Contract assignment is the process of assigning a contract to another party. The assignee takes on all the rights and obligations of the contract, including any future payments or performance. Assignment can be used to transfer ownership of a contract, or to delegate performance of the contract to another party.
Most contracts can be assigned, but some contracts may prohibit or restrict assignment. For example, a personal services contract may prohibit assignment because the services are specific to the original contracting parties. When in doubt, it is always best to check the terms of the contract before attempting to assign it.
There are two types of assignment: voluntary and involuntary. Voluntary assignment occurs when both parties agree to the transfer, and involuntary assignment occurs when one party transfers their rights under the contract without the other party’s consent. Involuntary assignment is usually only allowed in cases where the assignor is unable to perform their obligations under the contract, such as due to bankruptcy or death. Contract assignments can be made for a variety of reasons, including:
To transfer ownership of the contract
To delegate performance of the contract
To consolidate multiple contracts into one
To take advantage of economies of scale
Assignment can be used to transfer ownership of a contract, or to delegate performance of the contract to another party