Assignment and Delegation
What is the Assignment and Delegation?
Assignment transfers a party's contract rights to a third party, while delegation transfers contractual duties. The original party generally remains liable after delegation unless a novation occurs.
Source: Sally Beauty Co. v. Nexxus Products Co., 801 F.2d 1001 (7th Cir. 1986)
Definition
Assignment and delegation are mechanisms by which contractual rights and duties are transferred to third parties. An assignment is the transfer of a party's rights under a contract—typically the right to receive performance—to a third party (the assignee). A delegation is the transfer of a party's duties under a contract—the obligation to perform—to a third party (the delegatee). While these concepts are related, they operate differently and have distinct legal consequences.
Most contract rights are assignable unless the assignment would materially change the obligor's duty or risk, the contract expressly prohibits assignment, or the assignment involves personal rights that depend on the identity of the parties. Under UCC section 2-210 and common law principles, anti-assignment clauses are narrowly construed: a clause prohibiting 'assignment of the contract' typically bars only delegation of duties, not assignment of rights, unless the language clearly indicates otherwise.
Delegation of duties is generally permitted unless the contract calls for personal services based on the delegating party's unique skills or the other party has a substantial interest in having the original party perform. Critically, delegation does not relieve the delegating party of liability—the original obligor remains responsible for performance unless the obligee agrees to a novation, releasing the original party. If the delegatee fails to perform, the obligee may sue either the original obligor (on the contract) or, in many jurisdictions, the delegatee (as a third-party beneficiary of the delegation agreement).
Key Elements
- 1Assignment: transfer of contractual rights to a third party (assignee)
- 2Delegation: transfer of contractual duties to a third party (delegatee)
- 3The assignment or delegation must not materially affect the other party's rights or obligations
- 4The contract must not validly prohibit assignment or delegation
- 5The delegating party remains liable unless a novation releases them
- 6The obligee may enforce performance against the original obligor or the delegatee
Landmark Cases
Sally Beauty Co. v. Nexxus Products Co.
801 F.2d 1001 (7th Cir. 1986)
Held that an exclusive distributorship could not be delegated to a competitor's subsidiary because the obligee had a substantial interest in the identity of the performer.
Crane Ice Cream Co. v. Terminal Freezing & Heating Co.
147 Md. 588 (1925)
Distinguished between assignment of rights and delegation of duties, holding that a party could not delegate personal service obligations without the other party's consent.
Herzog v. Irace
594 A.2d 1106 (Me. 1991)
Addressed the rights of an assignee against the obligor, holding that proper notice of the assignment obligates the obligor to render performance to the assignee.
British Waggon Co. v. Lea & Co.
5 Q.B.D. 149 (1880)
Early authority allowing delegation of routine duties (wagon repair) where the obligee had no material interest in the identity of the performer.
Exam Tips
- Always distinguish between assignment of rights and delegation of duties—they have different rules and consequences.
- The original party remains liable after delegation unless there is a novation—this is the most commonly tested point.
- Anti-assignment clauses are narrowly construed: 'no assignment of the contract' typically bars delegation, not assignment of rights to payment.
- Check whether the contract involves personal services or unique skills—if so, delegation is likely prohibited.
Common Mistakes to Avoid
- Assuming that delegation releases the original party from liability—it does not unless there is a novation with the obligee's consent.
- Treating anti-assignment clauses as absolute bars when courts typically construe them narrowly to bar only delegation of duties.
- Confusing assignment and delegation as the same concept—assignment transfers rights, delegation transfers duties.
Memory Aid
Assignment = giving away your Rights (what you Receive). Delegation = giving away your Duties (what you Do). Delegator stays liable unless Novation.