partial assignment of contract rights

• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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§ 2-210. Delegation of Performance; Assignment of Rights.

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(1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract . No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2) Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract , or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

(3)Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.

(4) An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract .

(5) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (Section 2-609 ).

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CHAPTER 9 - SECTION 1

Chapter 9: assignment of rights,transfer of obligations, assignment of contracts - section 1: assignment of rights, article 9.1.1 (definitions).

“Assignment of a right” means the transfer by agreement from one person (the “assignor”) to another person (the “assignee”), including transfer by way of security, of the assignor’s right to payment of a monetary sum or other performance from a third person (“the obligor”).

In many circumstances an obligee entitled to the payment of a monetary sum or to another performance from an obligor may find it useful to assign its right to another person. For instance, an assignment to a bank is a common way to finance the credit granted to a customer. The Articles of the present Section cover the assignment of rights as defined in this Article.

1. Transfer by agreement

Only transfers by agreement are concerned, as opposed to situations in which the applicable law may provide for legal transfers of certain rights (such as, in certain jurisdictions, the transfer of a seller’s rights against an insurer to the purchaser of an insured building, or the automatic transfer of rights in the case of the merger of companies (see Article 9.1.2(b)).

The definition equally does not cover unilateral transfers, which in certain jurisdictions may take place without the assignee’s participation.

2. Right to payment of a monetary sum or to other performance

On the other hand, the definition is not restricted to the assignment of rights to the payment of a monetary sum. It also covers rights to other kinds of performance, such as the rendering of a service. Nor are the assignable rights limited to rights of a contractual nature. Claims deriving from non-contractual claims or based on a judgment, for instance, can be governed by the present Section, subject to Article 1.4. Future rights may also be transferred under the conditions of Article 9.1.5.

3. Notion of “transfer”

The “transfer” of the right means that it leaves the assignor’s assets to become part of those of the assignee. The definition also covers transfers for security purposes.

4. Third party rights

Transfers from the assets of the assignor to those of the assignee remain subject to third party rights. Different third persons can be affected by the assignment of a right between an assignor and an assignee, such as, first and foremost, the obligor, but also the assignor’s creditors and successive assignees. Third party rights are covered in part by other provisions of this Section (see Articles 9.1.10 and 9.1.11 concerning the obligor and successive assignees). They may in some instances be governed by mandatory rules of the otherwise applicable law (e.g. the law of bankruptcy).

ARTICLE 9.1.2 (EXCLUSIONS)

This Section does not apply to transfers made under the special rules governing the transfers: 

(a) of instruments such as negotiable instruments, documents of title or financial instruments, or 

(b) of rights in the course of transferring a business.

Some types of assignment of rights are normally subject to very specific rules under the applicable law, and are therefore not governed by this Section.

1. Transfer of instruments governed by special rules

The transfer of certain types of instrument governed by special rules are outside the scope of this Section. This applies for instance to negotiable instruments, such as bills of exchange, that are usually transferred by endorsement or delivery of the document, and which are subject to further distinct rules, e.g. concerning defences that would have been available to the transferor. This exclusion also applies to documents of title, such as bills of lading or warehouse receipts, and financial instruments such as stocks and bonds. The transfer of such instruments are all normally subject to specific rules.

This does not exclude the possibility that such rights, in certain jurisdictions, could also be transferred by a normal assignment, which would then be subject to this Section.

2. Transfer of a business

Another exclusion is assignment made in the course of transferring a business under special rules governing such transfers, as may happen in the case of the merger of companies. The applicable law often provides for mechanisms that cause all rights and obligations, under certain conditions, to be transferred in their entirety by operation of law.

Article 9.1.2(b) does not prevent this Section from applying when certain rights pertaining to the transferred business are assigned individually. On the contrary, the mere transfer of shares in a company may fall under Article 9.1.2(a) and therefore not be covered by this Section.

Illustrations

1. Company A is transferred to company B. If the otherwise applicable law provides that all rights pertaining to the former company are automatically transferred to the latter, the Principles do not apply.

2. The initial facts are the same as in Illustration 1, but B is not interested in taking over a specific claim against customer X, and prefers that right to be assigned to company C. This particular transfer is subject to the Principles.

ARTICLE 9.1.3 (ASSIGNABILITY OF NON-MONETARY RIGHTS)

A right to non-monetary performance may be assigned only if the assignment does not render the obligation significantly more burdensome.

The assignment of a right does not in principle affect the obligor’s rights and obligations. However, to a certain extent the fact that performance is now due to another obligee can modify the conditions under which the obligation is to be performed. The place of performance may be different. The change of obligee may in itself render the obligation more burdensome.

Article 9.1.8 entitles the obligor to be compensated by the assignor or the assignee for any additional costs caused by the assignment. That provision should be sufficient to take care of the problem in the case of the assignment of monetary obligations. However, when the assigned right concerns a non-monetary performance, the remedy may not always be sufficient. This Article excludes the possibility of assigning such rights when the transfer would render the obligation significantly more burdensome for the obligor.

1. Company X has undertaken to provide the security service aimed at preventing theft in warehouses used by company A for the storage of wood. The premises are sold to company B, which intends to apply them to the same use. Nothing in this provision prevents A from assigning to B its right to the security services provided by X.

2. The initial facts are the same as in Illustration 1, but B intends to use the warehouses for the storage of electronic equipment. A’s right to the security services provided by X may not be assigned to B: such services would become significantly more burdensome since the security risks are obviously much higher with electronic equipment than with the storage of wood.

ARTICLE 9.1.4 (PARTIAL ASSIGNMENT)

(1) A right to the payment of a monetary sum may be assigned partially. 

(2) A right to other performance may be assigned partially only if it is divisible, and the assignment does not render the obligation significantly more burdensome.

1. Economic interest

The partial assignment of a right may serve different economic purposes. A contractor may for instance want to assign part of its right to payment from a customer to a financing institution and keep the rest for itself. Or it may want to assign the other part to a supplier of raw materials.

Permitting partial assignment may however affect the principle that the assignment should not worsen the obligor’s situation. If the right is split, the obligor will have to perform in several parts, which could entail extra costs.

2. Monetary and non-monetary rights

The obligor’s burden of having to make two or several monetary payments instead of one is not in itself deemed to be excessive, and partial assignments of monetary rights are therefore permitted in principle (paragraph (1)).

Another rule prevails for the assignment of non-monetary rights, where the validity of the partial assignment is made dependent on two cumulative conditions: the divisibility of the performance due and the degree of additional burden the partial assignment may place on the obligor. Article 9.1.3 already excludes the possibility to assign non-monetary rights in their entirety if the assignment would render the obligation significantly more burdensome. Paragraph (2) applies the same rule to the partial assignment of such rights.

In any event, additional costs borne by the obligor as a result of having to perform in several parts must be compensated under Article 9.1.8.

1. Buyer X is due to pay a price of USD 1,000,000 to seller A on 31 October. A urgently needs USD 600,000 and assigns a corresponding part of its right to bank B. Notice of the partial assignment is given to X. On 31 October, both A and B claim payment of their respective parts. X must pay A USD 400,000 and B USD 600,000.

2. Metal company X is to deliver 1,000 tons of steel to carmaker A on 31 October. Due to a decrease in sales, A estimates that it will not need that much steel at that time, and assigns the right to delivery of up to 300 tons to carmaker B. Notice of the partial assignment is given to X. On 31 October both A and B claim delivery of their respective quantities. X must deliver 700 tons to A and 300 tons to B.

3. Tax consultant X has promised to spend 30 days in examining the accounts of company A in order to determine the proper policy to be followed in the light of new tax regulations. A subsequently regrets this arrangement, in consideration of the level of the fees to be paid. It proposes to assign 15 of the days to company B. X can argue against such a partial assignment on the grounds that performance of tasks of that nature is not divisible. It can also argue that the accounts of B are of a significantly more complex nature than those of A.

ARTICLE 9.1.5 (FUTURE RIGHTS)

A future right is deemed to be transferred at the time of the agreement, provided the right, when it comes into existence, can be identified as the right to which the assignment relates.

For the purposes of this Section, a future right is a right that will or might come into existence in the future (as opposed to a present right to a performance due in the future). Examples of future rights are rights that a bank may have against a customer who might be granted a credit line in the future, or that a company may have against another company on the basis of a contract which might be concluded in the future. The assignment of such future rights can be highly significant economically.

2. Determinability

According to this Article a future right can be assigned on condition that it can be determined as the right to which the assignment relates when it comes into existence. The reason for this is the need to avoid the difficulties that might be caused by a transfer of future rights that are described in vague and too broad general terms.

3. Retroactive effect

This Article also provides that the assignment of future rights is effective with retroactivity between the assignor and the assignee. When the right comes into existence, the transfer is considered to have taken place at the time of the assignment agreement.

As regards third parties, it will be recalled that their rights may in some instances be governed by mandatory rules of the otherwise applicable law (e.g. the law of bankruptcy). However, third party rights are partly covered by other provisions of this Section, including the consequences of notices specified in Articles 9.1.10 and 9.1.11.

Illustration

In order to finance new investments, company A assigns the royalties to be earned from future licences of a certain technology to lending institution B. Six months later, A licenses that technology to company X. The royalties due are considered to have been assigned to B from the date of the assignment agreement, provided the royalties can be related to this agreement.

ARTICLE 9.1.6 (RIGHTS ASSIGNED WITHOUT INDIVIDUAL SPECIFICATION)

A number of rights may be assigned without individual specification, provided such rights can be identified as rights to which the assignment relates at the time of the assignment or when they come into existence.

Rights are often assigned as a bundle or in bulk. A company may for instance assign all its receivables to a factoring company. In practice it would be excessively burdensome to require individual specification of each assigned right, but the global identification of the rights assigned as a bundle must be such as to permit the recognition of each right concerned as part of the assignment.

In the case of existing rights, such recognition must be possible at the time of the assignment. If future rights are included in the bundle, in accordance with Article 9.1.5 identification must be possible when the rights come into existence.

Retailer A assigns all its receivables to factor B. There are thousands of existing and/or future rights. The assignment does not require the specification of each single claim. Later, B gives notice of the assignment to the obligor of a specific receivable. B must be able to demonstrate the inclusion of that receivable in the bundle either at the time of the assignment, or, in the case of a right which did not exist yet at that time, when the right came into existence.

ARTICLE 9.1.7 (AGREEMENT BETWEEN ASSIGNOR AND ASSIGNEE SUFFICIENT)

(1) A right is assigned by mere agreement between the assignor and the assignee, without notice to the obligor. 

(2) The consent of the obligor is not required unless the obligation in the circumstances is of an essentially personal character.

In the definition of Article 9.1.1 the assignment of a right is described as a “transfer by agreement”. Articles 9.1.7 to 9.1.15 govern the respective legal positions of assignor, assignee and obligor.

1. Mere agreement between assignor and assignee

According to paragraph (1) of this Article, the assignment of a right is effective, i.e. the right is transferred from the assignor’s assets to the assignee’s assets, by mere agreement between these two parties. The provision is an application to the assignment of a right of the general principle laid down in Article 1.2 according to which nothing in the Principles requires a contract to be concluded in a particular form. Yet it does not affect the possible application of mandatory rules of the otherwise applicable law according to Article 1.4: thus, for instance, an assignment for security purposes may be subject to special requirements as to form.

As already stated in Comment 4 on Article 9.1.1, the rule laid down in paragraph (1) remains subject to third party rights, which are partly covered by other provisions of this Section (see Articles 9.1.10 and 9.1.11 concerning the obligor and successive assignees), and may in some instances be governed by mandatory rules of the otherwise applicable law (e.g. the law of bankruptcy) according to Article 1.4. However, it should be stressed that notice to the obligor as provided for by Article 9.1.10 is not a condition for the effectiveness of the transfer of the right(s) between the assignor and the assignee.

2. Consent of the obligor in principle not required

Paragraph (2) states explicitly what is already implied in paragraph (1), i.e. that the obligor’s consent is not required for the assignment to be effective between the assignor and the assignee.

3. Exception: obligation of an essentially personal character

An exception is made for the case in which the right to be assigned relates to an obligation of an essentially personal character, i.e. a right that has been granted by the obligor specifically to the person of the obligee. This characteristic prevents the right from being assigned without the consent of the obligor, since it would be inappropriate to oblige the obligor to perform in favour of another person.

1. Company X promises to sponsor activities organised by organisation A, engaged in the defence of human rights. A wishes to assign the right to organisation B, active in the protection of the environment. The assignment can only take place with X’s agreement.

2. A famous soprano has made a contract with agent A to sing in concerts organised by A. A sells its claims against the soprano to agent B. This transfer will require the soprano’s consent, if the circumstances reveal that she was willing to sing only for A.

4. Effect of other provisions

The possibility to assign a right without the obligor’s consent may be affected by the presence of a non-assignment clause in the contract between the assignor and the obligor (see Article 9.1.9), although such a clause does not in itself necessarily imply the essentially personal character of the obligation.

This Article does not address the issue of the necessity to give notice of the assignment to the obligor in order to avoid that the obligor pay the assignor after the assignment has taken place. On these issues, see Articles 9.1.10 and 9.1.11.

ARTICLE 9.1.8 (OBLIGOR’S ADDITIONAL COSTS)

The obligor has a right to be compensated by the assignor or the assignee for any additional costs caused by the assignment.

1. Compensation for additional costs

The assignment of a right does not necessarily affect the obligor’s rights and obligations. However, should the obligor bear additional costs due to the fact that performance has to be rendered to the assignee instead of the original obligee, this Article entitles the obligor to require due compensation.

1. Company X is obliged to reimburse a loan of EUR 1,000,000 to company A. Both companies are located in country M. A assigns its right to company B, located in country N. X has a right to be compensated for the additional costs involved in what has now become an international transfer.

The rule laid down in this Article is in conformity with Article 6.1.6, which provides a similar solution if a party to the contract changes its place of business after the conclusion of the contract.

2. Compensation by the assignor or the assignee

The obligor may claim compensation for additional costs either from the assignor or from the assignee. In the case of a monetary obligation, the obligor will often be in a position to set off its right to compensation against the obligation it owes to the assignee.

3. Partial assignment

Additional costs may arise in particular in the case of partial assignment (see Article 9.1.4). This Article applies accordingly.

2. In Illustration 2 to Article 9.1.4, A has assigned to B part of its right to receive a delivery of steel from X. Instead of having to deliver 1,000 tons to A, X became obliged to deliver 700 tons to A and 300 tons to B. X is entitled to be compensated for the additional costs resulting from having to deliver in two parts.

4. Obligation becoming significantly more burdensome

In two cases compensation for additional costs is not considered to be a sufficient remedy. Firstly, under Article 9.1.3 the assignment of a right to a non-monetary performance is not allowed when it would render the obligation significantly more burdensome. Secondly, under Article 9.1.4 the partial assignment of a right to a non-monetary performance is also not allowed in similar circumstances.

ARTICLE 9.1.9 (NON-ASSIGNMENT CLAUSES)

(1) The assignment of a right to the payment of a monetary sum is effective notwithstanding an agreement between the assignor and the obligor limiting or prohibiting such an assignment. However, the assignor may be liable to the obligor for breach of contract. 

(2) The assignment of a right to other performance is ineffective if it is contrary to an agreement between the assignor and the obligor limiting or prohibiting the assignment. Nevertheless, the assignment is effective if the assignee, at the time of the assignment, neither knew nor ought to have known of the agreement. The assignor may then be liable to the obligor for breach of contract.

1. Balance of interests

According to Article 9.1.7(2) the consent of the obligor is not required for the assignment to be effective between the assignor and the assignee unless the obligation is of an essentially personal character. However, in practice it is frequent for the contract between the original obligee/assignor and the obligor to contain a clause limiting or prohibiting the assignment of the original obligee/assignor’s rights as the obligor may not wish to change obligee. Should the original obligee/assignor subsequently assign such rights in spite of the non-assignment clause, the conflicting interests of the obligor and of the assignee must be weighed. The obligor suffers a violation of its contractual rights, but the assignee must equally be protected. At a more general level, it is also important to favour the assignment of rights as an efficient means of financing.

In this respect this Article makes a distinction between the assignment of monetary rights and the assignment of rights to other performances.

2. Monetary rights

In the case of the assignment of monetary rights, paragraph (1) gives preference to the needs of credit. The assignee of a monetary right is protected against non-assignment clauses and the assignment is fully effective. However, as the assignor acts contrary to its contractual duties, it is liable in damages to the obligor for non-performance of the contract under Chapter 7, Section 4.

1. Contractor A is entitled to the payment of USD 100,000 from its customer X after a certain stage of construction work has been completed. The contract contains a clause prohibiting A from assigning the right. A nevertheless assigns the right to bank B. B can rely on the assignment despite the clause, and can claim payment when it is due. X is however entitled to sue A for acting in breach of the clause. X could for instance claim damages if it demonstrates that it has suffered some prejudice.

2. Company X is to reimburse EUR 500,000 to company A at a date when it can set off this obligation partially with a claim of EUR 200,000 it has against A. The contract between X and A contains a non-assignment clause. Disregarding that clause, A assigns its right to reimbursement to company B. X may claim damages against A for the costs it incurs in having to engage in a separate procedure to recover the sum of EUR 200,000.

3. Non-monetary rights

The assignment of rights to non-monetary performances does not have the same relationship to credit, thus justifying another solution which is to be found in paragraph (2). In order to achieve a fair balance between the conflicting interests of the three parties concerned, the rule is that non-assignment clauses are given effect vis-à-vis the assignee with the result that the assignment is ineffective. The solution is however reversed if it can be established that, at the time of the assignment, the assignee did not know and ought not to have known of the non-assignment clause. In such a case, the assignment is effective, but the assignor may be liable in damages to the obligor for non-performance of the contract under Chapter 7, Section 4.

3. Company X has agreed to communicate to company A all improvements it will develop to a technical process over a period of time. Their contract stipulates that A’s rights towards X may not be assigned. A does not need the technology for itself any longer and attempts to assign its rights to company B. Such an assignment is ineffective. X does not become B’s obligor. In such a case, B has a claim against A under Article 9.1.15(b).

ARTICLE 9.1.10 (NOTICE TO THE OBLIGOR)

(1) Until the obligor receives a notice of the assignment from either the assignor or the assignee, it is discharged by paying the assignor. 

(2) After the obligor receives such a notice, it is discharged only by paying the assignee.

1. Effect of notice on the obligor

Whereas the assignment is effective between the assignor and the assignee as a result of their agreement (see Article 9.1.7), the obligor will be discharged by paying the assignor until it receives notice of the assignment. If the obligor pays the assignor, the assignee can recover that payment from the assignor (see Article 9.1.15(f)). Only after the obligor receives a notice of assignment does the assignment become effective towards the obligor. The obligor can then be discharged only by paying the assignee.

1. Seller A assigns its right to payment from buyer X to bank B. Neither A nor B gives notice to X. When payment is due, X pays A. This payment is fully valid and X is discharged. It will be up to B to recover it from A under Article 9.1.15(f).

2. Seller A assigns to bank B its right to payment from buyer X. B immediately gives notice of the assignment to X. When payment is due, X still pays A. X is not discharged and B is entitled to oblige X to pay a second time.

Before the obligor receives a notice of the assignment, it is discharged when it pays the assignor irrespective of whether it knew, or ought to have known, of the assignment. The purpose is to place the burden of informing the obligor of the assignment on the parties to the assignment agreement, i.e. the assignor and the assignee. This solution is considered to be justified in the context of international commercial contracts. However, it does not necessarily exclude that in certain circumstances the obligor will be liable for damages if it acted in bad faith when it paid the assignor.

Parties sometimes resort to so-called “silent assignments”, where the assignor and the assignee agree not to inform the obligor of the assignment. This arrangement is valid between parties, but since the obligor receives no notice, it will be discharged by paying the assignor, as provided in Article 9.1.10(1).

2. Meaning of “notice”

“Notice” is to be understood in the broad sense of Article 1.10. Although this Article does not specify the content of the notice, the latter should indicate not only the fact of the assignment, but also the identity of the assignee, the specifications of the right transferred (subject to Article 9.1.6) and, in the case of partial assignment, the extent of the assignment.

3. Who should give notice

Article 9.1.10(1) leaves the question of who should give notice open, i.e. whether it should be the assignor or the assignee. In practice, it is probable that in most cases the assignee will take the initiative, as it has a major interest in avoiding that the obligor will perform in favour of the assignor notwithstanding the assignment. But notice given by the assignor has the same effect. When notice is given by the assignee, the obligor may request adequate proof of the assignment (see Article 9.1.12).

4. When must notice be given

This Article does not explicitly require notice to be given only after the assignment agreement has been concluded. In some cases the contract between a future assignor and the obligor will provide that the rights arising from it will be assigned to a financial institution. Whether this can be considered to be adequate notice having the consequences provided for in this Article is a matter of interpretation, and may possibly depend on the definiteness of the clause regarding the identity of the future assignee.

5. Revocation of notice

Notice given to the obligor can be revoked in certain circumstances, e.g. if the assignment agreement itself becomes invalid, or if an assignment made for security purposes is no longer necessary. This will not affect payments made before the revocation to the person who was the assignee at the time, but if the obligor pays that person after the revocation it would no longer be discharged.

ARTICLE 9.1.11 (SUCCESSIVE ASSIGNMENTS)

If the same right has been assigned by the same assignor to two or more successive assignees, the obligor is discharged by paying according to the order in which the notices were received.

1. Priority of first notice

This Article deals with the case where the same assignor assigns the same right to different assignees. Normally this should not happen, although in practice it may occur, whether the assignor does so consciously or inadvertently. Preference is then given to the assignee who was the first to give notice. The other assignees can only claim against the assignor under Article 9.1.15(c) below.

On 5 February seller A assigns its right to payment from buyer X to bank B, and then on 20 February to bank C. C notifies the assignment on 21 February, and B does so only on 25 February. X is discharged by paying C, even though the right was assigned to C after it had been assigned to B.

Unlike the solution prevailing under certain jurisdictions, this Article does not take into consideration the actual or constructive knowledge the obligor may have of the assignment(s) in the absence of notice. This approach is motivated by the wish to encourage the giving of notice, thus ensuring a degree of certainty that is especially advisable in the context of international contracts.

2. No notice given

If no notice is given by any of the successive assignees the obligor will be discharged by paying the assignor (see Article 9.1.10(1)).

3. Notice without adequate proof

Notice by an assignee without there being adequate proof that the assignment has been made, may be ineffective under Article 9.1.12.

ARTICLE 9.1.12 (ADEQUATE PROOF OF ASSIGNMENT)

(1) If notice of the assignment is given by the assignee, the obligor may request the assignee to provide within a reasonable time adequate proof that the assignment has been made. 

(2) Until adequate proof is provided, the obligor may withhold payment. 

(3) Unless adequate proof is provided, notice is not effective. 

(4) Adequate proof includes, but is not limited to, any writing emanating from the assignor and indicating that the assignment has taken place.

Since receiving the notice of assignment has the important effects provided for in Articles 9.1.10 and 9.1.11, this Article intends to protect the obligor against the risk of receiving a fraudulent notice from a fake “assignee” by requiring adequate proof that the assignment has actually been made. Until adequate proof is provided, the obligor may withhold payment to the alleged assignee. If adequate proof is provided, notice is effective from the date it was provided.

On 1 December purchaser X has to pay USD 200,000 to contractor A as an instalment of the sum due for the construction of a plant. In October A assigns the right to bank B. Either A or B may give notice of the assignment to X. If B takes the initiative and writes to X that it has become the assignee of the sum, X may require B to provide adequate proof. Without prejudice to other types of evidence, B will probably produce the assignment agreement or any other writing from A confirming that the right has been assigned. Until such adequate proof is provided, X may withhold payment.

ARTICLE 9.1.13 (DEFENCES AND RIGHTS OF SET-OFF)

(1) The obligor may assert against the assignee all defences that the obligor could assert against the assignor. 

(2) The obligor may exercise against the assignee any right of set-off available to the obligor against the assignor up to the time notice of assignment was received.

1. Assertion of defences

A right can in principle be assigned without the obligor’s consent (see Article 9.1.7(2)). This solution rests on the assumption that the assignment will not adversely affect the obligor’s legal situation.

It can happen that the obligor would have been able to withhold or refuse payment to the original obligee on the basis of a defence such as the defective performance of that obligee’s obligations vis-à-vis the obligor. To determine whether such defences can be asserted also against the assignee, the respective interests of the parties have to be weighed: the obligor’s situation should not deteriorate as a result of the assignment, while the assignee has an interest in the integrity of the right it has acquired.

According to paragraph (1) of this Article, the obligor may assert against the assignee all the defences that it would have been able to assert if the claim had been made by the assignor. In this case, however, the assignee will have a claim against the assignor under Article 9.1.15(d).

1. Software company A promises customer X to install a new accounting application before the end of the year. The main payment is to take place one month after completion. A immediately assigns the right to bank B. When the payment is due, B wants to claim it from X, but the latter explains that the new software is not working properly and that the accounting department is in chaos. X refuses to pay until this catastrophic situation has been remedied. X is justified in asserting this defence against B, which can then claim against A under Article 9.1.15(d).

The same solution applies to defences of a procedural nature.

2. Company X sells a gas turbine to contractor A, to be incorporated into a plant built for customer B. When the work has been completed, A assigns the guarantee of satisfactory performance to B. When the turbine does not work properly, B sues X before a court at its place of business. X will successfully invoke the arbitration clause included in its contract with A.

According to paragraph (2), the obligor may exercise against the assignee any right of set-off provided that the right of set-off was available to the obligor under Article 8.1 before the notice of the assignment was given.

This solution is in accord with the principle that the obligor’s situation should not deteriorate as a result of the assignment. The assignee’s interests are protected by the claim it may then have against the assignor under Article 9.1.15(e).

3. Company A assigns to company B the right to the payment of EUR 100,000 that it has against company X. X however has a claim of EUR 60,000 against A. The two claims have not yet been set off by notice given under Article 8.3 of the Principles, but the required conditions for set-off were satisfied before the assignment was notified. X may still exercise its right of set-off by giving notice to the assignee. B can then only claim EUR 40,000 from X. B can recover the difference from A which had undertaken under Article 9.1.15(e) that the obligor would not give notice of set-off as regards the assigned right.

