Question

discuss the following under contract law:

· The concept of “Assignment”

·         Discuss your experiences or the experiences of others with Assignment.

Answer 1

“Assignment”, in context of contract law and property is a legal term and a process which denotes that a person or party (also called as the assignor) has transferred the obligations, benefits, and/or rights to another party or person (also called as the assignee). For contract law, assignment of contracts may specifically denote the legal transfer of obligations as well as benefits of a particular contract from one party to another. This is done through the legal document by the name “assignment agreement”, through which the contract is actually transferred. This assignment, therefore, replaces the original contract. It not only includes the name of the assignor and assignee, but also the name and consent of the original another party of the contract, which is called as the "obligor". The obligor should also give its consent to the contract assignment, as it is one of the original parties involved in the contract. Contract Assignment is also called as Assignment of Contract or Assignment Contract. Once the assignor notifies all the parties involved (including the assignee and the obligor) the assignee takes over the obligations and fulfills them to get the benefits.

Assignment contracts can be of great value to individuals and firms. For instance, they may be useful in cases when the conditions change or when the followings are not in accordance with what was predicted or forecasted. But assignment contract cannot be enforced in cases when the original contract contains laws preventing or prohibiting the same. Courts and laws may also not enforce an assignment contract when the value is reduced, performance is adversely affected, or when the risks for the obligor increases under the new contract. These contracts may also be prohibited in some States to a certain extent. For instance, the employees cannot assign future wages disease. Assignment contracts for claims against the government may violate public policy and hence are prohibited.

The laws relating to the “assignment clause” may not be as stringent as those for the “contract law” and in some cases, the assignment contracts maybe verbally made as well. But in some instances, an assignment contract may require a written and documented form. These instances are given below.

a. When the assignment contract requires the transfer of land or property.

b. When the original contract involves highly valuable services or large valuable properties.

c. When the original/assignment contract involves technical and complex terms.

d. When the parties not been in a business relationship before.

Illustration

An example here can be a contract involving a Public hospital and a pharmaceutical manufacturer, according to which the manufacturer is responsible for supplying the antibiotic ophthalmic drops to the hospital in a requisite amount in a given time. But when the pharmaceutical manufacturer (assignor) finds that the firm may not be able to fulfill the contract, it can transfer the obligations and benefits to another pharmaceutical manufacturer, who will be the assignee in the new contract or the assignment contract. The assignor may have to transfer the obligations and benefits when the company might face a sudden accident. An assignment contract may also be required when the assignor finds hands to be already full with other contracts, and the work not moving as fast as the firm thought it would, among other instances and cases.

But the consent of the Public hospital will be required. The Public hospital might have chosen a particular manufacturer in view of aspects like GMP (Good Manufacturing Practices) certification and others to ensure that the quality of the drops is good. The Hospital may extend the same evaluation criteria to the new manufacturer or assignee before giving its consent.

When all the parties including the obligor, assignor, and assignee give their consent to the new contract, it comes into place and become legally binding. Now the assignee is responsible for delivering the requisite quantity of antibiotic ophthalmic drops to the public hospital within the given time frame (when no other changes have been made to the original contract). But in the case where the original contract prohibits an assignment of the contract, it cannot be formed.