In a contract, at the end of the general boiler plate provisions, you might find a clause headed “Assignment” relates to the transfer of rights under a contract from one party to a third party. An example would be the transfer by a service provider of its right to receive payment to a third party (such as another company if it were debt factoring).
If the contract is silent, then generally the rights in the contract can be transferred unless there is a prohibition in the contract. It is for this reason that the contract may contain a clause headed “Assignment” containing either a prohibition or putting restrictions on the right to assign (such as consent is required not to be unreasonable withheld or delayed).
As with any legal principal there are some wrinkles and exceptions to assigning rights. For example rights in “personal contracts” cannot be transferred.
“Personal Contracts” are those which contain rights so personal to the parties concerned that the law considers the rights are not capable of being assigned.
Examples of a personal contract include a sports star’s contract, a popstar’s contract to perform at a concert or a motor insurance policy.
“Burden” simply because the rights under a contract may be transferred does not mean the same rules apply to the burden or obligations under the contract being transferred. An example of a burden would be the obligation to pay or to provide the services. The rules differ here and to find out more wait for our blog on “Novation” which will follow once we reach the letter “N”.
For more information contact Beverley Flynn or any member of our commercial and technology team.
Beverley Flynn