Assignment What is an assignment? Assignment is the act of granting or transferring to someone else your rights under a contract or transfering interest in land. So for example if I have contracted with someone to build an block of flats, I could assign the rights under the contract to a third party who could sue for the benefit accrued under the contract being either the money to be paid (debt owed under the building contract) or respectively if i am the purchaser, the benefit of having a certain obligation fulfilled namely, the building of the block of flats. The rule relating to assignments is that only rights or benefits may be assigned and not obligations, however the common law circumvents this rule through certain doctrines which consider the transfer of an obligation as a part and parcel with the benefit conferred in the aftermath of the assignment of certain rights which are conditional upon a performance by an assignor. Similarly the obligation of the assignor may be discharged by the counter party under the contract by providing consideration in the form of release of the assignor from his obligations and accepting the assignees promise of performance. Does an assignment require the acceptance of an assignee? Yes, an assignment must be accepted by an assignee. Why is assignment important? Because it is used as a vehicle for the transfer of rights in the fast paced world of commerce, it may be used for the creation of security for a loan and it is also occurs when someone dies or goes bankrupt where his rights under a contract or debt may be assigned by operation of law to his executor or official receiver respectively. As the person who dies or went bankrupt is banned from performing business deals with others subsequently the liabilities and obligations artificially pass to the above persons, it is said that artificially since they are not personally liable for these debts but have to pay those funds out of the bankrupt’s or deceased’s estate. Assignment also may be used in order to circumvent Privity of Contract usually in complex by-partisan relationships affecting the same business project like for example a funder requiring an assignment of the rights of the contract between the developer and the contractor, as a form of security. Furthermore, the purchaser of a house maybe vested with the rights to sue against the contractor by virtue of an assignment of such rights by the developer. What are the prerequisites of an assignment? There needs to be an intention to transfer the rights in question. The product of assignment must be readily identifiable and clear. The assignment must be unequivocal. There must be notice to the obligor.
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