Assignments & Delegations

Third-party beneficiary doctrine gave an outsider rights through the original contract. Assignment and delegation give an outsider rights or duties through a later transfer. The two operations look symmetric — one moves a right, the other moves a duty — but the default rules are not symmetric. Rights are freely transferable and the assignment generally extinguishes the assignor’s claim; duties are transferable too, but delegation does not release the delegator, who stays on the hook unless the obligee agrees to a novation.

Assignment of rights

R2d § 317. An obligee may transfer a contractual right to an assignee, who then steps into the obligee’s shoes against the obligor. Assignment is freely permitted unless it would materially change the obligor’s duty or risk, materially impair the obligor’s chance of return performance, or is barred by statute or by the contract. Because the obligor’s burden is usually unchanged when it pays a stranger instead of the original party, the obligor’s consent is not required. Anti-assignment clauses are construed narrowly: under the modern majority (UCC § 9-406; R2d § 322), a clause barring assignment of the right to payment is generally read as a covenant not to assign — its breach gives a damages claim but does not void the assignee’s right to collect, because free assignability of receivables is essential to commercial finance.

Delegation of duties and novation

R2d § 318. An obligor may delegate performance of a duty to another unless delegation is contrary to public policy or the contract’s terms, or unless the obligee has a substantial interest in having the original person perform (the personal-services carve-out). Critically, delegation does not discharge the delegator: absent the obligee’s agreement, the delegating party remains liable if the delegate performs defectively.

Novation is the discharge mechanism delegation lacks. A novation substitutes a new party for the original obligor with the obligee’s express consent to release the original — a three-party agreement. Without that express discharge, an “assumption” of a duty is only a delegation, and the original obligor stays secondarily liable.

Cases

McCloskey & Co. v. Minweld Steel Co. holds that anticipatory repudiation requires an absolute, unequivocal refusal or a positive statement of inability to perform; mere expressions of difficulty or requests for help do not rise to repudiation. Birdsall v. Saucier illustrates accord and satisfaction through substitute performance: where a creditor accepts a third party’s note in satisfaction of a debt, the original obligation is discharged even if the note later proves uncollectible.

What you should be able to do

Classify a transfer as an assignment of a right or a delegation of a duty, and name whose consent matters in each. Explain the central asymmetry: assignment extinguishes the assignor’s right, but delegation leaves the delegator liable absent a novation. Apply the personal-services limit of § 318 and the narrow construction of anti-assignment clauses. Recognize that one transaction often does both at once. Module VII closes here; next class is the capstone, year synthesis, and exam orientation.