to the obligor. This is an obligation of the assignee, not the assignor. If notice is not given, it would be normal practice for the obligor to render performance to the other original contracting party, in this case, the assignor. If due notice has been given and the obligor makes payment to the assignor, the obligor is not excused from making payment to the assignee.
The rights and duties of the assignee are the same as those previously held by the assignor under the original contract. Claims the assignor may have had against the obligor now belong to the assignee. In addition, defenses the obligor may have had against the assignor's claims may now be used against the assignee.
The assignee's duty in an assignment is to give notice of the assignment to the obligor. The obligor is allowed a reasonable time to seek assurance that an assignment has been truly made. Making the assignment in writing reduces the possibility of one's fraudulent representation as an assignee.
The assignor is obligated to any express and implied warranties that serve to protect either the assignee or the obligor. A warranty is a promise, statement, or other representation that a thing has certain qualities.
The assignor is bound by an implied warranty that the obligor will respect the assignment and will make performance as required by the original agreement between the assignor and the obligor.
If the assignor delegates to an assignee duties owed the obligor, there is an implied warranty that the duties delegated will be carried out in a complete and satisfactory manner.
Parties to a contract may include a condition that will not allow its assignment.
If all three parties agree, however, the assignor can be released from liability at the time of the assignment, and privity of contract can exist between the assignee and the obligor. Such an arrangement is called a novation, which is a substitution, by mutual agreement, of a new party for one of the original parties to a contract.
Exercise 1. Comprehension questions:
1. Give definition of a third party and identify what rights it has.
2. What are the types of intended beneficiaries?
3. Explain who creditor beneficiaries are.
4. What do the contracting parties owe the donee beneficiary?
5. Why is consideration important in creation of an agreement?
6. What are the forms of assignment?
7. Which of the two assignees has a superior right and claim against the obligor?