ARTICLE 9.1.14 (RIGHTS RELATED TO THE RIGHT ASSIGNED)

The assignment of a right transfers to the assignee: 

(a) all the assignor’s rights to payment or other performance under the contract in respect of the right assigned, and 

(b) all rights securing performance of the right assigned.

1. Scope of the assignment

This provision is inspired by the same principle as Article 9.1.13. The assignment transfers the assignor’s right as it is, not only with the defences the obligor may be able to assert, but also with all the rights to payment or to other performances under the contract in respect of the right assigned, and all rights securing performance of the right assigned.

1. Bank A is entitled to receive reimbursement of a loan of EUR 1,000,000 made to customer X, bearing interest at a rate of 3%. A assigns its right to reimbursement of the principal to bank B. The assignment also operates as a transfer of the right to interest and of the underlying security.

2. The initial facts are the same as in Illustration 1, but the loan contract entitles A to claim early repayment if X fails to pay the interest due. This right is also transferred to B.

3. The initial facts are the same as in Illustration 1, but X has deposited some shares as security to the benefit of A. This benefit is transferred to B, subject to the possible application of mandatory requirements of the otherwise applicable law under Article 1.4.

2. Partial assignment

When a right is partially assigned, if the rights covered by Article 9.1.14 are divisible they will be transferred in proportion. If they are not, parties should decide whether they are transferred to the assignee or whether they will remain with the assignor.

3. Contractual deviations

The rule laid down in paragraph (1) may however be modified by an agreement between the assignor and the assignee, who may stipulate, for instance, a separate assignment of interest.

4. Assignor’s co-operation

It follows from the general duty to co-operate laid down in Article 5.1.3 that the assignor is obliged to take all the steps necessary to permit the assignee to enjoy the benefit of accessory rights and securities.

ARTICLE 9.1.15 (UNDERTAKINGS OF THE ASSIGNOR)

The assignor undertakes towards the assignee, except as otherwise disclosed to the assignee, that: 

(a) the assigned right exists at the time of the assignment, unless the right is a future right; 

(b) the assignor is entitled to assign the right; 

(c) the right has not been previously assigned to another assignee, and it is free from any right or claim from a third party; 

(d) the obligor does not have any defences; 

(e) neither the obligor nor the assignor has given notice of set-off concerning the assigned right and will not give any such notice; 

(f) the assignor will reimburse the assignee for any payment received from the obligor before notice of the assignment was given.

When assigning a right by agreement to the assignee, the assignor assumes several undertakings.

1. Existence of the right

The assigned right should exist at the time of the assignment. This would, for instance, not be the case if the payment had already been made or if the right to a payment had previously been avoided.

1. Company A assigns a bundle of rights to factor B. When required to pay by B, customer X demonstrates that the amount due had been paid to A before the assignment. B has a claim against A, since at the time of the assignment the right no longer existed.

If, as permitted by Article 9.1.5, a future right is assigned, no such undertaking exists.

2. Company A assigns to bank B the royalties from a technology licence that is to be granted in the near future to company X. The licence never materialises. B has no claim against A.

2. Assignor entitled to assign the right

The assignor is entitled to assign the right. This is, for instance, not the case if there is a legal or contractual prohibition to assign the right.

3. Company X has agreed to communicate to company A all the improvements to a technical process that it will develop over a period of time. Their contract stipulates that A’s rights towards X cannot be assigned. A no longer needs the technology itself, and attempts to assign its rights to company B. This illustration was already given above, under Article 9.1.9, to give an example of an ineffective assignment. In this case, B has a claim against A under Article 9.1.15(b). It will be recalled that the solution would be reversed, should B demonstrate that it neither knew nor ought to have known of the non-assignment clause.

3. No previous assignment, no third party rights or claims

If the assignor has already assigned a right to another assignee, it is generally not entitled to make a second assignment of that same right and this prohibition could be considered as already covered by the undertaking under sub-paragraph (b). The practical importance of this hypothesis is such that a separate and explicit provision is justified. It will however be recalled that under Article 9.1.11 the second assignee may prevail over the first one if it gives earlier notice to the obligee.

However, a previous assignment may have been made merely for security purposes. In this case, the right is still assignable, with proper disclosure to the second assignee.

4. No defence from the obligor

According to Article 9.1.13(1), the obligor may assert against the assignee all the defences that the obligor would have been able to assert against the assignor. In such a case, the assignee has a claim against the assignor on the basis of this undertaking.

4. Bank B is the assignee of contractor A’s right to payment of a certain sum from customer X. When payment is due, X refuses to pay arguing that A did not perform its obligations properly. Such defence can be successfully set up against B under Article 9.1.13(1). B would then have a claim against A.

5. No notice of set-off

The right of set-off may be exercised by the obligor against the assignee if it was available to the obligor before the notice of assign¬ment was received (see Article 9.1.13(2)). The assignor undertakes vis-à-vis the assignee that neither the assignor nor the obligor has already given notice of set-off affecting the assigned right. The assignor also undertakes that such notice will not be given in the future. If, for instance, the obligor were to give such a notice to the assignee after the assignment, as permitted by Article 9.1.13(2), the assignee would have a claim against the assignor under Article 9.1.15(e).

6. Reimbursement of payment by the obligor

Article 9.1.10(1) provides that until it receives the notice of assignment the obligor is discharged by paying the assignor. This is the correct solution to protect the obligor, but the assignor and the assignee have agreed between themselves on the transfer of the right. The assignor therefore undertakes that it will reimburse the assignee for any payment it received from the obligor before the notice of assignment was given.

5. Seller A assigns to bank B its right to payment from buyer X. Neither A nor B gives notice to X. When payment is due, X pays A. As already explained in the Comment on Article 9.1.10, this payment is fully valid and B is discharged. However, Article 9.1.15(f) enables B to recover the sum paid from A.

7. No undertaking concerning the obligor’s performance or solvency

Parties to the assignment may certainly provide for an undertaking by the assignor concerning the obligor’s present or future solvency, or, more generally, the obligor’s performance of its obligations. However, without such an agreement, there is no such undertaking under this Article.

6. Company B is the assignee of company A’s right to payment of a certain sum from customer X. When payment is due, B finds out that X has become insolvent. B has to bear the consequences. The solution would be the same if B discovered that X was already insolvent at the time of the assignment.

In case of breach of one of the assignor’s undertakings, the remedies provided for in Chapter 7 become available. The assignee may for instance claim damages from the assignor or terminate the agreement if the conditions of Article 7.3.1 et seq. are fulfilled.

8. Effect of disclosure on undertaking

Some of the assignor’s undertakings may be affected by disclosures made at the time of the transfer. The assignor may for instance advise the assignee of the existence of a claim by a third party, in which case the assignee may accept the transfer of the right at its own risk, with no undertaking on that matter on the part of the assignor.

• UNIDROIT PRINCIPLES 2010
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Professor Verónica Ruiz Abou-Nigm is Chair in Private International Law at Edinburgh Law School. She has widely published in private international law and has taught and researched in Europe and Latin America. Her work is published in English, Spanish and Portuguese. Her research focuses on the intersections between private international law and other disciplines, including international commercial arbitration, shipping law, migration, sustainable development and legal education.

Professor Ruiz Abou-Nigm is President of the European Law Faculties Association (ELFA), Vice-President of the American Association of Private International Law (ASADIP), and Member of the Scientific Council of the European Association of Private International Law (EAPIL).

Dr Ole Böger is a Judge in Banking and Criminal matters at the Hanseatic Court of Appeal (Hanseatisches Oberlandesgericht) in Bremen, Germany, and a Lecturer at the University of Bremen. Previously, he has been, amongst others, a Desk Officer at the German Federal Ministry of Justice and for Consumer Protection (2013-2016), a Legal Officer at UNIDROIT working on the Principles of Close-Out Netting (2012-2013) and a research assistant at the Max-Planck-Institute for Foreign and Comparative Private Law in Hamburg, Germany (2003-2008). He has represented the German government in UNCITRAL Working Groups and at UNIDROIT, specifically in the preparation and adoption of the UNIDROIT MAC Protocol, and he is an Ex officio Observer to the Preparatory Commission for the Establishment of the International Registry for MAC equipment. Recently, he has been an external consultant to secured transactions law reform projects of the World Bank in Suriname (2016), Greece (2020) and Lebanon (2021). Dr Böger holds law degrees of the University of Göttingen in Germany and King’s College London (UK) and he has authored numerous publications with a focus on international secured transactions law and the law of payment services.

Professor Donati is the author of several publications on corporate law, restructuring, insolvency law, and bank crisis management. On the same topics, he has been invited as a speaker to various international and national conferences and participated in some high-impact international, European, and national research projects. Professor Donati’s education includes a Ph.D. in Corporate Law (University of Rome ‘La Sapienza’), an LLM in Corporate Governance (Stanford Law School), and a Law Degree with honors (University of Florence). He is qualified as an attorney in Italy and in the State of New York (USA).

Giulia Stella Previti is a Legal Officer at the International Institute for the Unification of Private Law (UNIDROIT), based in Rome.  Giulia has primary responsibility for UNIDROIT’s projects on the Legal Nature of Voluntary Carbon Credits and on Digital Assets and Private Law.

Prior to joining UNIDROIT, Giulia was a Senior Vice President at Burford Capital, where she analyzed opportunities to invest in a wide array of legal assets, specializing in evaluating international arbitration claims and awards.  In addition, Giulia spent about seven years in private practice at Freshfields in New York, where she was a Senior Associate focusing on international arbitration and litigation matters.  Giulia also clerked in US federal court for Senior Judge Jack B. Weinstein in the Eastern District of New York.

Giulia is admitted to the New York Bar and obtained her Juris Doctor from New York University School of Law.  She has a Masters of Science from the London School of Economics and Political Science and a Bachelor of Arts from University College London.

Priscila Pereira de Andrade works as a Legal Officer at UNIDROIT. She is mainly responsible for the Agricultural Development and Private Law projects jointly developed with IFAD and FAO (Legal Structure of Agricultural Enterprise, Agricultural Land Investment Contracts and Contract Farming). Priscila holds a Ph.D. in International Law from the University Paris I Panthéon-Sorbonne (France), a Master Degree in International Relations from the University Center of Brasília (Brazil), and a specialisation degree in International Environmental Law from the United Nations Institute for Training and Research (UNITAR). Before joining UNIDROIT, she worked for the International Institute for Sustainable Development (IISD) and was an assistant professor at the University of Pisa (Italy), as well as an associate professor at the Master in Law Program of the University Center of Brasília.

Keni Kariuki works as a Legal Consultant/MAECI Chairholder at UNIDROIT. He is mainly responsible for assisting in the “Private Law and Agricultural Development” projects jointly developed with IFAD and FAO (Collaborative Legal Structures for Agricultural Enterprises, Agricultural Land Investment Contracts and Contract Farming). Keni holds a Ph.D. in Agricultural Political Economy from SOAS University of London (United Kingdom), a Master’s degree in International Human Rights Globalisation and Justice from Keele University (United Kingdom), he completed his Bar Vocational Course (BVC) at Nottingham Trent University (United Kingdom), and has a Bachelor of Laws (LLB) in Law and Politics (Dual Degree) from Keele University. Before joining UNIDROIT, he worked for the African Union Commission (AUC) and as a consultant for other multilateral actors such as Gesellschaft für Internationale Zusammenarbeit (GIZ), FAO, and Bread for the World, among others.

Dr Giray graduated from Istanbul University’s Law Faculty in 1998 before obtaining a postgraduate degree in EU Law from Marmara University European Union Institute in 2000. He carried out academic research at the London University Advanced Legal Studies Institute for his doctorate thesis in 2004. He was awarded a Ph.D. in Private Law from Istanbul University’s Social Sciences Institute in 2007. He worked as a research assistant from 1999 to 2007 at Istanbul University’s Law Faculty in the Private International Law Department. Then, he was appointed as a military judge to the 2nd Army Commandership for military service.

He was appointed as an assistant professor in 2008. While conducting research at Georgetown University’s School of Law, he was granted with a scholarship from the Turkish Higher Education Council and Georgetown University for the 2011-2012 academic year. He simultaneously conducted research on ICSID arbitration at the World Bank and also at the Library of Congress.

Dr Giray was appointed as an associate professor in 2013 due to his articles and book named “Compensation Arising from Expropriation in International Investment Arbitration and Methods Used in the Calculation of Compensation”. He was appointed as a full-time professor in the same department in 2020 due to his articles, projects and a new book named “Limitation Periods in International Private and Procedural Law”.

In 2022 he was appointed as a Correspondent of Turkey by the International Institute for the Unification of Private Law (UNIDROIT).

He gives courses on Private International Law and International Civil Procedural Law for undergraduates, as well as International Family and Child Law, Disability Rights and International Investment Law-ICSID Arbitration for postgraduate students of the Law Faculty and Social Sciences Institute at Istanbul University, while carrying out administrative duties at the same time. Currently, he is pursuing additional postgraduate studies on Tax Law.

Mr Alvaro Galindo is an International Counsel advising on dispute resolution matters, particularly those involving Latin American jurisdictions. Currently, he is the Dean of the Law School at Universidad de las Americas. His practice focuses on disputes between sovereign states and state-owned entities and private companies. He has been recognised by The Legal 500 Latin America and was noted in this publication as “outstandingly intelligent” and for his “incomparable capacity for coordinating, planning, strategic assessment, and for his diplomatic approach”.

He was as member of the international arbitration practice at Dechert LLP in Washington, D.C. He also served as the Director of the International Affairs and Arbitration Unit for the Republic of Ecuador’s Attorney General’s Office. He acted as a legal consultant for the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C., and as regional director for the Latin American Development Corporation, where he coordinated the committee in charge of drafting the Arbitration Law of Ecuador.

Mr Galindo has significant teaching experience in the areas of dispute resolution, international investment, and arbitration law. He has authored numerous publications and articles related to arbitration and international investment law.

Currently, he is an Adjunct Professor at Georgetown University Law Center, with a course on Advanced Topics in International Investment Arbitration and Adjunct Professor of Practical Aspects of Arbitration (Spanish course) at American University Washington College of Law.

Mr Galindo has represented sovereign states in international and regional forums: the United Nations Conference on Trade and Development, UNCTAD; the United Nations Commission on International Trade Law, UNCITRAL.

Member of the Court of the ICC International Court of Arbitration and arbitrator in various arbitration centres in Latin America. In September 2021, he was appointed to the list of arbitrators under the ICSID Convention.

My main areas of expertise related to UNIDROIT work include international commercial contracts, international civil proceedings and private international law.

Derek was permanently appointed to the Supreme Court (now renamed the High Court) as a Judge, with effect from 1 November 2017. This after being in private practice for nearly thirty years. His main interest areas and focus areas are in commercial law, with a particular interest in Private International Law.

Derek has already used the UNIDROIT Principles and the UNIDROIT Model Clauses in several commercial High Court judgments since June 2022. He has benefitted immeasurably from being exposed to the workings of UNIDROIT.  Put in another way, “my eyes have been opened”.

Derek has used the UNIDROIT Principles and the UNIDROIT Model Clauses as an interpretive aid by way of application in several judgments that have since been reported as precedent jurisprudence in South Africa. He has also effectively utilised the UNIDROIT Principles and the UNIDROIT Model Clauses to supplement domestic law in his judgments by referencing the Constitution of the Republic of South Africa.

Antenor Madruga is a founding partner of the law firm Madruga BTW and recognised as a leading Brazilian lawyer in complex litigations and negotiations involving government criminal and administrative proceedings, particularly in multijurisdictional cases. He was the lead counsel in several of the major white-collar cases in Brazil. He is currently a member of the Self-Regulation Board of the Brazilian Federation of Banks (FEBRABAN). In his former career as a Federal Attorney, Mr. Madruga occupied several positions in the Brazilian government, among them: Director of the Department of Assets Recovery and International Legal Cooperation of the Ministry of Justice, Coordinator of the National Strategy Against Money Laundering (ENCCLA); Board of the Brazilian Financial Intelligence Unit (COAF); and National Secretary of Justice. Ph.D. in International Law.

Full Professor at the Department of Law at the Federal University of Espírito Santo -UFES. Professor of the Master’s Program in Procedural Law at UFES. Postgraduate in International Economics and Finance and PhD in Law and International Relations from the University of Barcelona. Member of the American Association of Private International Law – currently holds the position of Vice President of Communication and Publishing. Member of the Brazilian Academy of International Law; the Brazilian Association Elas no Processo; the Brazilian Association of Procedural Law; and the Brazilian Association of Women in the Legal Career. Member of the International and Latin American Networks of International Civil Procedure. Coordinator of the Research Group and the Jurisprudence Observatory – Labyrinth of the Codification of International Civil Procedural Law. Researcher in the project “Keys for Digital and Algorithmic Justice with a Gender Perspective. Practice Areas: Public International Law. Private International Law. International Civil Procedural Law. Comparative law. International Trade Law. Theory and Comparison between Systems. Main areas related to the work of UNIDROIT: Civil Procedure; ELI Model European Rules of Civil Procedure; ALI/UNIDROIT Principles; Best Practices for Effective Enforcement; Cross-Border Investment; Law and Technology; Arbitration; Intellectual Property and other subjects.

Mr Gama Jr. is a Brazilian lawyer and arbitrator. Currently, he holds the position of Adjunct Professor at the Pontifical Catholic University of Rio (PUC-Rio), where he teaches Private International Law and International Commercial Arbitration. He is a correspondent of the UNIDROIT since 2016 and a member of the CISG Advisory Council. Mr Gama Jr. acted as counsel and arbitrator in more than 100 cases, under the rules of ICC, LCIA, UNCITRAL and Brazilian arbitral institutions. His experience includes corporate law, M&A transactions, shareholders agreements, major construction contracts, built-to-suit contracts, insurance disputes, international sale of goods, services, consulting, joint-ventures and transfer of technology. He has authored a number of books and articles related to the UNIDROIT Principles. In 2016, Lauro lectured at the Hague Academy of International Law on the topic of “The UNIDROIT Principles as the law applicable to commercial contracts”, which was published in vol. 406 of the Collected Courses.

Lauro participated in the UNIDROIT working groups which produced the UNIDROIT Principles of International Commercial Contracts, 3rd edition (2005-2010), and the Model Clauses for the use of the UNIDROIT Principles (2012-2013). Moreover, he worked on the Portuguese version of the Black Letter rules of the 2016 UNIDROIT Principles, and was one of the five experts who collaborated with UNCITRAL, HCCH and UNIDROIT to develop the “Legal Guide to Uniform Instruments in the Area of International Commercial Contracts, with a Focus on Sales”, which was published in 2021.

Mr Fontoura Costa researches and teaches International Business Law and Comparative Law at the University of São Paulo. He focuses on issues such as: (i) arbitration; (ii) civil procedure; (iii) commodities production and trade; (iv) company law; (v) contract law and clauses; (vi) energy; (vii) information technologies; (viii) infrastructure; (ix) intellectual rights; (x) negotiable instruments; and (xi) transport law. He also acts as lawyer and arbitrator.

Mr Ferro Catapani is a Federal Judge and Professor at the Federal University of São Paulo. He has experience in research and teaching of commercial law and financial market regulation. His main areas of expertise related to the work of UNIDROIT, include: (i) legal structure of agricultural enterprises; (ii) capital markets and banking law; (iii) bank insolvency; (iv) netting; (v) factoring; (vi) franchising; (vii) leasing; (viii) negotiable instruments; (ix) security Interests.

Fabio holds a PhD (summa cum laude) in Civil Law, with research on secured transactions and security rights, from Université Panthéon-Assas (Paris 2) and University of São Paulo, Brazil.

He is lawyer in Brazil, acting in the field of real estate law and financing, including receivables financing through the capital markets for the real estate industry.

He was also a delegate of Brazil in UNCITRAL Working Group VI (Security Interests) and he has assisted multiple organizations and governments in drafting secured credit and public registries’ reforms, including in Angola, Brazil, Madagascar, Mozambique and São Tomé and Príncipe.

Professor Sheelagh McCracken is Professor of Finance Law at the University of Sydney, Australia and a Fellow of the Australian Academy of Law.

She has lectured on finance law in various centres in Australia and around the Asia-Pacific region, including Singapore, Hong Kong, Beijing and Tokyo. She writes and speaks regularly on secured transactions law, focusing in particular on the development, operation and application of personal property securities legislation in Australia.

A graduate of the University of Cambridge, she obtained her PhD from the University of Sydney, which was subsequently published in the UK as The Banker’s Remedy of Set-Off and is currently in its third edition. Other major publications include a standard Australian text, Everett & McCracken’s Banking and Financial Institutions Law which she has co-authored since its first publication over 30 years ago and is now in its 9 th edition.

Professor of Space Law and Emeritus of International Law, Sapienza University of Rome. Vice-President of Italian Society for International Organization (SIOI). Chairman of European Centre for Space Law (ECSL/ESA). General Counsel of International Astronautical Federation (IAF). Member of the Advisory Council of European Space Policy Institute (ESPI). Senior Legal Advisor of Italian Space Agency (ASI).

Legal Expert at Italian Ministry of Foreign Affairs. Italian Delegate to the 2001 Cape Town Diplomatic Conference for the Adoption of the UNIDROIT Convention on International Interests in High Value Mobile Equipment and Protocol on Matters specific to Aircraft Assets.

Chair of the Committee of Governmental Experts for the preparation of a Protocol to the Cape Town Convention on Matters specific to Space Assets (2003-2012). Chair of the Committee of the Whole of the 2012 Berlin Diplomatic Conference, which adopted the Protocol.

Since 2013, Chair of the Space Preparatory Commission, set up as Provisional Supervisory Authority for establishing the International Registry for Space Assets under the guidance of UNIDROIT General Assembly. Since 2010, UNIDROIT correspondent for Italy.

Italian delegate to UNCOPUOS, since 1997. Chairman of Legal Subcommittee (2004-2006) and Co-chair of Expert Group on Regulatory Regimes of the Working Group on Long-Term Sustainability of the Outer Space Activities (2010-2018).

Since 2007, Italian delegate to the Council of the EU for the Negotiation of the International Code of Conduct on Outer Space Activities (ICoC). Chair of the multilateral negotiations on ICoC held at the United Nations (New York, 2015).

Member of two UN Group of Governmental Experts on Outer Space Transparency and Confidence-Building Measures (TCBMs, 2011-2013), and on Practical Measures for the Prevention of an Arms Race in Outer Space (PAROS, 2018-2019). Member of the Specialized Panel of Permanent Court of Arbitration pursuant to Optional Rules on Disputes relating to Outer Space Activities.

Ms Olga Fonotova is an Associate Professor of the Faculty of Law (Department of Legal Regulation of Business) at the Russian National Research University “Higher School of Economics” in Moscow. She holds a PhD degree cum laude in private law / private international law from the Lomonosov Moscow State University (2006). Her academic and teaching interests cover private international law, international and national commercial law, with a focus on unified and non-state legal regulation of cross-border commerce.

Olga is a Russian law qualified practicing lawyer in the sphere of national and international commercial and corporate law with 20+ years’ experience in leading law firms. As part of her legal practice, she has advised multinational corporations on the setting up of multi-jurisdictional commercial relations, on the formation / termination of international joint ventures, restructuring of assets, and financing / refinancing of projects. For her work on commercial and corporate legal matters she was included in the international rating of leading lawyers “The Best Lawyers® in Russia” (2018 – 2022).

She is a UNIDROIT alumna (2011) and a Correspondent of UNIDROIT in Russia (2023 – 2025). From 2016 to 2021 Olga was a member of the ICC Commission on Commercial Law and Practice (ICC CLP) and a member of the Association of European Business (AEB) in Moscow.

Irini Stamatoudi is a Law Professor at the University of Nicosia (Cyprus) and a lawyer at the Supreme Court of Athens (Greece). She is specialised in Copyright and in Cultural Heritage Law. She holds degrees from the University of Athens – Greece (Law Degree) and the University of Leicester – UK (LL.M., Ph.D.). From 2007 – 2018 she was the General Director of the Hellenic Copyright Organisation (competent governmental organisation for copyright matters). She has taught at the Law School of the University of Leicester, on the joint LL.M. of the University of Turin, ILO, and WIPO, at the International Hellenic University, at the Academy of the World Intellectual Property Organization and on several other academic courses. For many years she acted as a legal counselor to the Ministry of Culture on issues of illegal trafficking of antiquities where she handled the famous return cases of masterpieces from the J. P. Getty Museum (in Los Angeles) and from the Leon Levy & Shelby White collection (NY). Since 1999 she has participated in several negotiation committees on the issue of Parthenon Marbles and is currently a member of the Ministry of Culture Advisory Committee on the Parthenon Marbles. She has published thirteen books in copyright and in cultural heritage law in Greece and abroad and several articles in academic journals worldwide. Some of her writings are considered internationally works of reference (e.g., I. Stamatoudi, Multimedia products as copyright works, Cambridge University Press, 2002, (reprint in paperback in January 2008, Kindle Edition 2010); I. Stamatoudi, Cultural Property Law and Restitution. A Commentary to International Conventions and European Union Law, Edward Elgar Publishing, Cheltenham (UK) – Northampton (US), 2011, I. Stamatoudi and P. Torremans (eds), European Union Copyright Law. A Commentary, Edward Elgar Publishing, Cheltenham (UK) – Northampton (US), 2014, and 2021 (2nd ed.)).

Main areas of expertise:

A. Substantive law: contracts; fiduciary relationships and trusts; secured transactions; commercial law generally and transnational commercial law in particular; company law; financial services. B. Private international law (conflict of laws). C. International civil procedure. D. Arbitration.

