In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee.
The right or benefit being assigned may be a gift (such as a waiver) or it may be paid for with a contractual consideration such as money.
An assignor may assign rights, such as a mortgage note issued by a third party borrower, and this would require the latter to make repayments to the assignee.
[5] The Assignment of Claims Act of 1940 [7] was passed to provide legal protection for financial institutions funding wartime defense contracts.
[9] As a response, the United States Federal Trade Commission promulgated Rule 433, formally known as the "Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses", which "effectively abolished the [holder in due course] doctrine in consumer credit transactions".
For example, the assignment of a legal malpractice claim is void since an assignee would be a stranger to the attorney-client relationship, who was owed no duty by the attorney and would imperil the sanctity of the highly confidential and fiduciary relationship existing between attorney and client.
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 agreementotherwise [sic].Equipment Lease Agreements typically contain language prohibiting the lessee from assigning the lease to a third party.
However, it is possible to assign the lease, but the new party (assignee) will be subject to the lessor’s credit evaluation process and approval.
[14][15] Title 41 of the United States Code § 6305 now provides the federal prohibition on transfers of government contracts, stating that the governmental entity which originally issued a contract must agree to any transfer or it is automatically invalid by law.
A parallel concept to assignment is delegation, which occurs when one party transfers his duties or liabilities under a contract to another.
If the contract had a provision that made the assignment ineffective, the assignee could sue the assignor for breach of this implied warranty.
In a quirk left over from the common law, if the assignment was donative, the last assignee is the true owner of the rights.
Under the modern American rule, now followed in most U.S. jurisdictions, the first assignor with equity (i.e. the first to have paid for the assignment) will have the strongest claim, while remaining assignees may have other remedies.
With privity of estate comes the duty on the part of the assignee to perform certain obligations under covenant, e.g. pay rent.
Similarly, the lessor retains the obligations to perform on covenants to maintain or repair the land.
Absent language to the contrary, a tenant may assign their rights to an assignee without the landlord's consent.
If the partnership is dissolved, the assignee can also claim the assignor's share of any distribution accompanying the dissolution.
The standard rule is that personal injury tort causes of action are not assignable as a matter of public policy.
[11][19] These should be distinguished from final settlements or judgments resulting from lawsuits brought on such causes of action, which may be assignable.
In the majority of jurisdictions, assignments involving fraud or legal malpractice causes of action are void as against public policy.
[20] Case law has held that an employee's covenant not to compete is assignable where one business is transferred to another.
In Norman v Federal Commissioner of Taxation,[2] a taxpayer attempted to assign by deed, to his wife certain moneys which he was eventually going to receive.
The court's worry was that assignments without consideration might be used as instruments of fraud, to avoid creditors and tax collection.
Prior to this allocation being made, the respondent allotted his benefit to trustees for a voluntary settlement.
The judgment held it ineffective and elaborated on previous points to state the respondent cannot be compelled to allow the trustees to retain the appointed sum.