Conditions That Should Be Fulfilled For Assignment Of Contract

The word “assign” means “transfer”. Therefore “assignment of contract means the transfer of contractual rights and liabilities under the contract to the third party with or without the concurrence of the other party to the contract. It may take place: -

I) Act of the parties:

The assignment is said to take place by an act of the parties when they themselves make the assignment.

a) Assignment of contractual obligations:

1) Contractual obligation involving personal skill or ability cannot be assigned.

2) A promisor cannot assign his liabilities or obligations under a contract. {i.e., a promisee cannot be compelled by the promisor or a third party to accept any person other than the promisor as the person liable to him on promise}. This rule is based on sense and convenience.

b) Assignment of contractual rights:

1) The right and benefit under a contract may be assigned if the obligation under the contract is not of a personal nature.

2) An actionable claim can be always be assigned but the assignment to be complete and effectual must be affected by an instrument in writing. Notice of such assignment must also be given to the debtor

II) Operation of law:

Assignment by operation of law takes place by intervention of the law.

1) Death: upon the death of the party to a contract his rights and liabilities under the contract devolve upon his heirs and legal representatives.

2) Insolvency: in the case of insolvency of a person his rights and liabilities incurred previous to adjudication pass to the official receiver or assignee.