Correspondent of UNIDROIT since 1998 Attorney since 1978, specialist in international road transport law and transport insurance la w. Doctor in Law. Thesis, concerning liability of the carrier (cum laude). Member of the Spanish Royal Academy of Law. Vice-president of the Committee on Legal Affairs of the International Road Transport Union (IRU, Geneva, Switzerland) Chairman of the “ad hoc” Working Group for the updating of the IRU 1976 model of CMR consignment note, which was approved by IRU in 2007. Member of the International Legal Assistance Network agreed by the IRU. Consultant to the United Nations in traffic and road transport international conventions. Member of the Board of Directors and President of the Working Group “Transport Insurance” in AIDA (International Association of Insurance Law), Spanish section – SEAIDA. Lecturer in various University Master degrees (postgraduate courses) and speaker in various national and international congresses on Transport Law, transport insurance, etc. Author of several books (including the first book in Spain dealing with the whole CMR Convention) and hundreds of articles about Transport Law, Transport Insurance and other transport related activities. Member of the Editorial Staff of the legal journal European Transport Law (Antwerpen, Belgium). Sanchez-Gamborino’s opinions have been quoted several times as legal literature by Spanish Courts of Justice when deciding transport cases. Speech (November 2008) before the Spanish Parliament when National Transport Law, now in force, was being worded. His opinions quoted in the Bulletin of the Spanish Senate (September 2009). As to his relationship with UNIDROIT , his texts published several times in the Uniform Law Review (nr. 2001-3, pp. 643-648; nr. 2006-3, pp. 677-682; nr. 2016-4, pp. 561-573) and attended meetings at Rome, such as when drafting the CRTD (Convention on the civil liability for damages on the transport of dangerous goods), May 1986, jointly with the Delegation of IRU.

Ben Schuijling’s expertise spans the broad field of business law, with an emphasis on secured transactions, restructuring and insolvency. In relation to the work of UNIDROIT his areas of expertise include security interests, factoring, leasing, commercial contracts, agency and intermediated securities.

Prof. (Dr.) Sandeepa Bhat is working as a Professor of Law and Director of Centre for Aviation and Space Laws at National University of Juridical Sciences, Kolkata. He has the teaching and research experience of nearly twenty years. He was a University First Rank holder with double gold medals for his LL.M. and a University Third Rank holder with gold medal for top-scoring his college during LL.B. His five Major Research Projects are sponsored by World Bank, ISRO, the WB Judicial Academy, Ministry of Justice and Ministry of Environment, Forest and Climate Change. Apart from being UNIDROIT Correspondent for India, he has the distinction of being a member of the American Society of International Law, International Academy of Space Law, and the International Institute of Space Law. Dr. Bhat has published eight books and more than fifty five articles in the journals of international and national repute. He has presented over hundred and forty research papers in the international and national conferences including the coveted International Astronautical Congress, as well as in international conferences held at Jakarta, Seoul, Sharjah, Singapore, Changsha, Paris, Austin, Southampton and Cambridge. He also has the distinction of being a member of Indian Space Research Organization’s Expert Group for drafting the National Space Act for India.

Bruce Whittaker is an Honorary Senior Fellow at Melbourne Law School, University of Melbourne. Before joining the Law School, Bruce was for many years a lawyer and partner at law firm Ashurst.

Bruce’s legal expertise is in the field of banking and finance law, with a particular focus on secured transactions law.

Bruce has been involved in a number of UNIDROIT projects. He was a member of the Australian delegation to UNIDROIT that developed and settled the text of the MAC Protocol to the Cape Town Convention. He continues to represent Australia as a member of the Preparatory Commission that is tasked with the implementation of the MAC Protocol, and in that context is chair of the drafting committee for the development of the regulations that will underpin the operation of the Register. Bruce is also a member of the expert working groups that have been established by UNIDROIT to develop its proposed Model Laws on Factoring and Warehouse Receipts. He is the co-chair of the drafting committee for each of these Model Laws.

Bruce has honours degrees in law and arts from the University of Melbourne.

My main areas of expertise related to the work of UNIDROIT are Capital Markets, Security Interests and Commercial Contracts

Ergun Özsunay graduated from the Istanbul University Faculty of Law in 1957 and joined the faculty staff. As a research assistant he studied with Alfred F. Conard and E. Allan Farnsworth (visiting professors, 1957-59). He attended graduate studies at Harvard Law School in 1959/60 (LL.M.). He obtained his PhD degree at Istanbul University (1961). In 1962 and 1963 he attended “Faculté International pour l’Enseignement de Droit Comparé” (“Diplome de Droit Comparé” and “Diplome d’Etudes Supérieures de Droit Comparé”) in Strasbourg. Then he studied at Max Planck Institut für auslaendisches-und internationales Privatrecht” for his Habilitationsschriftı (1965/66). He was appointed full professor of law for Civil Law and Comparative Law at Istanbul Uni. Faculty of Law and elected as the Director of the Institute of Comparative Law in 1978. He was active in the AIDC and AISJ (former president). After his retirement Prof. Özsunay served as a member of the Turkish delegations in UNCITRAL and DH-BIO (CoE). At present he teaches Civil Law (Contracts and Specific Types of Contracts, Torts (Civil Liability), Secured Transactions, comparative competition law, and International Arbitration and the US legal system). He has written several books and works on these topics.

Prof. Özsunay represented Türkiye in the following diplomatic conferences: “Convention on Agency in the International Sale of Goods” (1983); “Convention on the Applicable Law to Contracts for the International Sale of Goods” (1985); “Unidroit Conventions on International Factoring and International Financial Leasing” (1988), and in several Working Groups in UNCITRAL (II, III, VI).

He continues his activities in the following international organizations: “International Academy of Comparative Law (AIDC/IACL) (membre titulaire); “International Association of Legal Science” (A.I.S.J./IALS); “UNIDROIT” (correspondent member); “Deutsche Gesellschaft für Rechtsvergleichung” (correspondent member);“International Association of Procedural Law”; UNCITRAL WG II (Arbitration-Conciliation, until 2019); WG III (Online Dispute Resolution, and Investor-State Dispute Settlement) (until 2019); CoE: DH-BIO” (until 2019).

I am a lawyer and notary; Master in International Trade; Career Ambassador of the Diplomatic Service of El Salvador; Professor of Private International Law, Public International Law and Integration Law; Rapporteur on Private International Law when I was a Member of the Inter-American Juridical Committee of the OAS for 16 years; author of several articles on private international law; lecturers at various American Universities on issues of private international law; Panelist on the Vienna Convention on the International Sale of Goods at the UNCITRAL/UNCITRAL headquarters; Member of IHLADI (Instituto Hispano Luso Americano de Derecho Internacional); Founding Member of ASADIP (American Association of Private International Law); member of AMEDIP (Mexican Association of Private and Comparative International Law).

Dhafer DRIDI is a Lecturer at the Faculty of Law and Political Sciences of the University of Tunis. He teaches international contract law to the students of the master’s programme in International Business Law.

Dhafer is also an attorney in Tunisia, having practiced law since his admission to the Tunisian Bar in 2005. He is currently the proprietor of a law office in Tunis that offers legal services in several areas, such as arbitration, private international law, corporate law, banking and finance.

Dhafer has authored numerous academic articles published in local and regional revues and books. Dhafer has been invited as a speaker to several symposia and events addressing significant legal issues relating to arbitration and private international law. He is a native speaker of Arabic and a fluent speaker of French and English.

Dhafer has held a number of positions in academic, research, and civil society organisations. In particular, he was a trainer at L’Institut Supérieur de la Magistrature (The Higher Institute of the Judiciary), L’Institut Supérieur de la Profession d’Avocat (The Higher Institute of the Legal Profession), and L’Ecole Nationale des Finances (The National School of Finance).

Dhafer was a member of the research commission at the University of Versailles Saint-Quentin-en-Yvelines – University of Paris-Saclay and a member of the translation team of the Diplomatic Conference which adopted the Aircraft Protocol under the auspices of UNIDROIT. He is a vice-president of the Tunisian Association for ADR.

Dhafer participated in several academic trainings and summer programmes offered by globally-renowned institutions abroad. He was a visiting researcher at UNIDROIT from December 2007 to January 2008 and an independent researcher at the same institution from November to December 2005. In the summer of 2006, he took the summer course at The Hague Academy of International Law. In the summer of 2007, he took part in the intensive training offered by the International Training Centre for Human Rights and Peace Teaching in Strasbourg. Over the same summer, he also took the summer course of the Human Rights Institute in Strasbourg.

Allan M. Mukuki, PhD Candidate (Navarra, Spain), LLM (Groningen, Netherlands), PGDip (KSL), LLB (Hons) (UoN), ACIArb (London), Advocate of the High Court of Kenya .

Some of his many roles in the legal profession include Director of International Partnerships; a Doctoral Fellow; member of the Management Committee and moot court coordinator, all for Strathmore Law School; Research Fellow for the African Region (Kenya), for the European Research Council Grant Project on the interpretation of customary international law; and Acting Director for the Strathmore Institute of Advanced Studies in International Criminal Justice (SIASIC) Allan has previously worked at A.F Gross Advocate; in various legal institutes; in governmental agencies and in the Judiciary of Kenya. He was also a Legal researcher in the Office of the Solicitor General, Kenya, for the Maritime Delimitation in the Indian Ocean (Somalia v. Kenya), a case that was before the International Court of Justice. His main areas of specialization include Public International Law, The Law of International Organizations, International Humanitarian Law, International and Regional (EAC) Refugee Law and Legal Policy Development. Further, Allan has been involved in various national and international legal consultancies and projects; he has published several peer reviewed legal articles, a legal monograph and presented several legal papers in international conferences around the world. He has also developed several policy documents for Strathmore University as well as (currently operational) manuals and laws for the operation of the Judiciary as well as governmental agencies and regional agencies such as IGAD.

ANDREA SANTACOLOMA Director

PROFESSIONAL PRACTICE

Andrea Santacoloma is a Panamanian lawyer that focuses her practice on international commercial arbitration.

Prior to joining Adell & Merizalde, Andrea was the Deputy Director for Latin America of the ICC International Court of Arbitration for 5 years. In this role, she gained vast experience in the internal functioning of the ICC’s Secretariat and Court and saw first-hand the work of hundreds of arbitrators and ICC Court Members in the region. Andrea was also in charge of identifying new opportunities and potential users of the ICC Dispute Resolution Services (ICC DRS) in Latin America, in liaison with the ICC National Committees and other institutions in the region. She also worked as a lawyer advising local and international clients on business and corporate law and M&A in 3 Panamanian law firms.

She is currently the Executive Director of the Latin American Arbitration Association (ALARB), one of Latin America’s leading associations gathering practitioners and arbitrators, which seeks to encourage the use of arbitration and foster initiatives for the development of international arbitration in the region.

In July 2022, the G

overning Council of the International Institute for the Unification of Private Law (UNIDROIT) appointed Andrea as a Correspondent for Latin America. Namely, Andrea was appointed as a Correspondent for the Republic of Panama for the period 2022-2025.

• American University Washington College of Law, LL.M. in International Arbitration and Business Law • International Training Centre of the International Labor Organization (ILO) jointly with the United Nations Commission on International Trade Law (UNCITRAL), Università degli Studi di Torino, and University Institute of European Studies (IUSE), LL.M. in International Trade Law & Dispute Resolution • Universidad Católica Santa María La Antigua, LL.M. in Corporate Law • Universidad Católica Santa María La Antigua, Degree in Law and Political Science • Centro de Estudios Regionales de Panamá, Diploma in Entrepreneurship and Management of Small and Medium Enterprises

Bar admissions Republic of Panama

Languages Spanish, English, Italian (intermediate)

[email protected] +507 370 4155

Lawyer and Notary Public dedicated to the area of corporate and international business law, founder of Iurisconsulti, Abogados y Notarios. Attorney-at-law and Notary Public with a Degree in Juridical and Social Sciences graduate from Francisco Marroquin University (Guatemala City, Guatemala). Masters of Law LL.M graduate from Columbia University (New York City). Arbitrator in several arbitrations carried out in Guatemalan arbitration centers and abroad. Professor of General Contract Theory, Commercial Contracts, and International Businness Law at the Faculty of Law of the Francisco Marroquín University. Expert witness in Guatemalan law in several cases before USA courts. Associate member of the International Academy of Comparative Law. Guatemalan expert appointed within the project of the Organization of American States (OAS) for the drafting of the “Guide on Applicable Law for International Commercial Contracts in the Americas” (2017). Guatemalan expert appointed within the Lucerna Project of the Hague Principles on the choice of applicable law in the field of International commercial contracts (2017). Guatemalan correspondent of the International Institute for the Unification of Private Law (UNIDROIT 2022). Member of the group that participated in the translation of the English version into Spanish of “Unidroit Principles on International Commercial Contracts”, Edited by the International Institute for the Unification of Private Law (Unidroit) Rome, Italy (2018). Observer in several meetings of the United Nations Convention on Contracts for the International Sale Of Goods, Advisory Counsel (CISG-AC) (2015-2022). Guatemalan delegate to the United Nations Commission for International Trade Law (UNCITRAL) (2014-2015; 2021-2022). Member of the group that worked in the drafting of the Principles of Latin American Contract Law (2015-2017). Full member of The Asociación Americana de Derecho Internacional Privado (American Association on Private International Law).

Doctor of Law, Professor at Private International Law Department of the Institute of International Relations of Taras Shevchenko National University of Kyiv. Oleksandr Biryukov successfully defended in Kyiv National University dissertations on Comparative Insolvency in 1999 and on Cross-Border Insolvency in 2010.

He is a proven legal consultant with extensive experience working in international projects in Ukraine funded by USAID, TACIS/European Commission, the World Bank, WTO, EBRD, DFID etc. He participated in drafting the Model Laws for CIS on Securities Market (1998-2000) and the Discussion paper in the frame of preparation of the Model law on Insolvency of Banks for CIS (2003-2004); was a member in the Governmental Delegation of Ukraine at Diplomatic conference convened in 2008 by Switzerland Confederation to discuss and adopt UNIDROIT Convention on Intermediated Securities (now is Geneva Securities Convention).

Dr. Biryukov is a bankruptcy specialist, scientist, consultant to the IMF (Ukraine, 2017-2018) and the World Bank (Kazakhstan, 2012-2018). Being a member to the World Bank Insolvency and Creditor/Debtor Regimes Task Force he was involved in preparation of the Report on the Treatment of the Insolvency of Natural Persons.

Prof. Biryukov teaches a number of private law university courses, including Private International Law, Bankruptcy, Cross-Border Insolvency, Comparative Securities Law and other.

He is a Fulbright Scholar (New York University School of Law, USA, 2000-2001). In 1996 Biryukov conducted a research at UNIDROIT and in 2009 received a grant from INSOL International to carry out research in the field of comparative and international bankruptcy.

He authored a number of publications, including a book Law and Legal System of Ukraine (JURIS Publishing Inc., 2005), a chapter Recent Bankruptcy Law Developments in Ukraine in Contemporary Issues on Public International and Comparative Law (Vandeplas Publishing Co., 2009), a brochure Research Guide to Ukrainian Law (NYU Globalex Journal, 2006), and more than 120 publications devoted to private law reform in Ukraine.

NAME: PROF. DR. HERNANY VEYTIA (LL.M. YALE) AFFILIATION DIRECTOR BNM-CAMBRIDGE STUDY CENTRE ON SUSTAINABLE INVESTMENTS PRESENTATION Professor of law, international strategic consultant, arbitrator, and entrepreneur. Hernany Veytia is very comfortable with complex, high-profile and confidential transactions. Her consulting experience as partner of BNM and Deloitte enables her to focus on and add value to the sustainable and commercial aspects of each deal. Frequently she leads transdisciplinary teams to deliver fact findings and legal opinions, feasibility studies and turn-key projects for banks, governments, international organisations, and corporations willing to expand or withdraw operations in other jurisdictions. In Prof Veytia’s experience UNIDROIT works have been very useful to understand not only the foreign law, but also to recognise the cultural, political, and economic factors at play, and the way national and international regulators operate-and cooperate. In her opinion, UNIDROIT instruments have been of utmost importance for the legal strategies she designed for: • DANPREIT (Dispute Analytics Platform for Real Estate Investment Trusts in the Agriculture, Construction and Mining industries). • TELEKAIROS, innovative methodology that incorporates the use of space assets. • Corporate art collections, restitutions, including donations, sponsorships, and loans to museums. • Contracts used by a German waterworks company willing to grow in all the Caribbean and Central American countries. • Liquidation of commercial and investment banks • IPOs and reverse mergers for companies in the extraction industries (Canadian stock exchange), ILS listed in Bermuda and African sovereign funds listed in London. • Franchising and other commercial contracts in the food & drinks, health, aero-space, and automotive industries. In the last three decades Prof. Veytia has lived, and successfully completed investments and disinvestments in more than forty countries in the five Continents. She is frequently appointed as arbitrator and invited as speaker on risk transfers at international industry conferences in fields of her expertise: energy (both renewable and traditional), artificial intelligence, infrastructure, mining, real estate, agriculture, rail, space, automotive, and franchising. She sits in the board of directors of companies in Europe including the United Kingdom.

Suzanne Howarth is an Australian legal practitioner admitted to legal practice in New South Wales, the Australian Capital Territory as well as in England and Wales. Suzanne holds undergraduate and graduate law degrees from the Universities of Sydney and Melbourne, is a graduate of the Australian Institute of Company Director and an accredited mediator.

Suzanne joined the Australian Public Service in 1992. Before joining the Service, Suzanne worked with two major law firms in Sydney and in the City of London in the areas of insurance, international trade, and dispute resolution.

Since 2020, Suzanne has been an Executive Member of the International Law Section of the Law Council of Australia. For over two decades, Suzanne has worked as a senior Australian Government lawyer in various Australian central government agencies as well as the Australian Competition and Consumer Commission. Suzanne’s areas of expertise include government and public administration, competition and consumer law, corporate law, public and international law, trade and investment, taxation, and the regulation of not for profits.

Juliana is a lecturer in Private International Law at the Universidad Carlos III de Madrid. Her main areas of research and teaching are international trade law, European competition law and international family law. In relation to the former, she is the author of 3 monographs, one of them on “Régimen jurídico de la abogacía internacional” (2003), another on “Abordaje marítimo y litigación internacional” (2007) and the third one on “Contratos internacionales de distribución comercial en el Derecho Internacional Privado de la Unión Europea” (2013). She has also published on international factoring contracts, international insolvency and international commercial and investment arbitration. With regard to European competition law, she is co-author of the monograph “La doctrina de las infraestructuras esenciales en Derecho antitrust europeo” (2012) and has also written on other issues related to this subject, such as the influence of Big Data on anti-competitive behaviour. Finally, within the last line of research mentioned, she is the author of a fifth monograph on ” Relaciones económicas de los matrimonios y las uniones registradas en España, antes y después de los Reglamentos (UE) 2016/1103 y 2016/1104″ (2019) and has publications on international successions and free movement of persons, among other subjects. She has been Commissioner of the Ministry of Foreign Affairs, European Union and Cooperation of the Government of Spain, as delegate of Spain at the 51st Session of UNCITRAL and is a Member of the European Association of Private International Law – EAPIL- and has been part of the working group of this association created to draft the future European Regulation on Real Rights. Her current research focuses on the legal issues raised by new technologies, including intellectual property rights in the metaverse and digital assets.

Maria Hook is an Associate Professor at the University of Otago (Faculty of Law). Her main area of expertise is private international law, particularly in the New Zealand context. She is a joint author of The Conflict of Laws in New Zealand (LexisNexis, 2020).

Dr. Radwa Elsaman’s area of expertise includes commercial law, international comparative law, international sustainable development and the rule of law. She focuses mainly on the MENA region. In addition to being an Assistant Professor of Law at Cairo University in Egypt, she has lectured and conducted academic research at prominent universities throughout the United States, such as Cornell University School of Law and Boston University School of Law, and the Central European University in Europe.

With 20 years of experience, Dr. Elsaman is well known for assisting governments and private sector entities with legal and institutional reform. She has consulted for USAID on projects, including Automating Economic Courts in Egypt and Economic Stabilization Support for Syria. With the IDLO, she advised on Strengthening the Capacity of National Partners in Economic Laws and Capacity Building of Jordanian judges. Similarly, she advised the European Investment Bank on Improving Access to Finance by Facilitating SMEs’ Business Expansion. Moreover, she acted as a legal expert at the EU Euromed Justice Project. With the World Bank Group, she consulted on land and property projects in MENA. She was also engaged with other organizations, including the GIZ and the AFD. Between 2006 and 2015, Dr. Elsaman worked for international law firms, including Dentons and DLA Piper, where she represented clients in regulatory and transactional matters.

Her publications have appeared in worldwide-law journals. Currently, she contributes to the Cambridge Handbook on Comparative Law. Her book on “Comparative Franchising Law: United States, China, Malaysia, MENA Region” has been chosen as one of the six best books on franchising globally. She is a member of various professional global unions and is licensed to practice law in multiple jurisdictions. She got her LL.B. from Cairo University School of Law; an LL.M. from the IMO’s International Maritime Law Institute, a second LL.M. and J.S.D (PhD in Law), from the American University Washington College of Law.

Stefan Vogenauer has been teaching an intensive masters course in ‘Global Commercial Contract Law’ as a Senior Research Fellow at the University of Melbourne since 2012. He also taught the BCL/MJur options ‘Transnational Commercial Law’ and ‘International Commercial Arbitration’ at the University of Oxford, where he served as Professor of Comparative Law and Director of the Institute of European and Comparative Law from 2003 to 2015. He has taught and lectured widely in many European countries and has held Visiting Professorships at NYU Law School, the University of Auckland, the University of Paris 2, the University of Texas at Austin, Louisiana State University, National Taiwan University and National Law University Delhi.

Apart from legal history, his main research interests are in comparative private law, contract law and transnational commercial law. He is an expert in contract law where he has worked extensively on national laws (English, French and German) and on comparative, European and transnational aspects. He is the sole editor of the Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd edn, Oxford University Press 2015), a standard reference work in the field. He is also a co-author of the leading student textbook in comparative contract law, the Ius Commune Casebook for the Common Law of Europe: Cases, Materials and Text on Contract Law (3rd edn, Hart Publishing 2019). His co-authored monograph on contracts written in English but governed by another law (Englisch als Vertragssprache) was published with CH Beck in 2018.

From 2017, Professor Vogenauer served as a member of the panel of experts for the drafting of the ‘tripartite’ Legal Guide to Uniform Instruments in the Area of International Commercial Contracts, with a Focus on Sales, published jointly by UNCITRAL, the Hague Conference and UNIDROIT.

Prof. Amnon Lehavi (J.S.D, LL.M, Yale) is Full Professor at the Harry Radzyner Law School, Reichman University, Israel, and former Dean of the Law School (2016-2021). He acts as Academic Director of the G City Real Estate Institute at Reichman University. Prof. Lehavi is a member of UNIDROIT’s Exploratory Expert Group on “Private Art Collections: Orphan Objects.” He also served as Co-President of the Law Schools Global League (2018-2021). Prof. Lehavi was a visiting professor at the University of Toronto (Canada), University of California, Berkeley (USA), Tilburg University (the Netherlands), KU Leuven (Belgium), and Luiss University (Italy).

An expert on property law, urban law and policy, cultural property, international economic law, and law and globalization, Prof. Lehavi is the author of Property Law in a Globalizing World (Cambridge UP, 2019) and The Construction of Property: Norms, Institutions, Challenges (Cambridge UP, 2013), and the editor of Disruptive Technology, Legal Innovation, and the Future of Real Estate (Springer, 2020), One Hundred Years of Zoning and the Future of Cities (Springer, 2018), and Private Communities and Urban Governance: Theoretical and Comparative Perspectives (Springer, 2016).

Email: [email protected]; Twitter: @Alehavi; ORCID iD: 0000-0002-7976-9546.

My areas of interest: I have been a member of the Working Group preparing the UNIDROIT Principles of International Commercial Contracts 2010 and 2016. Apart from the law of obligations in comparative and historical perspective I am very interested in the law of succession, also in historical and comparative perspective. Today, in fact, the law of succession is the main focus of my work.

I discovered UNIDROIT’s work through the study on Transport Terminals [when writing on OTT UN Convention (1991)]. Afterwards the Principles on International Commercial Contracts (Chapter 6, within a volume devoted to the Principles under my coordination, and Chapter 9.1, in Bonell Fs). I directed (and still I am mentoring) Master’s and PhD students’ research to deep in documents ending up in ULIS, to get a better CISG understanding on different CISG Articles (e.g., 7, 25, 78 and 79). With a group of students, we translated to Spanish the Guide to International Master Franchise Arrangements 1st. edition. Lastly, with a group of University colleagues and other bank experts we sent comments on Model Law on Factoring and on Principles on Digital Assets within the last four months or so. Apart from UNIDROIT’s works, but on international trade law area, I have had the benefit to represent Spain in UNCITRAL (1989-2014). There, I chaired the Plenary (1994) and two working groups: NIEO (1993-1994, while drafting Model Law on Procurement of Goods, Construction and Services, 1994) and the one on International Contract Practices (1995-2001) during the Convention on Assignment of Receivables on International Trade (2001) preparation. I was member of the Spain Delegation in Working Group V, dealing with Insolvency Law (2001-2014), and Working Group III (2001-2008) when drafting Rotterdam Rules. Consequently, my publications are within that ambits. In Spanish Law I wrote on Companies, Commercial Registry, Loans (with particular attention to interests’ debt in it and in other credit contracts, also on lack of timely payment). I was granted (DAAD, A. v Humboldt S. and Salvador de Madariaga) to research periods (three years in a sum) in MPI (Hamburg). I coach my University students’ teams to Willem C Vis International Commercial Arbitration Moot and to MOOTmadrid.

Walter Doralt has his main research interests in Civil Law, European Private Law, and Company Law, with methods drawing on Comparative Law (Austria, Germany, England, France, Italy and Switzerland) as well as Law and Economics. His habilitation (Bucerius Law School) dealt with Long Term Contracts.

María Belén Moreno is an upcoming lawyer focusing on international commercial and investment arbitration cases. She works in the Dispute Resolution Department, mainly representing national and international clients in commercial arbitrations before the Centro de Arbitraje y Mediación Paraguay (CAMP), Paraguay’s only arbitration institution, and in ad hoc arbitration proceedings. Belén is a newly admitted member to the Arbitrator list of CIACBLP (Centro Internacional de Arbitraje – Cámara de Bélgica y Luxemburgo en el Perú). She was a part of the National University of Asuncion´s commercial arbitration moot team as an oralist, receiving an honorable mention at the Willem C. Vis International Commercial Arbitration Moot in 2015. Ever since, she has been coaching the University´s moot teams in the Latin America moot and the Willem C. Vis Moot. Belen has an LL.M. from Georgetown University and has graduated with academic honors as part of the Dean’s List 2020. She also earned a Certificate in International Arbitration and Dispute Resolution.

Fabián is a Senior Associate in the area of Litigation and Arbitration.

His practice focuses on Construction and Infrastructure Law, Public-Private Partnerships, Concessions, Public and Private International Law, Free Trade and Investment Treaties, International Contracting, Civil, Corporate, Administrative, and the resolution of disputes through Domestic and International Arbitration and Dispute Boards in the aforementioned areas of law. Fabián works on disputes related to the sectors and/or industries of construction and infrastructure, airports and ports, insurance, banking and finance, energy, and foreign investment.

Fabián has large experience advising and/or representing government agencies and companies in domestic and international arbitrations under different arbitration rules (ICC, UNCITRAL, LCIA, ICSID, etc.).

Fabián completed an internship at a law firm in Chile in the area of International Contracts and International Arbitration. He completed a period of training and academic research on the relationship between International Investment Arbitration and the law and jurisprudence of the World Trade Organization, specializing in non-discrimination clauses in both their substantive and procedural form in international economic law, at the Max Planck Institute for Comparative Public Law and International Law in Heidelberg, Germany as part of his LL.M.

Fabián is Arbitrator and Secretary of Arbitral Tribunal of the Conciliation and Arbitration Center of Tegucigalpa Chamber of Commerce and Industry. He is also Arbitrator of the Arbitration Center of México (CAM), Ibero-American Arbitration Center (CIAR), Institution for the Resolution of Disputes on Blockchain and Technology (IBT) and is part of the list of potential Arbitrators of the General Secretariat of the Madrid International Arbitration Center (CIAM). He has had experience for several years as a professor and participates regularly as a participant as well as speaker or lecturer in forums, colloquiums, training courses and international workshops on different subjects. He is fluent in Spanish, English and French. Basic knowledge of German (level A1 CEFR).

My main areas of expertise related to the work of UNIDROIT include international commercial contracts and secured transactions, as well as international civil procedure and private international law.

Dyalá Jiménez is a Costa Rican national who specializes in conflict resolution. She is frequently appointed as arbitrator in international treaty-based and contract-based disputes, both under institutional rules and ad hoc procedures. She is also trained in mediation by ICSID/CEDR and acts as conciliator in local complex disputes.

She is a member of the ICSID panel of conciliators and arbitrators for Costa Rica and of the ICC International Court of Arbitration. Dyalá is also a member of the International Council for Commercial Arbitration (ICCA) Governing Board.

In terms of her academic background, she is a Fulbright Scholar and alumnus of Georgetown University Law Center (LLM ‘99) and is author of numerous publications (visit www.djarbitraje.com). She has teaching experience in Costa Rica (Lead University, 2017) and in Chile (Universidad de Chile undergraduate and the Heidelberg/Universidad de Chile LLM Program, from 2004 to 2013). Dyalá is also the correspondent for Costa Rica of the International Institute for the Unification of Private Law, UNIDROIT.

From 2018 to 2020, Dyalá served as Minister of Foreign Trade of Costa Rica and in such capacity was charged with public policy on exports and foreign direct investment. In that role, she also led the country’s efforts to become the 38th member of the OECD, which included passing 14 laws of varied complexity and sensibility. During those two years Dyalá had to tackle a diversity of disputes including frictions with trade partners, obstacles in land transportation, challenges arising out of the Pandemic, strike on the ports, among others.

Dyalá is a member of the board of directors of Costa Rica’s investment promotion agency, CINDE, and served on the board of the local Chamber of Commerce.

Dyalá has lived in Washington, DC, Paris and Santiago (Chile) and works in Spanish, English, French and Portuguese.

Doctor of Law and Social Sciences, University of the Republic (1978); Professor of Private International Law at the University of the Republic (1984-) and at the Catholic University of Uruguay (1994-2017); Member of the Uruguayan Institute of Private International Law (1984-) and Director (2017-2021); Professor at the Uruguayan Centre of Judicial Studies (2017-). Visiting professor at several universities and institutions in foreign countries, professor at the Hague Academy of International Law (2015).

Author of 26 books and 175 chapters in books and articles published in Uruguay and abroad. Some of the main ones are La Autonomía de la Voluntad en la Contratación Internacional, Montevideo, FCU, 1991 (Thesis); Curso de Derecho del Transporte, Montevideo, coauthor Fernando Aguirre Ramírez, FCU, 8 volumes, several editions (1999-2011); Curso de Derecho Internacional Privado, Montevideo, FCU, 3 volumes, several editions (2001-2015); “Public Policy: Common Principles in the American States”, Recueil des cours, Vol. 379 (2016), Leiden/Boston, Brill Nijhoff, 2016, pp. 73-396; Legal Aspects of Cruises, Editor and author of the General Report, Ius Comparatum – Global Studies in Comparative Law, Volume 56, Switzerland, Springer, 2022; Derecho Internacional Privado. Parte General. Jurisdicción estatal y arbitral, Tomo I, 1st ed., Montevideo, FCU, 2022; Derecho Internacional Privado. Parte Especial Civil y Comercial, Tomo II, 1st ed., Montevideo, FCU, 2022; Derecho Internacional Privado. Parte Especial Civil y Comercial, Tomo III, 1st ed., Montevideo, FCU, 2022.

Lecturer and panelist in more than 150 seminars, conferences and workshops.

Research activities: Fulbright scholarship, University of California at Davis (1988); at UNIDROIT (1998); at the University of the Republic, Uruguay, and at foreign universities. Professional experience as external Consultant on Private International Law matters to several Uruguayan and foreign law firms and institutions and as arbitrator. Main areas of expertise related to the work of UNIDROIT: international contracts, international family law issues, cross border insolvency, international procedural issues, access to justice.

Mr Forrest is a Professor of Law and the Director of the Marine and Shipping Law Unit at the University of Queensland. He teaches maritime law, private international law and cultural heritage law and has a broad research interest in the unification of private maritime law. His most recent book is, with Professor Nick Gaskell, The Law of Wreck (2019, Informa Law). His current work involves UNIDROIT’S implementation of the Cape Town Convention on International Interests in Mobile Equipment, and particular, the possibility of adopting a Protocol addressing ships and maritime transport equipment. He also has an interest in cultural heritage and the current Private Art Collection’s project.

Professor Pilar Perales Viscasillas is the Chair of Commercial Law at Carlos III University of Madrid (UC3M). She acts as a national and international arbitration in commercial law disputes. Author of seven monographs in matters related to international sale of goods contracts, uniform law of international trade, commercial contract law, company law, insurance and arbitration, as well as more than 150 publications in collective and periodical works, several of them in English. Many of her publications relates to various Unidroit Legal instruments. Professor Perales Viscasillas is the current Chair of the CISG-AC (Advisory Council on the Convention on Contracts for the International Sale of Goods) (2003) and Council Rapporteur of Opinion No. 4; she was an observer in the Working Group for the preparation of the third and fourth editions of the UNIDROIT Principles on International Commercial Contracts (2010 and 2016) (2007-2010 and 2017). She has been Spanish Delegate to the United Nations Commission on International Trade Law (UNCITRAL-UNCITRAL) (2001-2014) in Working Group II on International Commercial Arbitration, and Spanish correspondent for CLOUT (2002-2017). She participated in the working group that drafted The UNCITRAL, HCCH, and UNIDROIT, Legal Guide to uniform instruments in the area of international commercial contracts, with a focus on sales. Member of the Plenary of the Centro Internacional de Arbitraje de Madrid (CIAM) and Council member of The Spanish Club of Arbitration. Member of the Executive Board of SEAIDA (The Spanish Branch of AIDA, Association Internationale de Droit des Assurances). Co-Chair of the Cátedra de Derecho Empresarial Deloitte Legal.

She is also Director of the Moot Madrid , where usually UNIDROIT Legal texts are used; and co-Director of the Master on International Advocacy (UC3M).

Bernardo is a partner at Parra Rodríguez Abogados (Colombia) with more than 35 years of legal experience. Bernardo assists national and international clients in aviation regulatory matters, structured finance transactions, M&A operations, asset-based-financing, cross-border transactions and aircraft financing transactions under the Cape Town Convention.

Bernardo represents world-leading international airlines and financial institutions. His experience includes aircraft operating and financial leases, asset purchase and sale transactions, cross-border financing transactions, private placement transactions, secured loans and issuance of notes, among others.

Bernardo has also participated in some of the major M&A and financing transactions in Colombia, such as the financing of the Medellin Metro, the acquisition of Central, North and South Cerrejón, the acquisition of Bell South assets in Colombia, the establishment of Carrefour in Colombia and the first private placement abroad by the major Colombian airline, amongst others.

Furthermore, Bernardo is a member of the Aviation Working Group (“AWG”) legal panel and legal coordinator of the AWG Colombian National Contact Group.

Bernardo is a 1986 lawyer from Universidad de los Andes (Bogotá, Colombia). In 1988 he obtained an LL.M in International Business Law from London School of Economics and Political Science in London, England.

Edgardo Muñoz is a leading voice in the field of international business law as a member of Universidad Panamericana’s law faculty in Guadalajara, Mexico, from where he frequently contributes in specialized publications and discussion forums.

Besides his academic commitments, he practices in the area of international contracting and arbitration. He sits as arbitrator in international forums and represents clients in commercial and sport proceedings. He is a Member of the Court of Arbitration for Sports [CAS] and of the Appeal Tribunal of the International Gymnastics Federation.

Edgardo Muñoz is also a Member of the CISG Advisory Council and Correspondent of UNIDROIT in Mexico.

He received his Bachelor of Laws from Universidad Iberoamericana in Mexico, and Master of Laws degree (LLM) from University of Liverpool in the U.K. and a second Master of Laws degree (LL.M) University of California in Berkeley. His Doctor of Laws degree (PhD) suma cum laude is from University of Basel in Switzerland.

Dr Teresa Rodriguez de las Heras Ballell is an Associate Professor of Commercial Law at University Carlos III of Madrid, Spain.

She is currently an Academic Visitor at the University of Cambridge, and was Sir Roy Goode Scholar at UNIDROIT in 2021-2022. The topics addressed during these appointments have been: secured transactions, effective enforcement, and digital assets.

Asset-based finance and secured transactions, specially, the international legal harmonization instruments are one of her main areas of expertise with a significant level of specialization in the Cape Town Convention system. Within this remit, she was member of the Study Group for the MAC Protocol and delegate of Spain in the Diplomatic Conference, as well as an observer and a delegate of Spain at UNCITRAL for WG VI on secured transactions.

Digital law and technology-related private-law matters (platforms, AI, data, digital assets, algorithmic contracts) are her second area of primary research, expertise, and international experience. She is delegate of Spain at UNCITRAL WG IV on ecommerce (AI in international trade), and an Expert for UNCITRAL and UNIDROIT on digital economy projects. She is also member of the European Commission Expert Group on Liability and New Technologies, the EU Expert Group for the Observatory on Online Platform Economy, and the EU Expert Group on B2B Data Sharing and Cloud Computing. She is member of the European Law Institute (ELI) Executive Committee and Council and author of the ELI Guiding Principles on Automated Decision Making in Europe, 2022.

She is an arbitrator at the Madrid Court of Arbitration and the Spanish Court of Arbitration. She has acted as an arbitrator in a variety of commercial disputes, mostly financial agreements, and banking contracts, as well as commercial contracts in general (agency, distribution, service agreements). Besides, she held a European Central Bank scholarship to prepare a report on FinTech regulation. So, she is also specialized in financial regulation.

I discovered UNIDROIT’s work through the study on Transport Terminals (when writing on Operators of Transport Terminals UN Convention). Afterwards the Principles on International Commercial Contracts (Chapter 6, within a volume devoted to the Principles under my coordination, and Chapter 9.1, in Bonell Fs, as a sequel from Assignment of Receivables UN Convention publications). I directed (and still I am mentoring) Master’s and PhD students’ research to deep in different aspects of the documents ending up in ULIS, to get a better CISG understanding on different CISG Articles (e.g., 7, 25, 78 and 79). In that documentary precedents vein one of the PHD students is digging on the documents related to Hotel Keepers and Travel Agencies. With a group of students, we translated to Spanish the Guide to International Master Franchise Arrangements 1st. edition. Lastly, with a group of University colleagues and other bank experts we send comments on Model Law on Factoring and on Principles on Digital Assets within the last four months or so.

Mr. Alvaro Galindo is an International Counsel advising on dispute resolution matters, particularly those involving Latin American jurisdictions. Currently, he is the Dean of the Law School at Universidad de las Americas and partner at Carmigniani Perez Abogados. His practice focuses on disputes between sovereign states and state-owned entities and private companies. He has been recognized by The Legal 500 Latin America and was noted in this publication as “outstandingly intelligent” and for his “incomparable capacity for coordinating, planning, strategic assessment, and for his diplomatic approach”. He was as member of the international arbitration practice at Dechert LLP in Washington, D.C. He also served as the Director of the International Affairs and Arbitration Unit for the Republic of Ecuador’s Attorney General Office. He acted as a legal consultant for the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C., and as regional director for the Latin American Development Corporation, where he coordinated the committee in charge of drafting the Arbitration Law of Ecuador. Mr. Galindo has significant teaching experience in the areas of dispute resolution, international investment, and arbitration law. He has authored numerous publications and articles related to arbitration and international investment law. Currently, he is an Adjunct Professor at Georgetown University Law Center, with a course on Advanced Topics in International Investment Arbitration and Adjunct Professor of Practical Aspects of Arbitration (Spanish course) at American University Washington College of Law. Mr. Galindo has represented sovereign states in international and regional forums: the United Nations Conference on Trade and Development, UNCTAD; the United Nations Commission on International Trade Law, UNCITRAL. Member of the Court of the ICC International Court of Arbitration and arbitrator in various arbitration centers in Latin America. In September 2021, he was appointed to the list of arbitrators under the ICSID Convention.

Professor Mads Bryde Andersen (b. 1958) is a professor of private law at the Univer¬sity of Copenhagen. He is the author, or editor, of several books and articles in his field of contracts and obligations, intellectual property law and computer and high tech¬nology law. His authorship includes “Lærebog i Obligationsret I” (The law of Obligations, I, 5th edition, 2020), “Dansk Pensionsret” (Danish Pension Law, 2nd edition, 2017, with Jesper Mark), “Grund¬læggende aftaleret” (Basic Contract Law, 5th edition, 2021), “Enkelte transaktioner” (Commercial Transactions, 5th edition 2022), “Praktisk aftaleret” (Contract Law in Practice, 5th edition 2019), “Advokatretten” (The law of Advocates, 2nd edition, 2022, with Lars Lindencrone Petersen), “IT-retten” (The law of IT, 2nd edition, 2005) and “Ret og metode” (Legal Method, 2002). He has published numerous academic articles and anthologies. Since 2003 he has been the editor-in-chief of the most prestigious Danish legal periodical Ugeskrift for Retsvæsen, section B (The Weekly Law Report).

For a number of years Professor Andersen was the Danish delegation to UNCITRAL. From 1997 to 1998 he chaired the UNCITRAL working group on Electronic Commerce. He has been involved in a number of working groups within the OECD dealing with security and consumer issues of the information society and was the head of the Danish delegation during the OECD talks on encryption policy (1995-1996). From 2003 to 2012 he was co-chair and later chair of the Danish Guarantee Fund for Depositors and Investors.

Professor Andersen is a frequently used arbitrator in domestic and international arbitration matters and has been involved in more than 150 arbitration cases, either as chairperson, sole arbitrator or co-arbitrator.

Professor Andersen’s office address is:

UNIVERSITY OF COPENHAGEN, FACULTY OF LAW KAREN BLIXENS PLADS 16 (6A-3-26) 2300 COPENHAGEN S Denmark Mobile Phone +45 4058 0925 E-mail [email protected]

Tim Schnabel served as the U.S. head of delegation for the negotiation of the UNIDROIT Principles on the Operation of Close-Out Netting Provisions, the initial work on the MAC Protocol to the Cape Town Convention, and the Preparatory Commission for the Space Protocol to the Cape Town Convention. He led U.S. participation in several UNCITRAL projects, including the Singapore Mediation Convention, the Mauritius Transparency Convention, the Model Law on Enterprise Group Insolvency, the Model Law on Recognition and Enforcement of Insolvency-Related Judgments, and the initial work on reform of investor-state dispute settlement. He also participated in the negotiation of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. He now serves as the Executive Director of the Uniform Law Commission, which has worked within the United States since 1892 to draft and seek enactment of state legislation on topics for which uniformity of state law is useful and feasible. Uniform acts developed by the ULC, which have been enacted over 6,000 times by state legislatures, include the Uniform Commercial Code and hundreds of other acts related to real property, trusts and estates, family law, civil procedure, emerging technologies, unincorporated organizations, and other areas of law.

Ana Filipa Vrdoljak is the UNESCO Chair in International Law and Cultural Heritage and Professor of Law, University of Technology Sydney. She has taught international law, cultural heritage law, human rights law, and international humanitarian law in Europe, Asia and Oceania, the Americas, and Middle East. She has been Fernand Braudel Senior Fellow (2017), Marie Curie Fellow (2006-2008) and Jean Monnet Fellow (2004-2006), Law Department European University Institute, Florence. She holds a Doctor of Philosophy (in Law) from the University of Sydney.

Professor Vrdoljak is the author of International Law, Museums and the Return of Cultural Objects (Cambridge University Press, 1e 2006 and 2008, 2e forthcoming) and editor of Oxford Handbook on International Cultural Heritage Law with Francesco Francioni (Oxford University Press 2020), and Oxford Commentary on the 1970 UNESCO and 1995 UNIDROIT Conventions with Andrzej Jakubowski and Alessandro Chechi (Oxford University Press, forthcoming 2023). She is a General Editor, with Francesco Francioni, of the Oxford Commentaries on International Cultural Heritage Law (Oxford University Press) and book series, Cultural Heritage Law and Policy (Oxford University Press). She is President of the International Cultural Property Society (U.S.) and Chair of the Management Committee, International Journal of Cultural Property (Cambridge University Press).

Professor Vrdoljak is a member of UNIDROIT’s 1995 UNIDROIT Convention Academic Project (UCAP) and member of the UNIDROIT Export Group on Orphan Works. She is a member of UNESCO Expert Group preparing Model Provisions for the 1970 UNESCO Convention. She has served on expert panels for UNESCO, UNIDROIT, European Commission and the OHCHR. She has been a member of the ILA’s Cultural Heritage Committee since 2008. She has been a Barrister and Solicitor of the High Court and Federal Courts of Australia since 1997, and Supreme Court of New South Wales since 1992.

Petra is a German and New Zealand qualified lawyer. Her main areas of research are international commercial law, in particular international commercial contracts and international dispute resolution, and human rights. Currently she focuses especially on access to commercial justice issues and issues in relation to cross-border contracting by MSMEs. Petra is a law reform specialist. She has, inter alia, lead two Commonwealth projects: an inquiry into judicial diversity in Commonwealth small states and regarding international commercial arbitration in the Commonwealth. She is also the director of the Institute of Small and Micro States. The aim of the Institute is to provide a platform for research and law reform regarding issues pertinent to small states.

Anna Veneziano is the Deputy Secretary General of the International Institute for the Unification of Private Law (UNIDROIT). She is a Professor of Comparative Law at the University of Teramo, Italy, where she was formerly the Director of the Department of Private Law. She has also formerly been a tenured Professor of European Property Law at the University of Amsterdam (UvA). Her education includes a Law Degree with honours from the University of Rome La Sapienza, an LL.M degree from the Yale Law School funded by a Fulbright scholarship, and a PhD degree from the University of Florence (Italy).

Her main research and publication areas are on secured transactions as well as international, comparative, and European contract and sales law. Before joining UNIDROIT she was a member of the Italian delegation with respect to the Cape Town Convention on International Interests on Mobile Equipment and its Aircraft Protocol as well as its Space Protocol. She was also a member of the Study Group on a European Civil Code and of the Compilation and Redaction Group on a Draft Common Frame of Reference on European Private Law (DCFR), and of the restricted Expert Group set up by the European Commission on a common European law on sales.

Amongst other accolades to his professional experience, Professor Tirado is a founding member of the European Banking Institute, an International Fellow of the American College of Bankruptcy and has been Director and Academic Co-Chair of the International Insolvency Institute.

Myrte Thijssen started her career in the Legal Service of the Dutch Central Bank (Supervision and Regulation Department). From 2015-19 she worked in the Legal Service of the Single Resolution Board, providing advice in banking crises and dealing with litigation before the Appeal Panel and the Court of Justice of the European Union. She studied at the University of Amsterdam and New York University. She has taught Corporate Law and Law of Bank Crisis Management at the University of Amsterdam and the University of Bologna respectively. She has published several articles in the field of banking and financial law with a particular focus on bank resolution.

Prior to joining UNIDROIT, Michelle worked in the Department of Justice of Hong Kong, China, for over 10 years, advising and representing Hong Kong, China in various aspects of international law. Prior to that she worked in an international law firm, assisting leading companies and financial institutions in complex disputes. She has an LLB from the University of Hong Kong and LLM from New York University.

Assessing Assignability: Transferring Contractual Rights or Obligations | Practical Law

Assessing Assignability: Transferring Contractual Rights or Obligations

Practical law legal update 5-546-6326  (approx. 7 pages).

• An intended transfer is of the type that is prohibited by law or public policy (see Practice Note, Assignability of Commercial Contracts: Statutory and Public Policy Exceptions ).
• The parties expressly agree to restrict transferability (see Practice Note, Assignability of Commercial Contracts: Contractual Anti-assignment and Anti-delegation Clauses ).
• Breaching the contract.
• Making an ineffective and invalid transfer.

Distinguishing Between Assignment and Delegation

• The assignment of rights to receive performance.
• The delegation of duties to perform.

Characteristics of Assignments

• The right to receive performance from the assignor.
• Its remedies against the assignor for any failure to perform.

Characteristics of Delegation

The general rule governing assignment and delegation.

• Most assignments of contractual rights.
• Many delegations of contractual performance.
• Assignments and delegations that violate public policy or law.
• Assignments of rights or delegations of performance that are personal in nature.
• Contracts with anti-assignment or anti-delegation clauses.

Contracts That Present the Greatest Challenges

• Personal services contracts (see Personal Services Contracts ).
• Non-exclusive intellectual property licenses (see Intellectual Property Licenses ).
• Contracts with anti-assignment and anti-delegation clauses (see Contracts With Anti-assignment and Anti-delegation Contract Clauses ).

Personal Services Contracts

Intellectual property licenses, contracts with anti-assignment and anti-delegation clauses, is a change of control an assignment.

• Contains an anti-assignment and anti-delegation clause expressly restricting a change of control.
• States that a change in management or equity ownership of the contracting party is deemed to be an assignment.

When Does an Involuntary Transfer Trigger a Restricted Transfer?

• A contractual anti-assignment and anti delegation clause applies to a specific type or transfer.
• The transfer is permissible, with or without a contractual anti-assignment and anti-delegation provision.

Drafting and Negotiating Anti-assignment and Anti-delegation Clauses

• Directly addressing assignment of rights and delegation of performance.
• Clarifying the universe of restricted transfers.
• Designating the non-transferring party's consent rights.
• Specifying any exceptions to non-transferability.
• Requiring notification of a permitted transfer.
• Including a declaration that impermissible transfers are void.
• Adding a novation to the anti-assignment and anti-delegation provision.

Understanding an assignment and assumption agreement

Need to assign your rights and duties under a contract? Learn more about the basics of an assignment and assumption agreement.

Find more Legal Forms and Templates

by   Belle Wong, J.D.

Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She ...

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Updated on: November 24, 2023 · 3min read

The assignment and assumption agreement

The basics of assignment and assumption, filling in the assignment and assumption agreement.

While every business should try its best to meet its contractual obligations, changes in circumstance can happen that could necessitate transferring your rights and duties under a contract to another party who would be better able to meet those obligations.

If you find yourself in such a situation, and your contract provides for the possibility of assignment, an assignment and assumption agreement can be a good option for preserving your relationship with the party you initially contracted with, while at the same time enabling you to pass on your contractual rights and duties to a third party.

An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting the assignment is known as the assignee.

In order for an assignment and assumption agreement to be valid, the following criteria need to be met:

• The initial contract must provide for the possibility of assignment by one of the initial contracting parties.
• The assignor must agree to assign their rights and duties under the contract to the assignee.
• The assignee must agree to accept, or "assume," those contractual rights and duties.
• The other party to the initial contract must consent to the transfer of rights and obligations to the assignee.

A standard assignment and assumption contract is often a good starting point if you need to enter into an assignment and assumption agreement. However, for more complex situations, such as an assignment and amendment agreement in which several of the initial contract terms will be modified, or where only some, but not all, rights and duties will be assigned, it's a good idea to retain the services of an attorney who can help you draft an agreement that will meet all your needs.

When you're ready to enter into an assignment and assumption agreement, it's a good idea to have a firm grasp of the basics of assignment:

• First, carefully read and understand the assignment and assumption provision in the initial contract. Contracts vary widely in their language on this topic, and each contract will have specific criteria that must be met in order for a valid assignment of rights to take place.
• All parties to the agreement should carefully review the document to make sure they each know what they're agreeing to, and to help ensure that all important terms and conditions have been addressed in the agreement.
• Until the agreement is signed by all the parties involved, the assignor will still be obligated for all responsibilities stated in the initial contract. If you are the assignor, you need to ensure that you continue with business as usual until the assignment and assumption agreement has been properly executed.

Unless you're dealing with a complex assignment situation, working with a template often is a good way to begin drafting an assignment and assumption agreement that will meet your needs. Generally speaking, your agreement should include the following information:

• Identification of the existing agreement, including details such as the date it was signed and the parties involved, and the parties' rights to assign under this initial agreement
• The effective date of the assignment and assumption agreement
• Identification of the party making the assignment (the assignor), and a statement of their desire to assign their rights under the initial contract
• Identification of the third party accepting the assignment (the assignee), and a statement of their acceptance of the assignment
• Identification of the other initial party to the contract, and a statement of their consent to the assignment and assumption agreement
• A section stating that the initial contract is continued; meaning, that, other than the change to the parties involved, all terms and conditions in the original contract stay the same

In addition to these sections that are specific to an assignment and assumption agreement, your contract should also include standard contract language, such as clauses about indemnification, future amendments, and governing law.

Sometimes circumstances change, and as a business owner you may find yourself needing to assign your rights and duties under a contract to another party. A properly drafted assignment and assumption agreement can help you make the transfer smoothly while, at the same time, preserving the cordiality of your initial business relationship under the original contract.

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Chapter 14 Third-Party Rights

Learning objectives.

After reading this chapter, you should understand the following:

• How an assignment of contract rights is made and how it operates
• What a delegation of duties is and how it operates
• Under what circumstances a person not a party to a contract can enforce it

To this point, we have focused on the rights and duties of the two parties to the contract. In this chapter, we turn our attention to contracts in which outsiders acquire rights or duties or both. Three types of outsiders merit examination:

• Assignees (outsiders who acquire rights after the contract is made)
• Delegatees (outsiders who acquire duties after the contract is made)
• Third-party beneficiaries (outsiders who acquire rights when the original contract is made)

14.1 Assignment of Contract Rights

• Understand what an assignment is and how it is made.
• Recognize the effect of the assignment.
• Know when assignments are not allowed.
• Understand the concept of assignor’s warranties.

The Concept of a Contract Assignment

Contracts create rights and duties. By an assignment The passing or delivering by one person to another of the right to a contract benefit. , an obligee One to whom an obligation is owed. (one who has the right to receive a contract benefit) transfers a right to receive a contract benefit owed by the obligor One who owes an obligation. (the one who has a duty to perform) to a third person ( assignee One to whom the right to receive benefit of a contract is passed or delivered. ); the obligee then becomes an assignor One who agrees to allow another to receive the benefit of a contract. (one who makes an assignment).

The Restatement (Second) of Contracts defines an assignment of a right as “a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires the right to such performance.” Restatement (Second) of Contracts, Section 317(1). The one who makes the assignment is both an obligee and a transferor. The assignee acquires the right to receive the contractual obligations of the promisor, who is referred to as the obligor (see Figure 14.1 "Assignment of Rights" ). The assignor may assign any right unless (1) doing so would materially change the obligation of the obligor, materially burden him, increase his risk, or otherwise diminish the value to him of the original contract; (2) statute or public policy forbids the assignment; or (3) the contract itself precludes assignment. The common law of contracts and Articles 2 and 9 of the Uniform Commercial Code (UCC) govern assignments. Assignments are an important part of business financing, such as factoring. A factor A person who pays money to receive another’s executory contractual benefits. is one who purchases the right to receive income from another.

Figure 14.1 Assignment of Rights

Method of Assignment

Manifesting assent.

To effect an assignment, the assignor must make known his intention to transfer the rights to the third person. The assignor’s intention must be that the assignment is effective without need of any further action or any further manifestation of intention to make the assignment. In other words, the assignor must intend and understand himself to be making the assignment then and there; he is not promising to make the assignment sometime in the future.

Under the UCC, any assignments of rights in excess of $5,000 must be in writing, but otherwise, assignments can be oral and consideration is not required: the assignor could assign the right to the assignee for nothing (not likely in commercial transactions, of course). Mrs. Franklin has the right to receive $750 a month from the sale of a house she formerly owned; she assigns the right to receive the money to her son Jason, as a gift. The assignment is good, though such a gratuitous assignment is usually revocable, which is not the case where consideration has been paid for an assignment.

Acceptance and Revocation

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. Problems of acceptance normally arise only when the assignor intends the assignment as a gift. Then, for the assignment to be irrevocable, either the assignee must manifest his acceptance or the assignor must notify the assignee in writing of the assignment.

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, Aldana v. Colonial Palms Plaza . Of course, an obligor who receives notice of the assignment from the assignee will want to be sure the assignment has really occurred. After all, anybody could waltz up to the obligor and say, “I’m the assignee of your contract with the bank. From now on, pay me the $500 a month, not the bank.” The obligor is entitled to verification of the assignment.

Effect of Assignment

General rule.

An assignment of rights effectively makes the assignee stand in the shoes of An assignee takes no greater rights than his assignor had. the assignor. He gains all the rights against the obligor that the assignor had, but no more. 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. Suppose Dealer sells a car to Buyer on a contract where Buyer is to pay $300 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, $250 and deduct that $250 from the amount owed Dealer on the next installment (called a setoff). Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the $250 from payment to Assignee.

The “shoe rule” does not apply to two types of assignments. First, it is inapplicable to the sale of a negotiable instrument to a holder in due course (covered in detail Chapter 23 "Negotiation of Commercial Paper" ). 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. Uniform Commercial Code, Section 9-206. While a waiver of defenses Surrender by a party of legal rights otherwise available to him or her. makes the assignment more marketable from the assignee’s point of view, it is a situation fraught with peril to an obligor, who may sign a contract without understanding the full import of the waiver. Under the waiver rule, for example, a farmer who buys a tractor on credit and discovers later that it does not work would still be required to pay a credit company that purchased the contract; his defense that the merchandise was shoddy would be unavailing (he would, as used to be said, be “having to pay on a dead horse”).

For that reason, there are various rules that limit both the holder in due course and the waiver rule. Certain defenses, the so-called real defenses (infancy, duress, and fraud in the execution, among others), may always be asserted. Also, the waiver clause in the contract must have been presented in good faith, and if the assignee has actual notice of a defense that the buyer or lessee could raise, then the waiver is ineffective. Moreover, in consumer transactions, the UCC’s rule is subject to state laws that protect consumers (people buying things used primarily for personal, family, or household purposes), and many states, by statute or court decision, have made waivers of defenses ineffective in such consumer transactions A contract for household or domestic purposes, not commercial purposes. . Federal Trade Commission regulations also affect the ability of many sellers to pass on rights to assignees free of defenses that buyers could raise against them. Because of these various limitations on the holder in due course and on waivers, the “shoe rule” will not govern in consumer transactions and, if there are real defenses or the assignee does not act in good faith, in business transactions as well.

When Assignments Are Not Allowed

The general rule—as previously noted—is that most contract rights are assignable. But there are exceptions. Five of them are noted here.

Material Change in Duties of the Obligor

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. Nor will a minor change in the duties the obligor must perform defeat the assignment.

Several residents in the town of Centerville sign up on an annual basis with the Centerville Times to receive their morning paper. A customer who is moving out of town may assign his right to receive the paper to someone else within the delivery route. As long as the assignee pays for the paper, the assignment is effective; the only relationship the obligor has to the assignee is a routine delivery in exchange for payment. Obligors can consent in the original contract, however, to a subsequent assignment of duties. Here is a clause from the World Team Tennis League contract: “It is mutually agreed that the Club shall have the right to sell, assign, trade and transfer this contract to another Club in the League, and the Player agrees to accept and be bound by such sale, exchange, assignment or transfer and to faithfully perform and carry out his or her obligations under this contract as if it had been entered into by the Player and such other Club.” Consent is not necessary when the contract does not involve a personal relationship.

Assignment of Personal Rights

When it matters to the obligor who receives the benefit of his duty to perform under the contract, then the receipt of the benefit is a personal right The right or duty of a particular person to perform or receive contract duties or benefits; cannot be assigned. that cannot be assigned. For example, a student seeking to earn pocket money during the school year signs up to do research work for a professor she admires and with whom she is friendly. The professor assigns the contract to one of his colleagues with whom the student does not get along. The assignment is ineffective because it matters to the student (the obligor) who the person of the assignee is. An insurance company provides auto insurance covering Mohammed Kareem, a sixty-five-year-old man who drives very carefully. Kareem cannot assign the contract to his seventeen-year-old grandson because it matters to the insurance company who the person of its insured is. Tenants usually cannot assign (sublet) their tenancies without the landlord’s permission because it matters to the landlord who the person of their tenant is. Section 14.4.1 "Nonassignable Rights" , Nassau Hotel Co. v. Barnett & Barse Corp. , is an example of the nonassignability of a personal right.

Assignment Forbidden by Statute or Public Policy

Various federal and state laws prohibit or regulate some contract assignment. The assignment of future wages is regulated by state and federal law to protect people from improvidently denying themselves future income because of immediate present financial difficulties. And even in the absence of statute, public policy might prohibit some assignments.

Contracts That Prohibit Assignment

Assignability of contract rights is useful, and prohibitions against it are not generally favored. Many contracts contain general language that prohibits assignment of rights or of “the contract.” Both the Restatement and UCC Section 2-210(3) declare that in the absence of any contrary circumstances, a provision in the agreement that prohibits assigning “the contract” bars “only the delegation to the assignee of the assignor’s performance.” Restatement (Second) of Contracts, Section 322. In other words, unless the contract specifically prohibits assignment of any of its terms, a party is free to assign anything except his or her own duties.

Even if a contractual provision explicitly prohibits it, a right to damages for breach of the whole contract is assignable under UCC Section 2-210(2) in contracts for goods. Likewise, UCC Section 9-318(4) invalidates any contract provision that prohibits assigning sums already due or to become due. Indeed, in some states, at common law, a clause specifically prohibiting assignment will fail. For example, the buyer and the seller agree to the sale of land and to a provision barring assignment of the rights under the contract. The buyer pays the full price, but the seller refuses to convey. The buyer then assigns to her friend the right to obtain title to the land from the seller. The latter’s objection that the contract precludes such an assignment will fall on deaf ears in some states; the assignment is effective, and the friend may sue for the title.

Future Contracts

The law distinguishes between assigning future rights under an existing contract and assigning rights that will arise from a future contract. Rights contingent on a future event can be assigned in exactly the same manner as existing rights, as long as the contingent rights are already incorporated in a contract. Ben has a long-standing deal with his neighbor, Mrs. Robinson, to keep the latter’s walk clear of snow at twenty dollars a snowfall. Ben is saving his money for a new printer, but when he is eighty dollars shy of the purchase price, he becomes impatient and cajoles a friend into loaning him the balance. In return, Ben assigns his friend the earnings from the next four snowfalls. The assignment is effective. However, a right that will arise from a future contract cannot be the subject of a present assignment.

Partial Assignments

An assignor may assign part of a contractual right, but only if the obligor can perform that part of his contractual obligation separately from the remainder of his obligation. Assignment of part of a payment due is always enforceable. However, if the obligor objects, neither the assignor nor the assignee may sue him unless both are party to the suit. Mrs. Robinson owes Ben one hundred dollars. Ben assigns fifty dollars of that sum to his friend. Mrs. Robinson is perplexed by this assignment and refuses to pay until the situation is explained to her satisfaction. The friend brings suit against Mrs. Robinson. The court cannot hear the case unless Ben is also a party to the suit. This ensures all parties to the dispute are present at once and avoids multiple lawsuits.

Successive Assignments

It may happen that an assignor assigns the same interest twice (see Figure 14.2 "Successive Assignments" ). With certain exceptions, the first assignee takes precedence over any subsequent assignee. One obvious exception is when the first assignment is ineffective or revocable. A subsequent assignment has the effect of revoking a prior assignment that is ineffective or revocable. Another exception: if in good faith the subsequent assignee gives consideration for the assignment and has no knowledge of the prior assignment, he takes precedence whenever he obtains payment from, performance from, or a judgment against the obligor, or whenever he receives some tangible evidence from the assignor that the right has been assigned (e.g., a bank deposit book or an insurance policy).

Some states follow the different English rule: the first assignee to give notice to the obligor has priority, regardless of the order in which the assignments were made. Furthermore, if the assignment falls within the filing requirements of UCC Article 9 (see Chapter 28 "Secured Transactions and Suretyship" ), the first assignee to file will prevail.

Figure 14.2 Successive Assignments

Assignor’s Warranties

An assignor has legal responsibilities in making assignments. He cannot blithely assign the same interests pell-mell and escape liability. Unless the contract explicitly states to the contrary, a person who assigns a right for value makes certain assignor’s warranties Promises, express or implied, made by an assignor to the assignee about the merits of the assignment. to the assignee: that he will not upset the assignment, that he has the right to make it, and that there are no defenses that will defeat it. However, the assignor does not guarantee payment; assignment does not by itself amount to a warranty that the obligor is solvent or will perform as agreed in the original contract. Mrs. Robinson owes Ben fifty dollars. Ben assigns this sum to his friend. Before the friend collects, Ben releases Mrs. Robinson from her obligation. The friend may sue Ben for the fifty dollars. Or again, if Ben represents to his friend that Mrs. Robinson owes him (Ben) fifty dollars and assigns his friend that amount, but in fact Mrs. Robinson does not owe Ben that much, then Ben has breached his assignor’s warranty. The assignor’s warranties may be express or implied.

Key Takeaway

Generally, it is OK for an obligee to assign the right to receive contractual performance from the obligor to a third party. The effect of the assignment is to make the assignee stand in the shoes of the assignor, taking all the latter’s rights and all the defenses against nonperformance that the obligor might raise against the assignor. But the obligor may agree in advance to waive defenses against the assignee, unless such waiver is prohibited by law.

There are some exceptions to the rule that contract rights are assignable. Some, such as personal rights, are not circumstances where the obligor’s duties would materially change, cases where assignability is forbidden by statute or public policy, or, with some limits, cases where the contract itself prohibits assignment. Partial assignments and successive assignments can happen, and rules govern the resolution of problems arising from them.

When the assignor makes the assignment, that person makes certain warranties, express or implied, to the assignee, basically to the effect that the assignment is good and the assignor knows of no reason why the assignee will not get performance from the obligor.

• If Able makes a valid assignment to Baker of his contract to receive monthly rental payments from Tenant, how is Baker’s right different from what Able’s was?
• Able made a valid assignment to Baker of his contract to receive monthly purchase payments from Carr, who bought an automobile from Able. The car had a 180-day warranty, but the car malfunctioned within that time. Able had quit the auto business entirely. May Carr withhold payments from Baker to offset the cost of needed repairs?
• Assume in the case in Exercise 2 that Baker knew Able was selling defective cars just before his (Able’s) withdrawal from the auto business. How, if at all, does that change Baker’s rights?
• Why are leases generally not assignable? Why are insurance contracts not assignable?

14.2 Delegation of Duties

• Know what a delegation of duty is.
• Recognize how liability remains on the delegator following a delegation.
• Understand what duties may not be delegated.

Basic Rules Regarding Delegation

To this point, we have been considering the assignment of the assignor’s rights (usually, though not solely, to money payments). But in every contract, a right connotes a corresponding duty, and these may be delegated. A delegation The passing or delivering by one person to another of the duty to perform a contract. is the transfer to a third party of the duty to perform under a contract. The one who delegates is the delegator One who delegates. . Because most obligees are also obligors, most assignments of rights will simultaneously carry with them the delegation of duties. Unless public policy or the contract itself bars the delegation, it is legally enforceable.

In most states, at common law, duties must be expressly delegated. Under Uniform Commercial Code (UCC) Section 2-210(4) and in a minority of states at common law (as illustrated in Section 14.4.2 "Assignment Includes Delegation" , Rose v. Vulcan Materials Co. ), an assignment of “the contract” or of “all my rights under the contract” is not only an assignment of rights but also a delegation of duties to be performed; by accepting the assignment, the delegatee One to whom the duty to perform a contract is delegated. (one to whom the delegation is made) implies a promise to perform the duties. (See Figure 14.3 "Delegation of Duties" )

Figure 14.3 Delegation of Duties

Effect on Obligor

An obligor who delegates a duty (and becomes a delegator) does not thereby escape liability for performing the duty himself. The obligee of the duty may continue to look to the obligor for performance unless the original contract specifically provides for substitution by delegation. This is a big difference between assignment of contract rights and delegation of contract duties: in the former, the assignor is discharged (absent breach of assignor’s warranties); in the latter, the delegator remains liable. The obligee (again, the one to whom the duty to perform flows) may also, in many cases, look to the delegatee, because the obligee becomes an intended beneficiary of the contract between the obligor and the delegatee, as discussed in Section 14.3 "Third-Party Beneficiaries" . Of course, the obligee may subsequently agree to accept the delegatee and discharge the obligor from any further responsibility for performing the duty. A contract among three persons having this effect is called a novation A new contract substituting for an old one, or a new party to a contract replacing a former party. ; it is a new contract. Fred sells his house to Lisa, who assumes his mortgage. Fred, in other words, has delegated the duty to pay the bank to Lisa. If Lisa defaults, Fred continues to be liable to the bank, unless in the original mortgage agreement a provision specifically permitted any purchaser to be substituted without recourse to Fred, or unless the bank subsequently accepts Lisa and discharges Fred.

Nondelegable Duties

Personal services.

Personal services are not delegable. If the contract is such that the promisee expects the obligor personally to perform the duty, the obligor may not delegate it. Suppose the Catskill Civic Opera Association hires a famous singer to sing in its production of Carmen and the singer delegates the job to her understudy. The delegation is ineffective, and performance by the understudy does not absolve the famous singer of liability for breach.

Many duties may be delegated, however. Indeed, if they could not be delegated, much of the world’s work would not get done. If you hire a construction company and an architect to design and build your house to certain specifications, the contractor may in turn hire individual craftspeople—plumbers, electricians, and the like—to do these specialized jobs, and as long as they are performed to specification, the contract terms will have been met. If you hired an architecture firm, though, you might not be contracting for the specific services of a particular individual in that firm.

Public Policy

Public policy may prohibit certain kinds of delegations. A public official, for example, may not delegate the duties of her office to private citizens, although various statutes generally permit the delegation of duties to her assistants and subordinates.

Delegations Barred by Contract

As we have already noted, the contract itself may bar assignment. The law generally disfavors restricting the right to assign a benefit, but it will uphold a contract provision that prohibits delegation of a duty. Thus, as we have seen, UCC Section 2-210(3) states that in a contract for sale of goods, a provision against assigning “the contract” is to be construed only as a prohibition against delegating the duties.

The duty to perform a contractual obligation may usually be delegated to a third party. Such delegation, however, does not discharge the delegator, who remains liable on the contract absent a novation.

Some duties may not be delegated: personal services cannot be, and public policy or the contract itself may bar delegation.

• What is the difference between an assignment and a delegation?
• Under what circumstances is the delegator discharged from liability on the contract?

14.3 Third-Party Beneficiaries

• Know what a third-party beneficiary is, and what the types of such beneficiaries are.
• Recognize the rights obtained by third-party beneficiaries.
• Understand when the public might be a third-party beneficiary of government contracts.

The fundamental issue with third-party beneficiaries gets to this: can a person who is not a party to a contract sue to enforce its terms?

The General Rule

The general rule is this: persons not a party to a contract cannot enforce its terms; they are said to lack privity The relationship of the immediate parties to a contract, a “private” relationship, as between retailer and customer. , a private, face-to-face relationship with the contracting parties. But if the persons are intended to benefit from the performance of a contract between others, then they can enforce it: they are intended beneficiaries.

Two Types of Third-Party Beneficiaries

In the vocabulary of the Restatement, a third person whom the parties to the contract intend to benefit is an intended beneficiary A person not a party to a contract who was intended to benefit from it and who may sue to enforce its terms. —that is, one who is entitled under the law of contracts to assert a right arising from a contract to which he or she is not a party. There are two types of intended beneficiaries.

Creditor Beneficiary

A creditor beneficiary One whom the party paying for the other’s performance intends to benefit as payment for a debt or obligation. is one to whom the promisor agrees to pay a debt of the promisee. For example, a father is bound by law to support his child. If the child’s uncle (the promisor) contracts with the father (the promisee) to furnish support for the child, the child is a creditor beneficiary and could sue the uncle. Or again, suppose Customer pays Ace Dealer for a new car, and Ace delegates the duty of delivery to Beta Dealer. Ace is now a debtor: he owes Customer something: a car. Customer is a creditor; she is owed something: a car. When Beta performs under his delegated contract with Ace, Beta is discharging the debt Ace owes to Customer. Customer is a creditor beneficiary of Dealers’ contract and could sue either one for nondelivery. She could sue Ace because she made a contract with him, and she could sue Beta because—again—she was intended to benefit from the performance of Dealers’ agreement.

Donee Beneficiary

The second type of intended beneficiary is a donee beneficiary A person not a party to a contract who is intended, as a gift, to benefit from its performance. . When the promisee is not indebted to the third person but intends for him or her to have the benefit of the promisor’s performance, the third person is a donee beneficiary (and the promise is sometimes called a gift promise). For example, an insurance company (the promisor) promises to its policyholder (the promisee), in return for a premium, to pay $100,000 to his wife on his death; this makes the wife a donee beneficiary (see Figure 14.1 "Assignment of Rights" ). The wife could sue to enforce the contract although she was not a party to it. Or if Able makes a contract with Woodsman for the latter to cut the trees in Able’s backyard as a Christmas gift to Able’s uphill Neighbor (so that Neighbor will have a view), Neighbor could sue Woodsman for breach of the contract.

If a person is not an intended beneficiary—not a creditor or donee beneficiary—then he or she is said to be only an incidental beneficiary A person not a party to a contract who benefits from its performance but was not intended to specifically. , and that person has no rights. So if Able makes the contract with Woodsman not to benefit Neighbor but for Able’s own benefit, the fact that the tree removal would benefit Neighbor does not make Neighbor an intended beneficiary.

The beneficiary’s rights are always limited by the terms of the contract. A failure by the promisee to perform his part of the bargain will terminate the beneficiary’s rights if the promisee’s lapse terminates his own rights, absent language in the contract to the contrary. If Able makes the contract as a gift to Neighbor but doesn’t make the required down payment to Woodsman, Neighbor’s claim fails. In a suit by the beneficiary, the promisor may avail himself of any defense he could have asserted against the promisee. Woodsman may defend himself against Neighbor’s claim that Woodsman did not do the whole job by showing that Able didn’t make full payment for the work.

Modification of the Beneficiary’s Rights

Conferring rights on an intended beneficiary is relatively simple. Whether his rights can be modified or extinguished by subsequent agreement of the promisor and promisee is a more troublesome issue. The general rule is that the beneficiary’s rights may be altered as long as there has been no vesting of rights The time at which the benefit of a contract is fixed in the beneficiary. (the rights have not taken effect). The time at which the beneficiary’s rights vest differs among jurisdictions: some say immediately, some say when the beneficiary assents to the receipt of the contract right, some say the beneficiary’s rights don’t vest until she has detrimentally relied on the right. The Restatement says that unless the contract provides that its terms cannot be changed without the beneficiary’s consent, the parties may change or rescind the benefit unless the beneficiary has sued on the promise, has detrimentally relied, or has assented to the promise at the request of one of the parties. Restatement (Second) of Contracts, Section 311. Some contracts provide that the benefit never vests; for example, standard insurance policies today reserve to the insured the right to substitute beneficiaries, to borrow against the policy, to assign it, and to surrender it for cash.

Government Contracts

The general rule is that members of the public are only incidental beneficiaries of contracts made by the government with a contractor to do public works. It is not illogical to see a contract between the government and a company pledged to perform a service on behalf of the public as one creating rights in particular members of the public, but the consequences of such a view could be extremely costly because everyone has some interest in public works and government services.

A restaurant chain, hearing that the county was planning to build a bridge that would reroute commuter traffic, might decide to open a restaurant on one side of the bridge; if it let contracts for construction only to discover that the bridge was to be delayed or canceled, could it sue the county’s contractor? In general, the answer is that it cannot. A promisor under contract to the government is not liable for the consequential damages to a member of the public arising from its failure to perform (or from a faulty performance) unless the agreement specifically calls for such liability or unless the promisee (the government) would itself be liable and a suit directly against the promisor would be consistent with the contract terms and public policy. When the government retains control over litigation or settlement of claims, or when it is easy for the public to insure itself against loss, or when the number and amount of claims would be excessive, the courts are less likely to declare individuals to be intended beneficiaries. But the service to be provided can be so tailored to the needs of particular persons that it makes sense to view them as intended beneficiaries—in the case, for example, of a service station licensed to perform emergency road repairs, as in Section 14.4.3 "Third party Beneficiaries and Foreseeable Damages" , Kornblut v. Chevron Oil Co .

Generally, a person who is not a party to a contract cannot sue to enforce its terms. The exception is if the person is an intended beneficiary, either a creditor beneficiary or a donee beneficiary. Such third parties can enforce the contract made by others but only get such rights as the contract provides, and beneficiaries are subject to defenses that could be made against their benefactor.

The general rule is that members of the public are not intended beneficiaries of contracts made by the government, but only incidental beneficiaries.

• What are the two types of intended beneficiaries?
• Smith contracted to deliver a truck on behalf of Truck Sales to Byers, who had purchased it from Truck Sales. Smith was entitled to payment by Byers for the delivery. The truck was defective. May Byers withhold payment from Smith to offset the repair costs?
• Why is the public not usually considered an intended beneficiary of contracts made by the government?

Nonassignable Rights

Nassau Hotel Co. v. Barnett & Barse Corporation

147 N.Y.S. 283 (1914)

McLaughlin, J.

Plaintiff owns a hotel at Long Beach, L. I., and on the 21st of November, 1912, it entered into a written agreement with the individual defendants Barnett and Barse to conduct the same for a period of years.…Shortly after this agreement was signed, Barnett and Barse organized the Barnett & Barse Corporation with a capital stock of $10,000, and then assigned the agreement to it. Immediately following the assignment, the corporation went into possession and assumed to carry out its terms. The plaintiff thereupon brought this action to cancel the agreement and to recover possession of the hotel and furniture therein, on the ground that the agreement was not assignable. [Summary judgment in favor of the plaintiff, defendant corporation appeals.]

The only question presented is whether the agreement was assignable. It provided, according to the allegations of the complaint, that the plaintiff leased the property to Barnett and Barse with all its equipment and furniture for a period of three years, with a privilege of five successive renewals of three years each. It expressly provided:

‘That said lessees…become responsible for the operation of the said hotel and for the upkeep and maintenance thereof and of all its furniture and equipment in accordance with the terms of this agreement and the said lessees shall have the exclusive possession, control and management thereof. * * * The said lessees hereby covenant and agree that they will operate the said hotel at all times in a first-class business-like manner, keep the same open for at least six (6) months of each year, * * *’ and ‘in lieu of rental the lessor and lessees hereby covenant and agree that the gross receipts of such operation shall be, as received, divided between the parties hereto as follows: (a) Nineteen per cent. (19%) to the lessor. * * * In the event of the failure of the lessees well and truly to perform the covenants and agreements herein contained,’ they should be liable in the sum of $50,000 as liquidated damages. That ‘in consideration and upon condition that the said lessees shall well and faithfully perform all the covenants and agreements by them to be performed without evasion or delay the said lessor for itself and its successors, covenants and agrees that the said lessees, their legal representatives and assigns may at all times during said term and the renewals thereof peaceably have and enjoy the said demised premises.’ And that ‘this agreement shall inure to the benefit of and bind the respective parties hereto, their personal representatives, successors and assigns.’

The complaint further alleges that the agreement was entered into by plaintiff in reliance upon the financial responsibility of Barnett and Barse, their personal character, and especially the experience of Barnett in conducting hotels; that, though he at first held a controlling interest in the Barnett & Barse Corporation, he has since sold all his stock to the defendant Barse, and has no interest in the corporation and no longer devotes any time or attention to the management or operation of the hotel.

…[C]learly…the agreement in question was personal to Barnett and Barse and could not be assigned by them without the plaintiff’s consent. By its terms the plaintiff not only entrusted them with the care and management of the hotel and its furnishings—valued, according to the allegations of the complaint, at more than $1,000,000—but agreed to accept as rental or compensation a percentage of the gross receipts. Obviously, the receipts depended to a large extent upon the management, and the care of the property upon the personal character and responsibility of the persons in possession. When the whole agreement is read, it is apparent that the plaintiff relied, in making it, upon the personal covenants of Barnett and Barse. They were financially responsible. As already said, Barnett had had a long and successful experience in managing hotels, which was undoubtedly an inducing cause for plaintiff’s making the agreement in question and for personally obligating them to carry out its terms.

It is suggested that because there is a clause in the agreement to the effect that it should ‘inure to the benefit of and bind the respective parties hereto, their personal representatives and assigns,’ that Barnett and Barse had a right to assign it to the corporation. But the intention of the parties is to be gathered, not from one clause, but from the entire instrument [Citation] and when it is thus read it clearly appears that Barnett and Barse were to personally carry out the terms of the agreement and did not have a right to assign it. This follows from the language used, which shows that a personal trust or confidence was reposed by the plaintiff in Barnett and Barse when the agreement was made.

In [Citation] it was said: “Rights arising out of contract cannot be transferred if they…involve a relation of personal confidence such that the party whose agreement conferred those rights must have intended them to be exercised only by him in whom he actually confided.”

This rule was applied in [Citation] the court holding that the plaintiff—the assignee—was not only technically, but substantially, a different entity from its predecessor, and that the defendant was not obliged to entrust its money collected on the sale of the presses to the responsibility of an entirely different corporation from that with which it had contracted, and that the contract could not be assigned to the plaintiff without the assent of the other party to it.

The reason which underlies the basis of the rule is that a party has the right to the benefit contemplated from the character, credit, and substance of him with whom he contracts, and in such case he is not bound to recognize…an assignment of the contract.

The order appealed from, therefore, is affirmed.

Case Questions

• The corporation created to operate the hotel was apparently owned and operated by the same two men the plaintiff leased the hotel to in the first place. What objection would the plaintiff have to the corporate entity—actually, of course, a legal fiction—owning and operating the hotel?
• The defendants pointed to the clause about the contract inuring to the benefit of the parties “and assigns.” So the defendants assigned the contract. How could that not be allowed by the contract’s own terms?
• What is the controlling rule of law upon which the outcome here depends?

Assignment Includes Delegation

Rose v. Vulcan Materials Co.

194 S.E.2d 521 (N.C. 1973)

Huskins, J.

…Plaintiff [Rose], after leasing his quarry to J. E. Dooley and Son, Inc., promised not to engage in the rock-crushing business within an eight-mile radius of [the city of] Elkin for a period of ten years. In return for this promise, J. E. Dooley and Son, Inc., promised, among other things, to furnish plaintiff stone f.o.b. the quarry site at Cycle, North Carolina, at stipulated prices for ten years.…

By a contract effective 23 April 1960, Vulcan Materials Company, a corporation…, purchased the stone quarry operations and the assets and obligations of J. E. Dooley and Son, Inc.…[Vulcan sent Rose a letter, part of which read:]

Mr. Dooley brought to us this morning the contracts between you and his companies, copies of which are attached. This is to advise that Vulcan Materials Company assumes all phases of these contracts and intends to carry out the conditions of these contracts as they are stated.

In early 1961 Vulcan notified plaintiff that it would no longer sell stone to him at the prices set out in [the agreement between Rose and Dooley] and would thereafter charge plaintiff the same prices charged all of its other customers for stone. Commencing 11 May 1961, Vulcan raised stone prices to the plaintiff to a level in excess of the prices specified in [the Rose-Dooley agreement].

At the time Vulcan increased the prices of stone to amounts in excess of those specified in [the Rose-Dooley contract], plaintiff was engaged in his ready-mix cement business, using large quantities of stone, and had no other practical source of supply. Advising Vulcan that he intended to sue for breach of contract, he continued to purchase stone from Vulcan under protest.…

The total of these amounts over and above the prices specified in [the Rose-Dooley contract] is $25,231.57, [about $152,000 in 2010 dollars] and plaintiff seeks to recover said amount in this action.

The [Rose-Dooley] agreement was an executory bilateral contract under which plaintiff’s promise not to compete for ten years gained him a ten-year option to buy stone at specified prices. In most states, the assignee of an executory bilateral contract is not liable to anyone for the nonperformance of the assignor’s duties thereunder unless he expressly promises his assignor or the other contracting party to perform, or ‘assume,’ such duties.…These states refuse to imply a promise to perform the duties, but if the assignee expressly promises his assignor to perform, he is liable to the other contracting party on a third-party beneficiary theory. And, if the assignee makes such a promise directly to the other contracting party upon a consideration, of course he is liable to him thereon. [Citation]

A minority of states holds that the assignee of an executory bilateral contract under a general assignment becomes not only assignee of the rights of the assignor but also delegatee of his duties; and that, absent a showing of contrary intent, the assignee impliedly promises the assignor that he will perform the duties so delegated. This rule is expressed in Restatement, Contracts, s 164 (1932) as follows:

(1) Where a party under a bilateral contract which is at the time wholly or partially executory on both sides purports to assign the whole contract, his action is interpreted, in the absence of circumstances showing a contrary intention, as an assignment of the assignor’s rights under the contract and a delegation of the performance of the assignor’s duties.

(2) Acceptance by the assignee of such an assignment is interpreted, in the absence of circumstances showing a contrary intention, as both an assent to become an assignee of the assignor’s rights and as a promise to the assignor to assume the performance of the assignor’s duties .’ (emphasis added)

We…adopt the Restatement rule and expressly hold that the assignee under a general assignment of an executory bilateral contract, in the absence of circumstances showing a contrary intention, becomes the delegatee of his assignor’s duties and impliedly promises his assignor that he will perform such duties.

The rule we adopt and reaffirm here is regarded as the more reasonable view by legal scholars and textwriters. Professor Grismore says:

It is submitted that the acceptance of an assignment in this form does presumptively import a tacit promise on the part of the assignee to assume the burdens of the contract, and that this presumption should prevail in the absence of the clear showing of a contrary intention. The presumption seems reasonable in view of the evident expectation of the parties. The assignment on its face indicates an intent to do more than simply to transfer the benefits assured by the contract. It purports to transfer the contract as a whole, and since the contract is made up of both benefits and burdens both must be intended to be included.…Grismore, Is the Assignee of a Contract Liable for the Nonperformance of Delegated Duties? 18 Mich.L.Rev. 284 (1920).

In addition, with respect to transactions governed by the Uniform Commercial Code, an assignment of a contract in general terms is a delegation of performance of the duties of the assignor, and its acceptance by the assignee constitutes a promise by him to perform those duties. Our holding in this case maintains a desirable uniformity in the field of contract liability.

We further hold that the other party to the original contract may sue the assignee as a third-party beneficiary of his promise of performance which he impliedly makes to his assignor, under the rule above laid down, by accepting the general assignment. Younce v. Lumber Co ., [Citation] (1908), holds that where the assignee makes an express promise of performance to his assignor, the other contracting party may sue him for breach thereof. We see no reason why the same result should not obtain where the assignee breaches his promise of performance implied under the rule of Restatement s 164. ‘That the assignee is liable at the suit of the third party where he expressly assumes and promises to perform delegated duties has already been decided in a few cases (citing Younce). If an express promise will support such an action it is difficult to see why a tacit promise should not have the same effect.’ Grismore, supra. Parenthetically, we note that such is the rule under the Uniform Commercial Code, [2-210].

We now apply the foregoing principles to the case at hand. The contract of 23 April 1960, between defendant and J. E. Dooley and Son, Inc., under which, as stipulated by the parties, ‘the defendant purchased the assets and obligations of J. E. Dooley and Son, Inc.,’ was a general assignment of all the assets and obligations of J. E. Dooley and Son, Inc., including those under [the Rose-Dooley contract]. When defendant accepted such assignment it thereby became delegatee of its assignor’s duties under it and impliedly promised to perform such duties.

When defendant later failed to perform such duties by refusing to continue sales of stone to plaintiff at the prices specified in [the Rose-Dooley contract], it breached its implied promise of performance and plaintiff was entitled to bring suit thereon as a third-party beneficiary.

The decision…is reversed with directions that the case be certified to the Superior Court of Forsyth County for reinstatement of the judgment of the trial court in accordance with this opinion.

• Why did Rose need the crushed rock from the quarry he originally leased to Dooley?
• What argument did Vulcan make as to why it should not be liable to sell crushed rock to Rose at the price set out in the Rose-Dooley contract?
• What rule did the court here announce in deciding that Vulcan was required to sell rock at the price set out in the Rose-Dooley contract? That is, what is the controlling rule of law in this case?

Third party Beneficiaries and Foreseeable Damages

Kornblut v. Chevron Oil Co.

62 A.D.2d 831 (N.Y. 1978)

Hopkins, J.

The plaintiff-respondent has recovered a judgment after a jury trial in the sum of $519,855.98 [about $1.9 million in 2010 dollars] including interest, costs and disbursements, against Chevron Oil Company (Chevron) and Lawrence Ettinger, Inc. (Ettinger) (hereafter collectively referred to as defendants) for damages arising from the death and injuries suffered by Fred Kornblut, her husband. The case went to the jury on the theory that the decedent was the third-party beneficiary of a contract between Chevron and the New York State Thruway Authority and a contract between Chevron and Ettinger.

On the afternoon of an extremely warm day in early August, 1970 the decedent was driving northward on the New York State Thruway. Near Sloatsburg, New York, at about 3:00 p.m., his automobile sustained a flat tire. At the time the decedent was accompanied by his wife and 12-year-old son. The decedent waited for assistance in the 92 degree temperature.

After about an hour a State Trooper, finding the disabled car, stopped and talked to the decedent. The trooper radioed Ettinger, which had the exclusive right to render service on the Thruway under an assignment of a contract between Chevron and the Thruway Authority. Thereafter, other State Troopers reported the disabled car and the decedent was told in each instance that he would receive assistance within 20 minutes.

Having not received any assistance by 6:00 p.m., the decedent attempted to change the tire himself. He finally succeeded, although he experienced difficulty and complained of chest pains to the point that his wife and son were compelled to lift the flat tire into the trunk of the automobile. The decedent drove the car to the next service area, where he was taken by ambulance to a hospital; his condition was later diagnosed as a myocardial infarction. He died 28 days later.

Plaintiff sued, inter alia , Chevron and Ettinger alleging in her complaint causes of action sounding in negligence and breach of contract. We need not consider the issue of negligence, since the Trial Judge instructed the jury only on the theory of breach of contract, and the plaintiff has recovered damages for wrongful death and the pain and suffering only on that theory.

We must look, then, to the terms of the contract sought to be enforced. Chevron agreed to provide “rapid and efficient roadside automotive service on a 24-hour basis from each gasoline service station facility for the areas…when informed by the authority or its police personnel of a disabled vehicle on the Thruway”. Chevron’s vehicles are required “to be used and operated in such a manner as will produce adequate service to the public, as determined in the authority’s sole judgment and discretion”. Chevron specifically covenanted that it would have “sufficient roadside automotive service vehicles, equipment and personnel to provide roadside automotive service to disabled vehicles within a maximum of thirty (30) minutes from the time a call is assigned to a service vehicle, subject to unavoidable delays due to extremely adverse weather conditions or traffic conditions.”…

In interpreting the contract, we must bear in mind the circumstances under which the parties bargained. The New York Thruway is a limited access toll highway, designed to move traffic at the highest legal speed, with the north and south lanes separated by green strips. Any disabled vehicle on the road impeding the flow of traffic may be a hazard and inconvenience to the other users. The income realized from tolls is generated from the expectation of the user that he will be able to travel swiftly and smoothly along the Thruway. Consequently, it is in the interest of the authority that disabled vehicles will be repaired or removed quickly to the end that any hazard and inconvenience will be minimized. Moreover, the design and purpose of the highway make difficult, if not impossible, the summoning of aid from garages not located on the Thruway. The movement of a large number of vehicles at high speed creates a risk to the operator of a vehicle who attempts to make his own repairs, as well as to the other users. These considerations clearly prompted the making of contracts with service organizations which would be located at points near in distance and time on the Thruway for the relief of distressed vehicles.

Thus, it is obvious that, although the authority had an interest in making provision for roadside calls through a contract, there was also a personal interest of the user served by the contract. Indeed, the contract provisions regulating the charges for calls and commanding refunds be paid directly to the user for overcharges, evince a protection and benefit extended to the user only. Hence, in the event of an overcharge, the user would be enabled to sue on the contract to obtain a recovery.…Here the contract contemplates an individual benefit for the breach running to the user.…

By choosing the theory of recovery based on contract, it became incumbent on the plaintiff to show that the injury was one which the defendants had reason to foresee as a probable result of the breach, under the ancient doctrine of Hadley v Baxendale [Citation], and the cases following it…in distinction to the requirement of proximate cause in tort actions.…

The death of the decedent on account of his exertion in the unusual heat of the midsummer day in changing the tire cannot be said to have been within the contemplation of the contracting parties as a reasonably foreseeable result of the failure of Chevron or its assignee to comply with the contract.…

The case comes down to this, then, in our view: though the decedent was the intended beneficiary to sue under certain provisions of the contract—such as the rate specified for services to be rendered—he was not the intended beneficiary to sue for consequential damages arising from personal injury because of a failure to render service promptly. Under these circumstances, the judgment must be reversed and the complaint dismissed, without costs or disbursements.

[Martuscello, J., concurred in the result but opined that the travelling public was not an intended beneficiary of the contract.]

• Chevron made two arguments as to why it should not be liable for Mr. Kornblut’s death. What were they?
• Obviously, when Chevron made the contract with the New York State Thruway Authority, it did not know Mr. Kornblut was going to be using the highway. How could he, then, be an intended beneficiary of the contract?
• Why was Chevron not found liable for Mr. Kornblut’s death when, clearly, had it performed the contract properly, he would not have died?

14.5 Summary and Exercises

The general rule that the promisee may assign any right has some exceptions—for example, when the promisor’s obligation would be materially changed. Of course the contract itself may prohibit assignment, and sometimes statutes preclude it. Knowing how to make the assignment effective and what the consequences of the assignment are on others is worth mastering. When, for example, does the assignee not stand in the assignor’s shoes? When may a future right be assigned?

Duties, as well as rights, may be transferred to third parties. Most rights (promises) contained in contracts have corresponding duties (also expressed as promises). Often when an entire contract is assigned, the duties go with it; the transferee is known, with respect to the duties, as the delegatee. The transferor himself does not necessarily escape the duty, however. Moreover, some duties are nondelegable, such as personal promises and those that public policy require to be carried out by a particular official. Without the ability to assign rights and duties, much of the modern economy would grind to a halt.

The parties to a contract are not necessarily the only people who acquire rights or duties under it. One major category of persons acquiring rights is third-party beneficiaries. Only intended beneficiaries acquire rights under the contract, and these are of two types: creditor and donee beneficiaries. The rules for determining whether rights have been conferred are rather straightforward; determining whether rights can subsequently be modified or extinguished is more troublesome. Generally, as long as the contract does not prohibit change and as long as the beneficiary has not relied on the promise, the change may be made.

• The Dayton Country Club offered its members various social activities. Some members were entitled, for additional payment, to use the golf course, a coveted amenity. Golfing memberships could not be transferred except upon death or divorce, and there was a long waiting list in this special category; if a person at the top of the list declined, the next in line was eligible. Golfing membership rules were drawn up by a membership committee. Magness and Redman were golfing members. They declared bankruptcy, and the bankruptcy trustee sought, in order to increase the value of their debtors’ estates, to assume and sell the golfing memberships to members on the waiting list, other club members, or the general public, provided the persons joined the club. The club asserted that under relevant state law, it was “excused from rendering performance to an entity other than the debtor”—that is, it could not be forced to accept strangers as members. Can these memberships be assigned?
• Tenant leased premises in Landlord’s shopping center, agreeing in the lease “not to assign, mortgage, pledge, or encumber this lease in whole or in part.” Under the lease, Tenant was entitled to a construction allowance of up to $11,000 after Tenant made improvements for its uses. Prior to the completion of the improvements, Tenant assigned its right to receive the first $8,000 of the construction allowance to Assignee, who, in turn, provided Tenant $8,000 to finance the construction. Assignee notified Landlord of the assignment, but when the construction was complete, Landlord paid Tenant anyway; when Assignee complained, Landlord pointed to the nonassignment clause. Assignee sued Landlord. Who wins? Aldana v. Colonial Palms Plaza, Inc. , 591 So.2d 953 (Fla. Ct. App., 1991).
• Marian contracted to sell her restaurant to Billings for $400,000. The contract provided that Billings would pay $100,000 and sign a note for the remainder. Billings sold the restaurant to Alice, who agreed to assume responsibility for the balance due on the note held by Marian. But Alice had difficulties and declared bankruptcy. Is Billings still liable on the note to Marian?

Yellow Cab contracted with the Birmingham Board of Education to transport physically handicapped students. The contract provided, “Yellow Cab will transport the physically handicapped students of the School System…and furnish all necessary vehicles and personnel and will perform all maintenance and make all repairs to the equipment to keep it in a safe and efficient operating condition at all times.”

Yellow Cab subcontracted with Metro Limousine to provide transportation in connection with its contract with the board. Thereafter, Metro purchased two buses from Yellow Cab to use in transporting the students. DuPont, a Metro employee, was injured when the brakes on the bus that he was driving failed, causing the bus to collide with a tree. DuPont sued Yellow Cab, alleging that under its contract with the board, Yellow Cab had a nondelegable duty to properly maintain the bus so as to keep it in a safe operating condition; that that duty flowed to him as an intended third-party beneficiary of the contract; and that Yellow Cab had breached the contract by failing to properly maintain the bus. Who wins? DuPont v. Yellow Cab Co. of Birmingham, Inc. , 565 So.2d 190 (Ala. 1990).

• Joan hired Groom to attend to her herd of four horses at her summer place in the high desert. The job was too much for Groom, so he told Tony that he (Groom) would pay Tony, who claimed expertise in caring for horses, to take over the job. Tony neglected the horses in hot weather, and one of them needed veterinarian care for dehydration. Is Groom liable?
• Rensselaer Water Company contracted with the city to provide water for business, domestic, and fire-hydrant purposes. While the contract was in effect, a building caught on fire; the fire spread to Plaintiff’s (Moch Co.’s) warehouse, destroying it and its contents. The company knew of the fire but was unable to supply adequate water pressure to put it out. Is the owner of the warehouse able to maintain a claim against the company for the loss?
• Rusty told Alice that he’d do the necessary overhaul on her classic car for $5,000 during the month of May, and that when the job was done, she should send the money to his son, Jim, as a graduation present. He confirmed the agreement in writing and sent a copy to Jim. Subsequently, Rusty changed his mind. What right has Jim?
• Fox Brothers agreed to convey to Clayton Canfield Lot 23 together with a one-year option to purchase Lot 24 in a subdivision known as Fox Estates. The agreement contained no prohibitions, restrictions, or limitations against assignments. Canfield paid the $20,000 and took title to Lot 23 and the option to Lot 24. Canfield thereafter assigned his option rights in Lot 24 to the Scotts. When the Scotts wanted to exercise the option, Fox Brothers refused to convey the property to them. The Scotts then brought suit for specific performance. Who wins?
• Rollins sold Byers, a businessperson, a flatbed truck on a contract; Rollins assigned the contract to Frost, and informed Byers of the assignment. Rollins knew the truck had problems, which he did not reveal to Byers. When the truck needed $3,200 worth of repairs and Rollins couldn’t be found, Byers wanted to deduct that amount from payments owed to Frost, but Frost insisted he had a right to payment. Upon investigation, Byers discovered that four other people in the state had experienced similar situations with Rollins and with Frost as Rollins’s assignee. What recourse has Byers?
• Merchants and resort owners in the San Juan Islands in Washington State stocked extra supplies, some perishable, in anticipation of the flood of tourists over Labor Day. They suffered inconvenience and monetary damage due to the union’s Labor Day strike of the state ferry system, in violation of its collective bargaining agreement with the state and of a temporary restraining order. The owners sued the union for damages for lost profits, attorney fees, and costs, claiming the union should be liable for intentional interference with contractual relations (the owners’ relations with their would-be customers). Do the owners have a cause of action?

Self-Test Questions

A creditor beneficiary is

• the same as a donee beneficiary
• a third-party beneficiary
• an incidental beneficiary
• none of the above

Assignments are not allowed

• for rights that will arise from a future contract
• when they will materially change the duties that the obligor must perform
• where they are forbidden by public policy
• for any of the above

When an assignor assigns the same interest twice,

• the subsequent assignee generally takes precedence
• the first assignee generally takes precedence
• the first assignee always takes precedence
• the assignment violates public policy
• is an example of delegation of duties
• involves using an account receivable as collateral for a loan
• involves the purchase of a right to receive income from another
• is all of the above

Personal promises

• are always delegable
• are generally not delegable
• are delegable if not prohibited by public policy
• are delegable if not barred by the contract

Self-Test Answers

Assignment Of Rights Agreement

Jump to section, what is an assignment of rights agreement.

​​An assignment of rights agreement is a written document in which one party, the assignor, assigns to another party all or part of their rights under an existing contract. The most common example of this would be when someone wants to sell their shares of stock in a company.

When you buy shares from someone else (the seller), they agree to transfer them over and give up any control they had on that share. This way, another party can take ownership without going through the trouble of trying to buy the whole company themselves.

Common Sections in Assignment Of Rights Agreements

Below is a list of common sections included in Assignment Of Rights Agreements. These sections are linked to the below sample agreement for you to explore.

Assignment Of Rights Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-99.(H)(7) 5 dex99h7.htm FORM OF ASSIGNMENT AGREEMENT , Viewed December 20, 2021, View Source on SEC .

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Assignment of Rights Example: Everything You Need to Know

A good assignment of rights example is if a party was entitled to collect $100 for painting, they can transfer the right to receive payment to another party. 3 min read updated on February 01, 2023

Updated October 28, 2020:

A good assignment of rights example is if a party was entitled to collect $100 for painting, they can transfer the right to receive payment to another party. An assignment contract takes place when one party to an existing contract (the assignor) transfers the contract's obligations and benefits to another party (the assignee). 

What Is an Assignment Agreement?

A contract assignment occurs when a party assigns its contractual rights to a third party. The benefit the issuing party would have received from the contract is now assigned to the third party. The party appointing their rights is referred to as the assignor, while the party obtaining the rights is the assignee. Essentially, the assignor prefers that the assignee reverses roles and assumes the contractual rights and obligations as stated in the contract.

Before this can occur, all parties to the original contract must be notified. The party creating the assignment usually does so with the motive of profit. Generally, assignments are perfectly legal. In specific situations, they may be illegal when they have been prohibited by a clause in the contract or prohibited by law.

Use of an Assignment Agreement

In situations where you don't have the staff to perform a task, it may be necessary to outsource the work to another party. Assignment agreements are created to formally transfer the contractual responsibilities and rights to a third party, while also making sure to preserve your own obligations and legal rights. The use of an assignment agreement is appropriate when you're:

• Handing over your contractual responsibilities to a third party
• Taking over contracts or responsibilities held by another party

A contract assignment may also be referred to as an assignment agreement. An assignment agreement should include the:

• Name of the party transferring their contractual duties
• Name of the party receiving the contractual obligations and rights
• Third-party, or obligor, to the original contract
• Name of the actual contract, along with the expiration date
• If and when the obligor's approval has been received
• Specific date the contract will take effect
• State laws that govern the contract

Parties Involved in a Contract Assignment

Generally, a contract assignment is made up of the following parties:

• Obligor: The party that is committed to transferring benefits or rights to the party specified in the contract. The obligor is most likely the party that initially makes the contract.
• Assignor: The party that is the initial beneficiary of the benefits or rights. They are responsible for making the assignment. In other words, they will be handing over the rights they were initially going to receive.
• Assignee:  The party that will be accepting the benefits and rights from the assignor. A transfer may have multiple assignees.

The steps in an assignment are:

• The obligor creates a contract with the assignor.
• The rights are transferred from the assignor to the assignee.
• The assignee is paid the benefits from the obligor.

How Is a Contract Assignment Created?

In most cases, it is not necessary to notify the obligor of an assignment. The assignor needs to definitively establish their intent in assigning rights to the assignee. Generally speaking, assignment contracts can be both written and oral. However, it is recommended that the contract is written. 

It is important that the contract is written in the present tense. If any past or future tense is used, it will make the contract legally nonbinding.

How Assignments Work

The specific language used in the contract will determine how the assignment plays out. For example , one contract may prohibit an assignment, while another contract may require that all parties involved agree to it before proceeding. Remember, an assignment of a contract does not necessarily alleviate an assignor from all liability. Many contracts include an assurance clause guaranteeing performance. In other words, the initial parties to the contract guarantee the assignee will achieve the desired goal.

When Assignments Will Not Be Enforced

The following situations indicate when an  assignment of a contract is not enforced:

• The contract specifically prohibits the assignment.
• The assignment drastically changes the expected outcome.
• The assignment is against public policy or illegal.
• The contract contains a no-assignment clause.
• The assignment is for a future right that would only be attainable in a contract in the future.
• The contract hasn't been finalized or written yet.

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14.1: Assignment of Contract Rights

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LEARNING OBJECTIVES

• Understand what an assignment is and how it is made.
• Recognize the effect of the assignment.
• Know when assignments are not allowed.
• Understand the concept of assignor’s warranties.

