties under a contract may not be assigned, in contrast to the benefits under a contract which may be assigned without the consent of the other contracting party.

For instance, suppose A engages B to perform a service in consideration of the sum of £10.00. The 'liabilities and duties' of A are to pay £10.00, and A's 'benefits' under the contract is to receive the service. From B's perspective, the 'liabilities and duties' of the contract are to perform the service, and the benefit of the contract is to receive the £10.00.  A is not entitled to assign the obligation to pay B the £10.00, unless B consents.  Likewise, B is not entitled to assign the obligation to perform the service to a third party unless A consents.

Although most professionally drafted contracts expressly prohibit such assignments, the provisions to prohibit an assignment of a contract are redundant.

In order to assign the burden of performance under a contract to a third party, the contract must be novated. Novation takes place when all three parties - that is, the current contracting parties and the incoming party who will take on the performance obligations - enter into a contract effectively stating that the outgoing party with a duty of performance will no longer be obliged to perform and the incoming party will take on those performance obligations.

Usage: A party to the contract purported to assign their obligations without the consent of the other party.

Related Words: novation; contract; agreement; offer; acceptance; consideration; accord and satisfaction; acquiescence; waiver; breach of contract; agreement; consensus ad idem; quid pro quo; legal capacity.