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Assignment of contracts

The term ‘assignment’ means ‘transfer’. Assignment of contracts would mean the transfer of rights and liabilities under a contract by a party to another person. Thus, in the case of an assignment, the original party or parties to the contract drop out and the others take his / their place.
 
Assignment takes place either, by the act of parties or by operation of Law
 
Assignment of rights and liabilities by act of the parties are subject to the following rules
  • In case if the contractual rights / obligation involve personal skill or ability, then such rights or obligations cannot be assigned.
  • In all other cases rights and obligations can be assigned subject to all equities between the original parties
Assignment of rights and liabilities by operation of Law are subject to the following rules
  • In case of death of the parties the rights and obligations (other than those of Personal nature) of the deceased party pass on to his legal representatives.
  • In case of insolvency of any party the rights and obligations (other than those of personal nature) of the insolvent party pass on to the Official Receiver or Assignee appointed by court
Example

Arun promises to marry Priya. Here, neither Arun can assign his obligation nor Priya can assign her right because the contract is of personal nature.

 

Example

Ram owes Rahim ₹ 10,000 and Robert owes Ram ₹ 10,000. Here Ram cannot compel Rahim to recover the amount from Robert. However, he can transfer his liability to Robert with the consent of Rahim and Robert. Rahim can also transfer his right to a third party to recover the amount from Ram.





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