Assignment and Delegation

AuthorFranklin G. Snyder, Mark Edwin Burge
Pages589-606
______________________________________________________________________________
UNIT 28: ASSIGNMENT AND DELEGATION 589
Unit 28
__________________________________________________________________
CONTRACT NONPARTIES
Part Two
__________________________________________________________________
Assignment and Delegation
FOCUS OF THIS UNIT
The nonparties we considered in the previous unitthird-party beneficiaries
can gain rights under contract law based largely on the original intent of the parties
to the contract. They are parties in their own right from the day the contract is
formed. This unit deals with a very different situation: where nonparties take over
the rights and duties of contracting parties after the inception of the contract. An
example may help explain what we mean here.
A Simple Contract. Suppose that builder Burge has contracted with Snyder to
build a department store, Snyder’s Shop-a-Rama, in exchange for $1 million. Under
this contract, Snyder has the right to performance from Burgeconstruction of the
store. Likewise, Burge has the right to Snyder’s performance—payment of the $1
million. Each party’s contract rights to the other’s performance under these facts also
create corresponding duties.
1
Thus, we can equally say that Burge has a legal duty to
build the department store for Snyder, while Snyder has a legal duty to pay Burge $1
million. In a bilateral contract like this example, both sides have rights the
performance of another (which are legal benefits) and duties to perform (which are
legal detriments).
Passing Along Rights and Duties. With these rights and duties in mind,
consider the possibility that the parties may want to move them around. In your
Property course, you have likely heard of the “bundle of sticks” approach to property
rights, in which various sticks from the bundle can be removed and transferred.
Contract rights are a form of property. What if Snyder decides that he, in fact, does
not want to own or run a department store, but he has heard that Williston would be
1
[One or more of your fir st-year professors may have introduced you to the idea that all legal
duties have reciprocal rights, and vice versa. Thus, my right to build a fence on my property implies
your duty not to tear down that fence; your duty to pay me money implies my right to get it, and so on.
These were dubbed “jural correlatives” by Professor Hohfeld and have had a great deal of influence,
particularly in property and tort law. See, e.g., Wesley Newcomb Hohfeld, Fundamen tal Legal
Conceptions as Applied in Judicial Reasoning, 26 YALE L.J. 710 (1917).Ed s.]
______________________________________________________________________________
590 CHAPTER IX: CONTRACT NONPARTIES
interested in jumping into such a business venture? Can Snyder and Willison agree
to substitute Williston into Snyder’s place in the original contract? Or suppose Burge
has decided to exit the construction business, so he arranges for Corbin to build
Snyder’s department store for him. Neither Snyder or Burge may have a particular
objectionWilliston may have better credit and Corbin may be a better construction
companybut what if one of the original parties objects? Does that party still have
the right to transfer its rights and duties?
Getting the Vocabulary Right. The law of assignment and delegation is where
we find the answers to these questions, but exploring that law requires
understanding some terminology. Contract rights (the benefits) are assigned, while
contract duties (the obligations) are delegated. Attorneys sometimes lump
assignment and delegation together and refer to both concepts as assignment, but
doing so is incorrect. Indeed, this kind of imprecision that can get a transactional
lawyer in trouble. Suppose the Snyder-Burge contract says that “Burge may the
assign the contract to another builder”—that provision arguably means that Burge
can transfer his benefit (“assign”), but cannot transfer his obligation (“delegate”).
Snyder may be indifferent about who gets the money he pays Burge, but may have a
strong objection to having someone else do the work, especially if he selected Burge
because of the latter’s special skill and expertise.
The original contracting party who makes an assignment is known as an
assignor, while the nonparty who receives the assignor’s rights is called the assignee.
Where duties are delegated, the original contracting party is called the delegator
while the nonparty who takes on the delegator’s duties under the contract is called
the delegatee.
2
The Basic Rules. The general rules are pretty simple. (1) Contractual benefits
may be assigned, and contract obligations may be delegated, except sometimes when
they cannot. (2) Both assignment and delegation may be limited or prohibited by the
parties’ agreement, except when such limits or prohibitions are not effective. Fleshing
out the exceptions to these general rules is the main challenge. The basic rules on
assignments are found in section 317 of the Restatement (Second) of Contracts, while
those on delegation are in section 318. Article 2 of the UCC has its own rules for sale-
of-goods contracts in section 2-210. Some of the UCC’s approach to interpretation of
assignment and delegation provisions is also reflected in section 322 of the
Restatement. You should look at those sections as you read the cases in this unit.
Interestingly, the CISG has no rules of its own on the topic, which means if you are
working in international sales transactions you may find yourself using the domestic
2
[We’re not terribly fond of all these “-or” and -ee” terms, as they can be a recipe for confusion
and errors in contract drafting. (Practice tip: When drafting contracts, use the parties’ names, or some
functional terms like “buyer” and “seller” instead whenever possible.) Nonetheless, you need to
recognize these sort of terms as they frequently appear in both transactional documents and court
opinions. Eds.]

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT