Assignment and Delegation

• Author: autor
• Pages: 264-275

264

Chapter 19. Assignment and Delegation

19.1. Introduction. To approach assignment and delegation, it is best to break a contract down

into the respective rights and duties of the parties, and to think of each of those rights and duties

as a commodity that can be bought and sold. It is important to get the vocabulary down: rights

are assigned, and duties are delegated.

Example. Seller agrees to sell 10 steel beams to Buyer for $10,000 on June 1. Seller has the right

to receive payment of $10,000 on June 1, and Buyer has the right to receive tender of the steel on

June 1. Seller has the duty to tender the steel on June 1, and Buyer has the duty to tender the

$10,000 on June 1.

Those rights and duties can be assigned and delegated. Seller might notify Buyer: don’t pay me,

pay my creditor instead. Buyer might notify Seller: don’t tender the steel to me, tender it to ABC

Co. Those would be assignments of rights. Seller might notify Buyer: you won’t be getting the

steel from me -- you will be getting it from Steelco. Buyer might notify Seller: I won’t be paying

you – payment will come from ABC Co. Those would be delegations of duties.

The UCC rules determine whether those assignments and delegations are enforceable. Section 2-

210 contains the rules on assignment and delegation. They are quite similar to the common law

rules, and the policy strongly favors free assignment and delegation. Let’s look at those rules.

19.2. Delegation of duty. Read § 2-210(1). It permits an obligor (one who is obligated to do

something) to delegate a duty except in two situations:

 unless otherwise agreed

 unless the other party has a substantial interest in having his original promisor

perform.

19.2.1. The second exception. We will discuss the first exception shortly. The second

exception, prohibiting delegation when there is a “choice of person” sounds like it might

arise frequently. In our example, Buyer might claim that it chose Seller to tender the steel

because Seller is a reliable party with whom it has always dealt. On the other hand, it

doesn’t have as much confidence in Steelco and specifically chose not to deal with

Steelco initially. Therefore, Buyer argues that it does not have to accept Seller’s

delegation of the duty to Steelco. Buyer will probably lose that argument. Steel beams are

a commodity with certain specifications, and will be the same whether they come from

Seller or Steelco.

The choice of person exception might kick in if the goods were to be specially

manufactured. For example, if you ask a particular tailor to make me a handmade suit,