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Transfer of Contracts & Novation - YouTube
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Okay. So what is the assignment of a
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contract? Well generally there are rights
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and obligations or duties between the
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parties to a contract to the parties to
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the agreement, so if either party wishes
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to assign their rights or their
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obligations under the contract then
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that's a transfer a transfer of the
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contract so it can go either way rights
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or duties so if you transfer to me the
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duty to perform then I now carry your
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duty to perform if you transfer me your
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rights and I have the right to receive
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the benefits that you would have
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received under this agreement. Okay. The
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assign or is the person a signing the
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contract Missoni is the person receiving
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the rights or obligations under the
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contract. Okay. So now here's the
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important thing an individual who
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receives an assignment under the
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contract of benefits of rights they have
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a duty to notify the obligor, the person
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in the contract who has the obligation
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to perform those duties, so that they
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will be the individual that actually
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receives those duties. So take me for
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example I'm a part of the contract and I
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transfer you my benefits or my rights
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under the contract, now I may later
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attempt to transfer those rights to
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someone else it is incumbent upon you in
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most states to notify the obligor, the
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person who owes initially me than you
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the duties under the contract, that you
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have been assigned those rights okay and
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that they should perform those
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obligations for you and you should
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prefer you should benefit from those
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rights. Now there are certain types of
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contracts where you cannot assign the
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right sort of duties under the agreement,
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examples would be say a supply contract,
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if I have a duty to supply all the
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materials that you need in your
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construction business now you wish to
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transfer those rights to someone else
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well that may not be assignable because
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the person you assign it to they have
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far greater needs than you
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and to put on me the obligation of
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having to meet their needs
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would be above and beyond the
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contemplation of our original agreement,
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so in that case that supply contract or
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requirements contract may not be
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assignable. Another type of a non
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assignable contract would be a contract
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that depends heavily heavily on these
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specific skills of an individual
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performing that contract, so say I'm a
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professional singer and you hire me to
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sing in an event, now I decide to
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transfer that to another individual now
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that's not a transferable contract it's
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not a transferable obligation simply
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because you hired me and you depended
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specifically on my skill or my voice or
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my talent in performing you didn't
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contract with the person I'm trying to
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transfer this to, so that would be
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another example of one that where the
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obligation is not transferable. Okay. Now
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say I do transfer an obligation under
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our existing contract, now my transfer of
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that obligation does not relieve me from
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liability for failure to perform, okay, so
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say the person I transfer it to does not
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perform the contract as they're supposed
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to well I'm not relieved of liability
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you can still sue me under that contract
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the only way I am relieved from
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potential liability is to do what's
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called a novation and that's an entering
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getting an agreement between the three
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parties the person to whom the
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obligation was transferred and the
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original parties through the contract
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that says okay I have transferred this
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agreement and no longer liable under the
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contract we have a novation or a new
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contract between the transferee and the
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other party to the contract. So those are
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the basic elements of of transferring
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assignment of rights and obligations
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under your contract.
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