Assignability Of Contracts

Assignability Of Contracts-6
For the assignment to become effective, the assignee must manifest his acceptance under most circumstances.

For the assignment to become effective, the assignee must manifest his acceptance under most circumstances.This is done automatically when, as is usually the case, the assignee has given consideration for the assignment (i.e., there is a contract between the assignor and the assignee in which the assignment is the assignor’s consideration), and then the assignment is not revocable without the assignee’s consent.Nor will a minor change in the duties the obligor must perform defeat the assignment.

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Notice to the obligor is not required, but an obligor who renders performance to the assignor without notice of the assignment (that performance of the contract is to be rendered now to the assignee) is discharged.

Obviously, the assignor cannot then keep the consideration he has received; he owes it to the assignee.

But if notice is given to the obligor and she performs to the assignor anyway, the assignee can recover from either the obligor or the assignee, so the obligor could have to perform twice, as in Exercise 2 at the chapter’s end, .

Of course, an obligor who receives notice of the assignment from the assignee will want to be sure the assignment has really occurred.

An obligor who could avoid the assignor’s attempt to enforce the rights could avoid a similar attempt by the assignee.

Likewise, under UCC Section 9-318(1), the assignee of an account is subject to all terms of the contract between the debtor and the creditor-assignor.First, it is inapplicable to the sale of a negotiable instrument to a holder in due course.Second, the rule may be waived: under the UCC and at common law, the obligor may agree in the original contract not to raise defenses against the assignee that could have been raised against the assignor.Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the 0 from payment to Assignee.The “shoe rule” does not apply to two types of assignments.Assignments are an important part of business financing, such as factoring.A To effect an assignment, the assignor must make known his intention to transfer the rights to the third person.Suppose Dealer sells a car to Buyer on a contract where Buyer is to pay 0 per month and the car is warranted for 50,000 miles.If the car goes on the fritz before then and Dealer won’t fix it, Buyer could fix it for, say, 0 and deduct that 0 from the amount owed Dealer on the next installment (called a setoff).When an assignment has the effect of materially changing the duties that the obligor must perform, it is ineffective.Changing the party to whom the obligor must make a payment is not a material change of duty that will defeat an assignment, since that, of course, is the purpose behind most assignments.


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