The Concept of a Contract Assignment

Contracts create rights and duties. By an assignment , an obligee (one who has the right to receive a contract benefit) transfers a right to receive a contract benefit owed by the obligor (the one who has a duty to perform) to a third person ( assignee ); the obligee then becomes an assignor (one who makes an assignment).

The Restatement (Second) of Contracts defines an assignment of a right as “a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires the right to such performance.”Restatement (Second) of Contracts, Section 317(1). The one who makes the assignment is both an obligee and a transferor. The assignee acquires the right to receive the contractual obligations of the promisor, who is referred to as the obligor (see Figure 14.1 "Assignment of Rights" ). The assignor may assign any right unless (1) doing so would materially change the obligation of the obligor, materially burden him, increase his risk, or otherwise diminish the value to him of the original contract; (2) statute or public policy forbids the assignment; or (3) the contract itself precludes assignment. The common law of contracts and Articles 2 and 9 of the Uniform Commercial Code (UCC) govern assignments. Assignments are an important part of business financing, such as factoring. A factor is one who purchases the right to receive income from another.

Figure 14.1 Assignment of Rights

Method of Assignment

Manifesting assent.

To effect an assignment, the assignor must make known his intention to transfer the rights to the third person. The assignor’s intention must be that the assignment is effective without need of any further action or any further manifestation of intention to make the assignment. In other words, the assignor must intend and understand himself to be making the assignment then and there; he is not promising to make the assignment sometime in the future.

Under the UCC, any assignments of rights in excess of $5,000 must be in writing, but otherwise, assignments can be oral and consideration is not required: the assignor could assign the right to the assignee for nothing (not likely in commercial transactions, of course). Mrs. Franklin has the right to receive $750 a month from the sale of a house she formerly owned; she assigns the right to receive the money to her son Jason, as a gift. The assignment is good, though such a gratuitous assignment is usually revocable, which is not the case where consideration has been paid for an assignment.

Acceptance and Revocation

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. Problems of acceptance normally arise only when the assignor intends the assignment as a gift. Then, for the assignment to be irrevocable, either the assignee must manifest his acceptance or the assignor must notify the assignee in writing of the assignment.

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, Aldana v. Colonial Palms Plaza . Of course, an obligor who receives notice of the assignment from the assignee will want to be sure the assignment has really occurred. After all, anybody could waltz up to the obligor and say, “I’m the assignee of your contract with the bank. From now on, pay me the $500 a month, not the bank.” The obligor is entitled to verification of the assignment.

Effect of Assignment

General rule.

An assignment of rights effectively makes the assignee stand in the shoes of the assignor. He gains all the rights against the obligor that the assignor had, but no more. 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. Suppose Dealer sells a car to Buyer on a contract where Buyer is to pay $300 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, $250 and deduct that $250 from the amount owed Dealer on the next installment (called a setoff). Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the $250 from payment to Assignee.

The “shoe rule” does not apply to two types of assignments. 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.Uniform Commercial Code, Section 9-206. While a waiver of defenses makes the assignment more marketable from the assignee’s point of view, it is a situation fraught with peril to an obligor, who may sign a contract without understanding the full import of the waiver. Under the waiver rule, for example, a farmer who buys a tractor on credit and discovers later that it does not work would still be required to pay a credit company that purchased the contract; his defense that the merchandise was shoddy would be unavailing (he would, as used to be said, be “having to pay on a dead horse”).

For that reason, there are various rules that limit both the holder in due course and the waiver rule. Certain defenses, the so-called real defenses (infancy, duress, and fraud in the execution, among others), may always be asserted. Also, the waiver clause in the contract must have been presented in good faith, and if the assignee has actual notice of a defense that the buyer or lessee could raise, then the waiver is ineffective. Moreover, in consumer transactions, the UCC’s rule is subject to state laws that protect consumers (people buying things used primarily for personal, family, or household purposes), and many states, by statute or court decision, have made waivers of defenses ineffective in such consumer transactions . Federal Trade Commission regulations also affect the ability of many sellers to pass on rights to assignees free of defenses that buyers could raise against them. Because of these various limitations on the holder in due course and on waivers, the “shoe rule” will not govern in consumer transactions and, if there are real defenses or the assignee does not act in good faith, in business transactions as well.

When Assignments Are Not Allowed

The general rule—as previously noted—is that most contract rights are assignable. But there are exceptions. Five of them are noted here.

Material Change in Duties of the Obligor

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. Nor will a minor change in the duties the obligor must perform defeat the assignment.

Several residents in the town of Centerville sign up on an annual basis with the Centerville Times to receive their morning paper. A customer who is moving out of town may assign his right to receive the paper to someone else within the delivery route. As long as the assignee pays for the paper, the assignment is effective; the only relationship the obligor has to the assignee is a routine delivery in exchange for payment. Obligors can consent in the original contract, however, to a subsequent assignment of duties. Here is a clause from the World Team Tennis League contract: “It is mutually agreed that the Club shall have the right to sell, assign, trade and transfer this contract to another Club in the League, and the Player agrees to accept and be bound by such sale, exchange, assignment or transfer and to faithfully perform and carry out his or her obligations under this contract as if it had been entered into by the Player and such other Club.” Consent is not necessary when the contract does not involve a personal relationship.

Assignment of Personal Rights

When it matters to the obligor who receives the benefit of his duty to perform under the contract, then the receipt of the benefit is a personal right that cannot be assigned. For example, a student seeking to earn pocket money during the school year signs up to do research work for a professor she admires and with whom she is friendly. The professor assigns the contract to one of his colleagues with whom the student does not get along. The assignment is ineffective because it matters to the student (the obligor) who the person of the assignee is. An insurance company provides auto insurance covering Mohammed Kareem, a sixty-five-year-old man who drives very carefully. Kareem cannot assign the contract to his seventeen-year-old grandson because it matters to the insurance company who the person of its insured is. Tenants usually cannot assign (sublet) their tenancies without the landlord’s permission because it matters to the landlord who the person of their tenant is. Section 14.4.1 "Nonassignable Rights" , Nassau Hotel Co. v. Barnett & Barse Corp. , is an example of the nonassignability of a personal right.

Assignment Forbidden by Statute or Public Policy

Various federal and state laws prohibit or regulate some contract assignment. The assignment of future wages is regulated by state and federal law to protect people from improvidently denying themselves future income because of immediate present financial difficulties. And even in the absence of statute, public policy might prohibit some assignments.

Contracts That Prohibit Assignment

Assignability of contract rights is useful, and prohibitions against it are not generally favored. Many contracts contain general language that prohibits assignment of rights or of “the contract.” Both the Restatement and UCC Section 2-210(3) declare that in the absence of any contrary circumstances, a provision in the agreement that prohibits assigning “the contract” bars “only the delegation to the assignee of the assignor’s performance.”Restatement (Second) of Contracts, Section 322. In other words, unless the contract specifically prohibits assignment of any of its terms, a party is free to assign anything except his or her own duties.

Even if a contractual provision explicitly prohibits it, a right to damages for breach of the whole contract is assignable under UCC Section 2-210(2) in contracts for goods. Likewise, UCC Section 9-318(4) invalidates any contract provision that prohibits assigning sums already due or to become due. Indeed, in some states, at common law, a clause specifically prohibiting assignment will fail. For example, the buyer and the seller agree to the sale of land and to a provision barring assignment of the rights under the contract. The buyer pays the full price, but the seller refuses to convey. The buyer then assigns to her friend the right to obtain title to the land from the seller. The latter’s objection that the contract precludes such an assignment will fall on deaf ears in some states; the assignment is effective, and the friend may sue for the title.

Future Contracts

The law distinguishes between assigning future rights under an existing contract and assigning rights that will arise from a future contract. Rights contingent on a future event can be assigned in exactly the same manner as existing rights, as long as the contingent rights are already incorporated in a contract. Ben has a long-standing deal with his neighbor, Mrs. Robinson, to keep the latter’s walk clear of snow at twenty dollars a snowfall. Ben is saving his money for a new printer, but when he is eighty dollars shy of the purchase price, he becomes impatient and cajoles a friend into loaning him the balance. In return, Ben assigns his friend the earnings from the next four snowfalls. The assignment is effective. However, a right that will arise from a future contract cannot be the subject of a present assignment.

Partial Assignments

An assignor may assign part of a contractual right, but only if the obligor can perform that part of his contractual obligation separately from the remainder of his obligation. Assignment of part of a payment due is always enforceable. However, if the obligor objects, neither the assignor nor the assignee may sue him unless both are party to the suit. Mrs. Robinson owes Ben one hundred dollars. Ben assigns fifty dollars of that sum to his friend. Mrs. Robinson is perplexed by this assignment and refuses to pay until the situation is explained to her satisfaction. The friend brings suit against Mrs. Robinson. The court cannot hear the case unless Ben is also a party to the suit. This ensures all parties to the dispute are present at once and avoids multiple lawsuits.

Successive Assignments

It may happen that an assignor assigns the same interest twice (see Figure 14.2 "Successive Assignments" ). With certain exceptions, the first assignee takes precedence over any subsequent assignee. One obvious exception is when the first assignment is ineffective or revocable. A subsequent assignment has the effect of revoking a prior assignment that is ineffective or revocable. Another exception: if in good faith the subsequent assignee gives consideration for the assignment and has no knowledge of the prior assignment, he takes precedence whenever he obtains payment from, performance from, or a judgment against the obligor, or whenever he receives some tangible evidence from the assignor that the right has been assigned (e.g., a bank deposit book or an insurance policy).

Some states follow the different English rule: the first assignee to give notice to the obligor has priority, regardless of the order in which the assignments were made. Furthermore, if the assignment falls within the filing requirements of UCC Article 9 (see Chapter 22 "Secured Transactions and Suretyship" ), the first assignee to file will prevail.

Figure 14.2 Successive Assignments

Assignor’s Warranties

An assignor has legal responsibilities in making assignments. He cannot blithely assign the same interests pell-mell and escape liability. Unless the contract explicitly states to the contrary, a person who assigns a right for value makes certain assignor’s warranties to the assignee: that he will not upset the assignment, that he has the right to make it, and that there are no defenses that will defeat it. However, the assignor does not guarantee payment; assignment does not by itself amount to a warranty that the obligor is solvent or will perform as agreed in the original contract. Mrs. Robinson owes Ben fifty dollars. Ben assigns this sum to his friend. Before the friend collects, Ben releases Mrs. Robinson from her obligation. The friend may sue Ben for the fifty dollars. Or again, if Ben represents to his friend that Mrs. Robinson owes him (Ben) fifty dollars and assigns his friend that amount, but in fact Mrs. Robinson does not owe Ben that much, then Ben has breached his assignor’s warranty. The assignor’s warranties may be express or implied.

KEY TAKEAWAY

Generally, it is OK for an obligee to assign the right to receive contractual performance from the obligor to a third party. The effect of the assignment is to make the assignee stand in the shoes of the assignor, taking all the latter’s rights and all the defenses against nonperformance that the obligor might raise against the assignor. But the obligor may agree in advance to waive defenses against the assignee, unless such waiver is prohibited by law.

There are some exceptions to the rule that contract rights are assignable. Some, such as personal rights, are not circumstances where the obligor’s duties would materially change, cases where assignability is forbidden by statute or public policy, or, with some limits, cases where the contract itself prohibits assignment. Partial assignments and successive assignments can happen, and rules govern the resolution of problems arising from them.

When the assignor makes the assignment, that person makes certain warranties, express or implied, to the assignee, basically to the effect that the assignment is good and the assignor knows of no reason why the assignee will not get performance from the obligor.

• If Able makes a valid assignment to Baker of his contract to receive monthly rental payments from Tenant, how is Baker’s right different from what Able’s was?
• Able made a valid assignment to Baker of his contract to receive monthly purchase payments from Carr, who bought an automobile from Able. The car had a 180-day warranty, but the car malfunctioned within that time. Able had quit the auto business entirely. May Carr withhold payments from Baker to offset the cost of needed repairs?
• Assume in the case in Exercise 2 that Baker knew Able was selling defective cars just before his (Able’s) withdrawal from the auto business. How, if at all, does that change Baker’s rights?
• Why are leases generally not assignable? Why are insurance contracts not assignable?

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• Partial Assignments

An assignor may assign part of a contractual right, but only if the obligor can perform that part of his contractual obligation separately from the remainder of his obligation. Assignment of part of a payment due is always enforceable. However, if the obligor objects, neither the assignor nor the assignee may sue him unless both are party to the suit. Mrs. Robinson owes Ben one hundred dollars. Ben assigns fifty dollars of that sum to his friend. Mrs. Robinson is perplexed by this assignment and refuses to pay until the situation is explained to her satisfaction. The friend brings suit against Mrs. Robinson. The court cannot hear the case unless Ben is also a party to the suit. This ensures all parties to the dispute are present at once and avoids multiple lawsuits.

