Assignment of contracts is the legal transfer of the obligations and benefits of a contract from one party, called the assignor, to another, called the assignee.3
What assignment of a Contract?
Assignment of contract is the legal transfer of the obligations and benefits of a contract from one party, called the assignor, to another, called the assignee. The assignor must properly notify the assignee so that he or she can take over the contractual rights and obligations. This can be done using a document called an assignment agreement, which allows you to protect your legal rights while transferring the contract.
An assignment agreement is appropriate for your needs if the following are true:
You want to transfer your contractual rights, responsibilities, and obligations to another individual or company.
You or your business are taking over a contract from another person or business.
The assignment agreement includes the names of the assignor and assignee, the name of the other party to the contract in question (known as the obligor), the contract’s title and expiration date, whether the obligor needs to consent to the transfer of the rights based on the original terms of the contract, when the obligor consented, when the assignment agreement takes effect, and what state will govern the transferred contract. The assignment agreement may also be called the contract assignment, assignment contract, or assignment of contract.
While assignment contracts are typically only used for amounts of less than $5,000, you can assign a higher profit contract when both the buyer and seller agree. You cannot assign a contract if the original contract prohibits doing so.
If you are assigning a contract, you may want to ask the obligor to sign a release or waiver agreement that releases you from contract liability. In addition to transferring rights and obligations, you can also use an assignment agreement to transfer an income stream to an assignee. However, when transferring rights to intellectual or personal property, it’s best to instead use a trademark assignment, bill of sale, or assignment of a trade name.