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• Kassel v. Consolidated Freightways Corp. CASE QUESTIONS
• Hunt v. Washington Apple Advertising Commission CASE QUESTIONS
• Citizens United v. Federal Election Commission CASE QUESTIONS
• Why Have Administrative Agencies?
• Why Regulate the Economy at All? Ideal Conditions for a Free Market
• History of Federal Agencies
• Classification of Agencies
• Powers of Agencies
• The Constitution and Agencies KEY TAKEAWAY EXERCISES
• Legislative Control
• Executive Control
• Judicial Review of Agency Actions KEY TAKEAWAY EXERCISES
• Trial-Type Hearings
• Rulemaking KEY TAKEAWAY EXERCISES
• The Paperwork Burden
• Inspections
• Access to Business Information in Government Files KEY TAKEAWAY EXERCISES
• Exhaustion of Administrative Remedies
• Strategies for Obtaining Judicial Review
• Suing the Government KEY TAKEAWAY EXERCISES
• Marshall v. Barlow’s, Inc. CASE QUESTIONS
• American Textile Manufacturers Institute v. Donovan CASE QUESTIONS
• The Nature of Criminal Law KEY TAKEAWAY EXERCISES
• Assault and Battery
• Theft: Larceny, Robbery, Embezzlement, False Pretenses
• Receiving Stolen Property
• Mail and Wire Fraud
• Violations of the Food and Drug Act
• Environmental Crimes
• Violations of the Foreign Corrupt Practices Act
• Violations of the Racketeering Influenced and Corrupt Organizations Act
• Computer Crime KEY TAKEAWAY EXERCISES
• Impossibility
• Agency and Corporations KEY TAKEAWAY EXERCISES
• Mistake of Fact and Mistake of Law
• Other Excuses
• Lack of Capacity KEY TAKEAWAY EXERCISES
• Procedure LEARNING OBJECTIVES KEY TAKEAWAY EXERCISES
• Search and Seizure
• Double Jeopardy
• Self-Incrimination
• Speedy Trial
• Cross-Examination
• Assistance of Counsel
• Cruel and Unusual Punishment
• Presumption of Innocence KEY TAKEAWAY EXERCISES
• False Pretenses CASE QUESTIONS
• White-Collar Crimes CASE QUESTIONS
• Definition of Tort
• Kinds of Torts
• Dimensions of Tort Liability
• Dimensions of Tort: Fault
• Dimensions of Tort: Nature of Injury
• Dimensions of Tort: Excuses
• Damages KEY TAKEAWAY EXERCISES
• False Imprisonment
• Intentional Infliction of Emotional Distress
• Trespass and Nuisance
• Intentional Interference with Contractual Relations
• Malicious Prosecution
• Absolute Privilege
• Qualified Privilege
• Invasion of Privacy
• Appropriation of Name or Likeness
• Personal Space
• Public Disclosure of Embarassing Facts
• False Light KEY TAKEAWAY EXERCISES
• Elements of Negligence
• Standard of Care
• Duty of Care and Its Breach
• Causation: Actual Cause and Proximate Cause
• Problems of Proof
• Contributory and Comparative Negligence
• Assumption of Risk
• Vicarious Liability KEY TAKEAWAY EXERCISES
• Historical Basis of Strict Liability: Animals and Ultrahazardous Activities
• Strict Liability for Products KEY TAKEAWAY EXERCISES
• Intentional Torts: False Imprisonment CASE QUESTIONS
• Negligence: Duty of Due Care CASE QUESTIONS
• Negligence: Proximate Cause CASE QUESTIONS
• Klein v. Pyrodyne Corporation CASE QUESTIONS
• The Role of Contracts in Modern Society
• The Definition of Contract
• Overview of the Contracts Chapter KEY TAKEAWAY EXERCISES
• History of the UCC
• Organization of the UCC
• The Convention on Contracts for the International Sale of Goods KEY TAKEAWAY EXERCISES
• Express Contract
• Implied Contract (Implied in Fact)
• Quasi-Contract
• Bilateral Contract
• Unilateral Contract
• Unenforceable
• Degree of Completion
• Terminology: Suffixes Expressing Relationships KEY TAKEAWAY EXERCISES
• Explicitness: Implied Contract CASE QUESTIONS
• Mutuality of Contract: Unilateral Contract CASE QUESTIONS
• Unilateral Contract and At-Will Employment CASE QUESTIONS
• The Significance of Agreement
• The Objective Test KEY TAKEAWAY EXERCISES
• The Definition of Offer
• Advertisements
• Invitations to Bid
• Communication
• Definiteness
• The UCC Approach
• Revocability
• Irrevocable Offers
• Revocability under the UCC
• Irrevocability by Law
• Rejection by the Offeree
• Counteroffer
• Acceptance with Counteroffer
• The UCC and Counteroffers
• Lapse of Time
• Death or Insanity of the Offeror
• Destruction of Subject Matter Essential to the Offer
• Postoffer Illegality KEY TAKEAWAY EXERCISES
• General Definition of Acceptance
• When Is Acceptance Effective?
• Instantaneous Communication
• Stipulations as to Acceptance
• The “Mailbox Rule”
• Acceptance “Outruns” Rejection
• Electronic Communications
• General Rule: Silence Is Not Acceptance
• Exceptions KEY TAKEAWAY EXERCISES
• Objective Intention CASE QUESTIONS
• Advertisements as Offers CASE QUESTIONS
• Silence as Acceptance CASE QUESTIONS
• Summary and Exercises Summary EXERCISES SELF-TEST QUESTIONS SELF-TEST ANSWERS SELF-TEST ANSWERS
• Physical Duress
• Duress by Threat
• Undue Influence KEY TAKEAWAY EXERCISES
• General Description
• Misstatement of Fact
• Concealment
• Nondisclosure
• Statement Made False by Subsequent Events
• Statements of Opinion
• Misstatement of Law
• Assertions of Intention
• Intentionally Made Misrepresentation
• Negligent Misrepresentation
• Materiality
• Justifiable Reliance
• Innocent Misrepresentation
• Remedies KEY TAKEAWAY EXERCISES
• Unilateral Mistake
• Mutual Mistake
• Material Effect on the Agreed-to Exchange of Performance
• Party Seeking Relief Does Not Bear the Risk of the Mistake KEY TAKEAWAY EXERCISES
• The General Rule
• Exceptions and Complications
• Necessities
• Nonvoidable Contracts
• Misrepresentation of Age
• Ratification
• Duty to Return Consideration Received
• Tort Connected with a Contract
• Mentally Ill Persons
• Intoxicated Persons KEY TAKEAWAY EXERCISES
• Undue Influence CASE QUESTIONS
• Discussion CASE QUESTIONS
• Misrepresentation by Assertions of Opinion CASE QUESTIONS
• Mutual Mistake CASE QUESTIONS
• The Purpose of Consideration
• A Definition of Consideration KEY TAKEAWAY EXERCISES
• Actual versus Legal Detriment
• Adequacy of Consideration
• Threat of Litigation: Covenant Not to Sue
• Accord and Satisfaction Generally
• Settling an Unliquidated Debt
• Settling a Disputed Debt
• The “In-Full-Payment” Check Situation
• Unforeseen Difficulties
• Creditors’ Composition
• Preexisting Duty
• Illusory Promises
• Exclusive Dealing Agreement
• Outputs Contracts and Needs Contracts KEY TAKEAWAY EXERCISES
• Past Consideration
• Promise Revived after Statute of Limitations Has Passed
• Voidable Duties
• Promissory Estoppel
• Moral Obligation
• Under the UCC
• International Contracts KEY TAKEAWAY EXERCISES
• Consideration for an Option CASE QUESTIONS
• Consideration: Preexisting Obligation CASE QUESTIONS
• Consideration: Required for Contract Modification CASE QUESTIONS
• General Perspectives on Illegality LEARNING OBJECTIVES KEY TAKEAWAY EXERCISES
• Gambling Contracts
• Sunday Contracts
• Licensing Statutes KEY TAKEAWAY EXERCISES
• Common-Law Restraint of Trade
• Sale of a Business
• Employment Noncompete Agreements
• Unconscionable Contracts
• Exculpatory Clauses
• Obstructing the Administration of Justice or Violating a Public Duty
• Family Relations KEY TAKEAWAY EXERCISES
• Effect of Illegality
• Party Withdrawing before Performance
• Party Protected by Statute
• Party Not Equally at Fault
• Excusable Ignorance
• Partial Illegality KEY TAKEAWAY EXERCISES
• Extension of Statutory Illegality Based on Public Policy CASE QUESTIONS
• Unlicensed Practitioner Cannot Collect Fee CASE QUESTIONS
• Unconscionability CASE QUESTIONS
• Overview of the Statute of Frauds
• Promises to Pay the Debt of Another
• Agreements of Executor or Administrator
• The Marriage Provision
• Contracts Affecting an Interest in Real Estate
• The One-Year Rule
• Other Writing Requirements
• Exceptions under the UCC
• The Ten-Day-Reply Doctrine
• “Specially Manufactured Goods”
• The “Admission” Exception
• The “Payment or Delivery and Acceptance” Exception
• At Common Law
• Full Performance
• Detrimental Reliance
• Oral Rescission
• Contract Modification KEY TAKEAWAY EXERCISES
• The Purpose of the Rule
• Not an Integrated Contract
• Void or Voidable Contracts
• Contracts Subject to a Condition Precedent
• Untrue Recital or Errors
• Postcontract Modification
• The UCC Approach KEY TAKEAWAY EXERCISES
• The General Problem
• The Basic Rule of Interpretation
• Tools of Interpretation KEY TAKEAWAY EXERCISES
• The Statute of Frauds’ Main Purpose Doctrine CASE QUESTIONS
• The Statute of Frauds’ One-Year Rule CASE QUESTIONS
• The Parol Evidence Rule: Postcontract Modification CASE QUESTIONS
• The Concept of a Contract Assignment
• Manifesting Assent
• Acceptance and Revocation
• General Rule
• Material Change in Duties of the Obligor
• Assignment of Personal Rights
• Assignment Forbidden by Statute or Public Policy
• Contracts That Prohibit Assignment
• Future Contracts
• Successive Assignments
• Assignor’s Warranties KEY TAKEAWAY EXERCISES
• Effect on Obligor
• Personal Services
• Public Policy
• Delegations Barred by Contract KEY TAKEAWAY EXERCISES
• Creditor Beneficiary
• Donee Beneficiary
• Modification of the Beneficiary’s Rights
• Government Contracts KEY TAKEAWAY EXERCISES
• Nonassignable Rights CASE QUESTIONS
• Assignment Includes Delegation CASE QUESTIONS
• Third party Beneficiaries and Foreseeable Damages CASE QUESTIONS
• Nonperformance, Material Breach
• Substantial Performance
• Anticipatory Breach and Demand for Reasonable Assurances KEY TAKEAWAY EXERCISES
• Conditions Classified Based on How They Are Created
• Conditions Classified Based on Their Effect on Duty to Perform
• Condition of Timeliness
• Condition That a Party Must Be Satisfied KEY TAKEAWAY EXERCISES
• Mutual Rescission
• Substituted Agreement
• Accord and Satisfaction KEY TAKEAWAY EXERCISES
• Death or Incapacity of a Personal Services Contractor
• Destruction or Deterioration of a Thing Necessary for Performance
• Performance Prohibited by Government Regulation or Order
• Impracticability
• Common-Law Impracticability
• Commercial Impracticability
• Frustration of Purpose KEY TAKEAWAY EXERCISES
• Cancellation, Destruction, or Surrender
• Power of Avoidance
• Statute of Limitations
• Bankruptcy KEY TAKEAWAY
• Substantial Performance; Conditions Precedent CASE QUESTIONS
• Waiver of Contract Rights; Nonwaiver Provisions CASE QUESTIONS
• Impossibility as a Defense CASE QUESTIONS
• Purpose of Remedies
• Parties Have the Power—but Not the Right—to Breach KEY TAKEAWAY EXERCISES
• Promisee’s Interests Protected by Contract LEARNING OBJECTIVE KEY TAKEAWAY EXERCISE
• Compensatory Damages
• Incidental Damages
• Consequential Damages
• Nominal Damages
• Liquidated Damages
• Punitive Damages KEY TAKEAWAY EXERCISES
• Specific Performance
• Restitution
• Total Nonperformance by Breaching Party
• Part Performance and Then Breach
• Restitution in Other Cases KEY TAKEAWAY EXERCISES
• Foreseeability
• Mitigation of Damages
• Certaintymages
• Affirmation
• Rights of Third Parties
• Agreement of the Parties Limiting Remedies
• Tort versus Contract
• Legal versus Extralegal Remedies KEY TAKEAWAY EXERCISES
• Consequential Damages CASE QUESTIONS
• Liquidated Damages CASE QUESTIONS
• Injunctions and Negative Covenants CASE QUESTIONS
• Limitation on Damages: Mitigation of Damages CASE QUESTIONS
• Summary and Exercises Summary EXERCISES  SELF-TEST QUESTIONS  SELF-TEST ANSWERS 
• History of Products-Liability Law
• Current State of the Law KEY TAKEAWAY EXERCISES
• Express Warranties
• Implied Warranties
• Implied Warranty of Merchantability
• Fitness for a Particular Purpose
• Other Warranties
• Exclusion or Modification of Warranties
• Exclusion of Express Warranties
• Exclusion of Implied Warranties in General
• Implied Warranty of Fitness
• Conflict between Express and Implied Warranties
• The Magnuson-Moss Act and Phantom Warranties
• Horizontal Privity
• Vertical Privity
• Contributory Negligence, Comparative Negligence, and Assumption of Risk KEY TAKEAWAY EXERCISES
• Design Defects
• Warning Defects
• Common-Law Defenses against Negligence
• Preemption KEY TAKEAWAY EXERCISES
• Strict Liability Defined
• Product in a Defective Condition
• Unreasonably Dangerous
• Engaged in the Business of Selling
• Reaches the User without Change in Condition
• Liability Despite Exercise of All Due Care
• Liability without Contractual Relation
• Disclaimers
• Plaintiff’s Conduct
• Misuse or Abuse of the Product
• Limited Remedy
• The Third Restatement KEY TAKEAWAY EXERCISES
• The Cry for Reform
• Statutes of Repose
• State-of-the-Art Defense
• Failure to Warn
• Comparative Fault for Consumer Misuse
• Criminal Penalties
• Federal Reform KEY TAKEAWAY EXERCISES
• Implied Warranty of Merchantability and the Requirement of a “Sale” CASE QUESTIONS
• Strict Liability and Bystanders
• Failure to Warn CASE QUESTIONS
• Patents LEARNING OBJECTIVES
• What May Be Patented
• What May Not Be Patented
• Tests for Patentability
• Procedures for Obtaining a Patent
• Patent Ownership
• Infringement and Invalidity Suits
• Patent Misuse KEY TAKEAWAY EXERCISES
• Definition of Trade Secrets
• Originality
• Economic Espionage Act
• Right of Employees to Use Trade Secrets KEY TAKEAWAY EXERCISES
• Definition and Duration
• Protected Expression
• Preventing Copying
• Infringement
• Copyrightability Standards
• Who May Obtain a Copyright?
• Obtaining a Copyright
• Computer Downloads and the Digital Millennium Copyright Act KEY TAKEAWAY EXERCISES
• Definitions of Trademarks
• Kinds of Marks
• Limitations on Marks
• Dilution, Tarnishment, and Blurring
• Acquiring Trademark Rights
• Loss of Rights KEY TAKEAWAY EXERCISES
• Fair Use in Copyright CASE QUESTIONS
• Trademark Infringement and Dilution CASE QUESTIONS
• Public and Private Insurance
• Life Insurance
• Health Insurance
• Disability Insurance
• Homeowner’s Insurance
• Automobile Insurance
• Other Liability Insurance
• Workers’ Compensation
• Property Insurance
• Malpractice Insurance
• Business Interruption Insurance
• Liability Insurance KEY TAKEAWAY EXERCISES
• Insurable Interest in Property
• Subrogation
• Intentional Losses
• Coinsurance Clause
• Liability Insurance
• No-Fault Trends
• Insurable Interest
• Change of Beneficiary and Assignment
• Murder KEY TAKEAWAY EXERCISES
• Representation
• Incontestable Clause
• Requirement of Insurer’s Good Faith KEY TAKEAWAY EXERCISES
• Misrepresentation to Insurer CASE QUESTIONS
• Why Is Agency Law Important, and What Is an Agent?
• Recurring Issues in Agency Law
• Recurring Issues in Agency
• General Agent
• Special Agent
• Agency Coupled with an Interest
• Independent Contractor
• Agency Created by Agreement
• Consideration
• Formalities
• Agency Created by Operation of Law
• Implied Agency
• Apparent Agency KEY TAKEAWAY EXERCISES
• Fiduciary Duty
• Duty to Avoid Self-Dealing
• Duty to Preserve Confidential Information
• Other Duties
• Duty of Skill and Care
• Duty of Good Conduct
• Duty to Keep and Render Accounts
• Duty to Act Only as Authorized
• Duty Not to Attempt the Impossible or Impracticable
• Duty to Obey
• Duty to Give Information
• “Shop Rights” Doctrine
• Contract Duties
• General Contract Duties
• Employment at Will
• Duty to Indemnify
• Tort and Workers’ Compensation Duties
• Background to Workers’ Compensation
• The System in General Kansas Workers’ Compensation Benefits for Specific Injuries
• Paying for Workers’ Compensation
• Recurring Legal Issues KEY TAKEAWAY EXERCISES
• Creation of Agency: Liability of Parent for Contracts Made by “Agent” Child CASE QUESTIONS
• Employee versus Independent Contractor CASE QUESTIONS
• Breach of Fiduciary Duty CASE QUESTIONS
• Workers’ Compensation: What “Injuries” Are Compensable? CASE QUESTIONS
• Principal’s Contract Liability Requires That Agent Had Authority
• Express Authority
• Implied Authority
• Apparent Authority
• Ratification KEY TAKEAWAY EXERCISES
• The Distinction between Direct and Vicarious Liability
• Direct Liability
• Vicarious Liability
• Agents for Whom Principals Are Vicariously Liable
• Liability for Agent’s Intentional Torts
• Deviations from Employment
• The “Scope of Employment” Problem
• The Zone of Risk Test
• Special Cases of Vicarious Liability
• Use of Automobiles
• Torts of Family Members
• Other Torts Governed by Statute or Regulation
• Principal’s Criminal Liability KEY TAKEAWAY EXERCISES
• Tort Liability
• Contract Liability
• Agent for Undisclosed or Partially Disclosed Principal
• Lack of Authority in Agent
• Agent Acting on Own Account
• By Act of the Parties
• Express Termination
• Implied Termination
• By Operation of Law KEY TAKEAWAY EXERCISES
• Implied Authority CASE QUESTIONS
• Employer’s Liability for Employee’s Intentional Torts: Scope of Employment CASE QUESTIONS
• Facts and Proceedings in the Trial Court
• Importance of Partnership Law
• Through the Twentieth Century
• The Current State of Partnership Law
• Meaning of “Legal Entity”
• Entity Characteristics of a Partnership
• For Accounting Purposes
• For Purposes of Taxation
• For Purposes of Litigation
• For Purposes of Owning Real Estate
• For Purposes of Bankruptcy KEY TAKEAWAY EXERCISES
• Creation in General
• Specific Issues of Concern
• Who Can Be a Partner?
• Written versus Oral Agreements
• Validity of the Partnership Name
• Creation of Implied Partnership
• Association of Persons
• Co-owners of a Business
• Sharing of Profits
• Business for Profit
• Sharing the Profit
• Other Factors
• Creation of Partnership by Estoppel KEY TAKEAWAY EXERCISES
• Tests of Partnership Existence CASE QUESTIONS
• Background Facts
• Suit against Whitehead
• The Faxed Credit References
• The Fax Cover Sheet
• The Epsco Personnel Credit Application
• The Checks to Epsco
• The Business Card
• The Dealership Application CASE QUESTIONS
• Duty to Serve
• Duty of Loyalty
• Application of the Fiduciary Standard to Partnership Law
• Limits on the Reach of the Fiduciary Duty
• Activities Affected by the Duty of Loyalty
• Duty of Care
• Duty of Obedience
• Duty to Inform Copartners
• Duty to Account
• Rights to Distributions
• Right to Profits (and Losses)
• Right to Indemnification
• Right to Return of Capital Contribution
• Right to Compensation
• Right to Management
• Right to Choose Partners
• Right to Property of the Partnership
• Rights in Specific Partnership Property: UPA Approach
• Rights in Specific Property: RUPA Approach
• Right to Assign Partnership Interest
• Voluntary Assignment
• Involuntary Assignment
• Right to Enforce Partnership Rights
• Right to Information and Inspection of Books KEY TAKEAWAY EXERCISES
• Liability of the Partnership
• Partnership “Statements”
• Personal Liability of Partners, in General
• Liability of Existing Partners
• Liability of Incoming Partners
• Partnership Liability for Torts
• Partners’ Personal Liability for Torts
• Liability for Crimes
• Liability for Taxes KEY TAKEAWAY EXERCISES
• Meaning of Dissolution under UPA
• Causes of Dissolution
• In Accordance with the Agreement
• In Violation of the Agreement
• By Operation of Law
• By Court Order
• Effect of Dissolution on Authority
• After Dissolution
• Forming a New Partnership
• Winding Up and Termination
• Dissociation
• Causes of Dissociation
• Effect of Dissociation
• Dissolution
• Effect of Dissolution
• Continuing after Dissociation
• Who Can Participate in Winding Up
• Settlement of Accounts among Partners KEY TAKEAWAY EXERCISES
• Breach of Partnership Fiduciary Duty CASE QUESTIONS
• Partnership Authority, Express or Apparent CASE QUESTIONS
• Winding Up the Partnership
• Lopez’s Liability for the IKON Debt
• Attorneys’ Fees
• Conclusion CASE QUESTIONS
• Dissolution under RUPA CASE QUESTIONS
• Governing Law
• Capitalization
• General Partners
• Limited Partners
• Assignment of Partnership Rights
• Inspection of Books
• Addition of New Partners
• Compensation
• Winding Up KEY TAKEAWAY EXERCISES
• History of the Limited Liability Company
• Creation of the LLC
• Liability to Outsiders
• Internal Liabilities
• Continuity of Life
• Dissolution and Winding Up
• Free Transferability of Interest KEY TAKEAWAY EXERCISES
• Creation and Capitalization
• Transferability of Ownership
• Limited Liability Limited Partnerships
• Ethical Concerns KEY TAKEAWAY EXERCISES
• Limited Partnerships: Limited Partners’ Liability for Managing Limited Partnership CASE QUESTIONS
• Liability Issues in LLCs CASE QUESTIONS
• Defective Registration as a Limited Liability Partnership CASE QUESTIONS
• A Fixture of Every Major Legal System
• US Corporation Formation
• Corporate Law Today KEY TAKEAWAY EXERCISES
• Ease of Formation
• Ownership and Control
• Transferability of Interests
• Taxation KEY TAKEAWAY EXERCISES
• The Basic Rights of the Corporate “Person”
• Absence of Rights
• Failure to Act as a Corporation
• Other Types of Personal Liability KEY TAKEAWAY EXERCISES
• Nonprofit Corporations
• Public Corporations
• Professional Corporations
• The Two Types KEY TAKEAWAY EXERCISES
• Function of the Charter
• Charter as a Contract
• Where to Charter
• Why Choose Delaware?
• Preincorporation Stock Subscriptions
• Execution and Filing of the Articles of Incorporation
• Organizational Meeting of Directors KEY TAKEAWAY EXERCISES
• De Jure and De Facto Corporations
• Corporation by Estoppel KEY TAKEAWAY EXERCISES
• Limiting a Corporation’s First Amendment Rights CASE QUESTIONS
• Piercing the Corporate Veil CASE QUESTIONS
• Corporate Promoter CASE QUESTIONS
• De Jure and De Facto Corporations CASE QUESTIONS
• Learning Objectives LEARNING FAKE OBJECTIVES
• Debt Securities
• Equity Securities
• Other Forms of Finance KEY TAKEAWAY EXERCISES
• Basics of Corporate Bonds
• Advantages and Disadvantages of Bonds KEY TAKEAWAY EXERCISES
• Authorized, Issued, and Outstanding Stock
• Par Value and No-Par Stock
• Preference to Dividends
• Liquidation Preference
• Convertible Shares
• Redeemable Shares
• Voting Rights
• Common Stock
• Stocks and Bonds and Bears, Oh My! KEY TAKEAWAY EXERCISES
• Nature of the Consideration
• Evaluating the Consideration: Watered Stock KEY TAKEAWAY EXERCISES
• Cash Dividend
• Stock Dividend
• Property Dividend
• Stock Split
• Distribution from Capital Surplus
• Record Date, Payment Date, Rights of Stockholders
• When Directors Are Too Stingy
• When Directors Are Too Generous KEY TAKEAWAY EXERCISES
• Changes in the Revised Model Business Corporation Act
• Introduction to Article 8 of the Uniform Commercial Code
• The UCC and the 1933 and 1934 Securities Acts KEY TAKEAWAY EXERCISES
• Consideration in Exchange for Stock CASE QUESTIONS
• Payment of Dividends CASE QUESTIONS
• Express Powers
• Implied Powers
• The Ultra Vires Doctrine
• Criminal, Tortious, and Other Illegal Acts KEY TAKEAWAY EXERCISES
• General Management Functions
• Who Has the Right to Vote?
• Cumulative Voting
• Voting Arrangements to Concentrate Power
• Voting Agreements
• Voting Trusts
• Inspection of Books and Records
• Preemptive Rights
• Derivative Actions KEY TAKEAWAY EXERCISES
• Delegation to Committees
• Delegation to Officers
• Number and Election of Directors
• Directors’ Qualifications and Characteristics
• Removal of Directors and Officers
• Compensation KEY TAKEAWAY EXERCISES
• Nature of the Problem
• Contracts with the Corporation
• Corporate Opportunity
• Constituency Statutes and Corporate Social Responsibility
• Sarbanes-Oxley and Other Modern Trends
• Liability Prevention and Insurance KEY TAKEAWAY EXERCISES
• Ultra Vires Acts CASE QUESTIONS
• Business Judgment Rule CASE QUESTIONS
• What Is a Security?
• Fundamental Mission
• Registration
• Companies Covered
• Reporting Proxy Solicitation
• Blue Sky Laws
• Dodd-Frank Wall Street Reform and Consumer Protection Act KEY TAKEAWAY EXERCISES
• The Foreign Corrupt Practices Act
• Recapture of Short-Swing Profits: Section 16(b)
• Insider Trading: Section 10(b) and Rule 10b-5
• Secondary Actor
• Sarbanes-Oxley Act KEY TAKEAWAYAWAY EXERCISES
• What Is a Security? CASE QUESTIONS
• Tippee Liability CASE QUESTIONS
• Duty to Disclose Material Information CASE QUESTIONS
• Successor Liability
• Consolidation
• Tender Offers
• Leveraged Buyouts
• State versus Federal Regulation of Takeovers
• Short-Form Mergers
• Appraisal Rights KEY TAKEAWAY EXERCISES
• Typical Requirements for Foreign Corporations
• Penalties for Failure to Comply with a Statute
• Jurisdiction over Foreign Corporations
• Taxing Authority KEY TAKEAWAY EXERCISES
• Voluntary Dissolution
• Involuntary Dissolution
• Action by Shareholder
• Claims against a Dissolved Corporation
• Bankruptcy KEY TAKEAWAY EXERCISES
• Successor Liability CASE QUESTIONS
• Constitutional Issues Surrounding Taxation of a Foreign Corporation CASE QUESTIONS
• Discrimination Based on Religion
• Sex Discrimination
• Discrimination Based on Race, Color, and National Origin
• Bona Fide Occupational Qualification (BFOQ)
• Defenses in Sexual Harassment Cases
• Affirmative Action
• The Age Discrimination in Employment Act
• Disabilities: Discrimination against the Handicapped
• Equal Pay Act KEY TAKEAWAY EXERCISES
• Discharging an Employee for Refusing to Violate a Law
• Discharging an Employee for Exercising a Legal Right
• Discharging an Employee for Performing a Legal Duty
• Discharging an Employee in a Way That Violates Public Policy
• Contract Modification of Employment at Will
• Good Faith and Fair Dealing Standard KEY TAKEAWAY EXERCISES
• The Federal Plant-Closing Act
• The Employee Polygraph Protection Act
• Occupational Safety and Health Act
• Employee Retirement Income Security Act
• Fair Labor Standards Act
• Workers’ Compensation Laws
• Other State Laws KEY TAKEAWAY EXERCISES
• Factual Background
• From the Opinion of FEINBERG, CIRCUIT JUDGE CASE QUESTIONS
• Title VII and Hostile Work Environment CASE QUESTIONS
• Age Discrimination: Burden of Persuasion CASE QUESTIONS
• Factual Background CASE QUESTIONS
• Labor and the Common Law in the Nineteenth Century
• Labor under the Antitrust Laws
• The Norris–La Guardia Act
• The National Labor Relations Act (the Wagner Act)
• The Taft-Hartley Act (Labor-Management Relations Act)
• The Landrum-Griffin Act KEY TAKEAWAY EXERCISES
• Unfair Labor Practice Cases
• Representation Cases KEY TAKEAWAY EXERCISES
• Determining the Appropriate Union
• Interfering with Employee Communication
• Regulating Campaign Statements
• Exclusivity
• The Duty to Bargain in Good Faith
• Mandatory Subjects of Bargaining
• The Board’s Power to Compel an Agreement
• Union Activity on Company Property
• “Runaway Shop”
• Other Types of Interference
• Discrimination against Union Members
• The Right to Strike
• Secondary Boycotts
• Hot Cargo Agreement
• Discrimination by Unions
• Jurisdictional Disputes
• Bankruptcy and the Collective Bargaining Agreement KEY TAKEAWAY EXERCISES
• Exclusivity CASE QUESTIONS
• The Cost of Credit
• The Truth in Lending Act
• Consumer Leasing Act of 1988
• Fair Credit and Charge Card Disclosure
• Credit Card Accountability, Responsibility, and Disclosure Act of 2009
• State Credit Disclosure Laws
• Equal Credit Opportunity Act
• Fair Credit Reporting Act of 1970: Checking the Applicant’s Credit Record KEY TAKEAWAY EXERCISES
• Cancellation Rights
• Billing Mistakes
• Disputes about the Quality of Goods or Services Purchased
• Garnishment
• Wage Assignment
• Confession of Judgment
• Fair Debt Collection Practices Act of 1977 KEY TAKEAWAY EXERCISES
• Usury CASE QUESTIONS
• Discrimination under the ECOA CASE QUESTIONS
• A. Permissible Purpose under the FCRA
• B. Willful Failure to Comply with the FCRA
• C. Obtaining a Consumer Report under False Pretenses or Knowingly without a Permissible Purpose CASE QUESTIONS
• By Agreement with the Debtor
• Basics of Secured Transactions
• Source of Law
• Definitions
• Consumer Goods
• Farm Products
• Intangible Property
• General Intangibles
• Indispensable Paper
• Chattel Paper
• Instruments
• Investment Property
• Other Types of Collateral
• Requirements for Attachment
• Creditor Gives Value
• Debtor’s Rights in Collateral
• Security Agreement (Contract) or Possession of Collateral by Creditor
• Perfection by Filing
• The Financing Statement
• Contents of the Financing Statement
• Duration of the Financing Statement
• Debtor Moves out of State
• Where to File the Financing Statement
• Temporary Perfection
• Perfection by Possession
• Perfection by Control
• Automatic Perfection KEY TAKEAWAY EXERCISES
• Application of the Rule
• Exceptions to the General Rule
• Immediate Exceptions
• Other Exceptions
• Lien Creditors
• Bankruptcy Trustee KEY TAKEAWAY EXERCISES
• Resort to Judicial Process
• Repossession
• Strict Foreclosure
• Foreclosure on Intangible Collateral KEY TAKEAWAY EXERCISES
• Types of Suretyship
• Creation of the Suretyship
• Duties of the Surety
• Rights of the Surety
• Exoneration
• Reimbursement
• Contribution
• Defenses of the Parties
• Defenses of the Principal
• Defenses of the Surety KEY TAKEAWAY EXERCISES
• Preliminary Statement and Issues
• Findings of Fact
• Conclusion of Law, Decision, and Order CASE QUESTIONS
• Uniform Commercial Code Section 2A-525(3)
• Uniform Commercial Code Section 2A-108 CASE QUESTIONS
• Per Curium*: CASE QUESTIONS
• The Uses of Mortgages
• Short History of Mortgage Law
• Statutory Regulation
• Consumer Credit Statutes Apply
• Real Estate Settlement Procedures Act
• The Note and the Mortgage Documents
• The Mortgage KEY TAKEAWAY EXERCISES
• Priorities in Real Property Security
• The General Rule of Priorities
• Fixture Filing
• Future Advances
• Foreclosure
• Deed of Trust
• Installment or Land Contract KEY TAKEAWAY EXERCISES
• Attachment Lien
• Judgment Lien
• Procedure for Obtaining a Mechanic’s Lien
• Mechanic’s Liens Priorities
• Possessory Lien
• Tax Lien KEY TAKEAWAY EXERCISES
• Denial of Mortgagee’s Right to Foreclose; Erroneous Filings; Lost Instruments CASE QUESTIONS
• Law/Analysis
• A. Who Must Receive the Consent.
• B. What Kind of Consent Is Necessary.
• C. Evidence There Was No Consent
• D. Evidence There Was Consent
• Duty to Re-Open Sale
• Chilled Bidding
• Adequacy of the Sale Price
• Duty to a Junior Lienholder
• Attorney Fees CASE QUESTIONS
• The Purpose of Bankruptcy Law
• Constitutional Basis
• Bankruptcy Statutes
• Bankruptcy Courts, Judges, and Costs
• Overview of Bankruptcy Provisions KEY TAKEAWAY EXERCISES
• Commencement
• Voluntary and Involuntary Petitions
• The Automatic Stay
• First Meeting of Creditors
• Trustee’s Powers and Duties
• Claims and Creditors
• Proof of Claims
• Claims with Priority
• Debtor's Duties and Exemptions
• Debtor’s Duties
• Debtor’s Exemptions
• Secured Property
• Dischargeable and Nondischargeable Debts
• Dischargeable Debts
• Nondischargeable Debts
• Reaffirmation
• Property Included in the Estate KEY TAKEAWAY EXERCISES
• Trustee’s Duties
• Distribution of the Estate
• Discharge KEY TAKEAWAY EXERCISES
• How It Works
• Eligibility
• Operation of Business
• Creditors’ Committee
• The Reorganization Plan
• Acceptance of the Plan
• Confirmation of the Plan
• Discharge, Conversion
• Confirmation
• Alternatives to Bankruptcy: Overview
• Assignment for Benefit of Creditors
• Composition
• Receivership KEY TAKEAWAY EXERCISES
• Dischargeability of Student Loans under Chapter 7 CASE QUESTIONS
• Chapter 11 Bankruptcy CASE QUESTIONS
• Chapter 13: What Debts Are Dischargeable? CASE QUESTIONS
• Definition of Property
• The Economist’s View
• Classification of Property
• Importance of the Distinction between Real and Personal Property KEY TAKEAWAY EXERCISES
• Lost or Misplaced Property
• Requirements
• Gifts Causa Mortis
• Gifts to Minors
• Confusion KEY TAKEAWAY EXERCISES
• Transfer of Real Estate
• Tenant’s Fixtures KEY TAKEAWAY EXERCISES
• Lost or Misplaced Property CASE QUESTIONS
•  Back Matter

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Partial assignment of contract

An exception to the assignment rules relates to making successive assignments. An oral or written act or statement indicating the intention to partial assignment of contract a right fashion research paper topics act as partial assignment of contract assignment. No such release approved pursuant to this Subsection 2. By acceptance of the proportionate part of hostgator business plan review Warrant, Transferee shall contraact a Holder partial assignment of contract said proportionate part assignmwnt said Warrant and aszignment to the rights, obligations and representations of Holder set forth in said Warrant. The intention of an assignor must ccontract an effective assignment that doesn't require partial assignment of contract further manifestation of intention or further action. The action assignmet assignment doesn't provide any type of warranty on its own that the obligor is pwrtial to perform. Provided that the applicable Oil and Gas Lease permits the assignment contemplated by assinment form attached as Exhibit L and pratial applicable any required consent from the other party to the Oil and Gas Lease is obtained, Gatherer and the applicable Producer shall cooperate in completing such form by inserting or attaching a description of the applicable Oil and Gas Lease, Subject Well and Surface EstateGatherer and Producer shall execute such completed Oil and Gas Lease Partial Assignment, and Producer shall have the right to record such Oil and Gas Lease Partial Assignment in the applicable public records. The assignor of a contract can legally assign a portion of a contractual right. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. When a contract is assigned, the obligee, or the party who holds the right to receive a benefit from a contract, chooses to transfer his or her right to receive that benefit from the obligor, or the party who has the duty to perform on the action. To make an assignment, the assignor must understand it clearly and intend to make the assignment at that exact time. Any such complete and executed partial assignment and assumption of this Agreement shall be submitted to CITY for approval pursuant to Section 2. CITY shall reviewand if the above conditionsincluding but not limited tothose conditions in Section 2. The assignor cannot promise to make an assignment at a future date. This can only occur if the other involved party can perform that portion of the contractual obligation separately from the rest of the obligations.

• Practical Law

Assessing Assignability: Transferring Contractual Rights or Obligations

Practical law legal update 5-546-6326  (approx. 7 pages).

• An intended transfer is of the type that is prohibited by law or public policy (see Practice Note, Assignability of Commercial Contracts: Statutory and Public Policy Exceptions ).
• The parties expressly agree to restrict transferability (see Practice Note, Assignability of Commercial Contracts: Contractual Anti-assignment and Anti-delegation Clauses ).
• Breaching the contract.
• Making an ineffective and invalid transfer.

Distinguishing Between Assignment and Delegation

• The assignment of rights to receive performance.
• The delegation of duties to perform.

Characteristics of Assignments

• The right to receive performance from the assignor.
• Its remedies against the assignor for any failure to perform.

Characteristics of Delegation

The general rule governing assignment and delegation.

• Most assignments of contractual rights.
• Many delegations of contractual performance.
• Assignments and delegations that violate public policy or law.
• Assignments of rights or delegations of performance that are personal in nature.
• Contracts with anti-assignment or anti-delegation clauses.

Contracts That Present the Greatest Challenges

• Personal services contracts (see Personal Services Contracts ).
• Non-exclusive intellectual property licenses (see Intellectual Property Licenses ).
• Contracts with anti-assignment and anti-delegation clauses (see Contracts With Anti-assignment and Anti-delegation Contract Clauses ).

Personal Services Contracts

Intellectual property licenses, contracts with anti-assignment and anti-delegation clauses, is a change of control an assignment.

• Contains an anti-assignment and anti-delegation clause expressly restricting a change of control.
• States that a change in management or equity ownership of the contracting party is deemed to be an assignment.

When Does an Involuntary Transfer Trigger a Restricted Transfer?

• A contractual anti-assignment and anti delegation clause applies to a specific type or transfer.
• The transfer is permissible, with or without a contractual anti-assignment and anti-delegation provision.

Drafting and Negotiating Anti-assignment and Anti-delegation Clauses

• Directly addressing assignment of rights and delegation of performance.
• Clarifying the universe of restricted transfers.
• Designating the non-transferring party's consent rights.
• Specifying any exceptions to non-transferability.
• Requiring notification of a permitted transfer.
• Including a declaration that impermissible transfers are void.
• Adding a novation to the anti-assignment and anti-delegation provision.
• General Contract and Boilerplate
• General Commercial
• United States