Assignability Of Contracts

Assignability Of Contracts-34
Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the 0 from payment to Assignee.

Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the 0 from payment to Assignee.

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When an assignment has the effect of materially changing the duties that the obligor must perform, it is ineffective.

Changing the party to whom the obligor must make a payment is not a material change of duty that will defeat an assignment, since that, of course, is the purpose behind most assignments.

First, it is inapplicable to the sale of a negotiable instrument to a holder in due course.

Second, the rule may be waived: under the UCC and at common law, the obligor may agree in the original contract not to raise defenses against the assignee that could have been raised against the assignor.

But if notice is given to the obligor and she performs to the assignor anyway, the assignee can recover from either the obligor or the assignee, so the obligor could have to perform twice, as in Exercise 2 at the chapter’s end, .

Of course, an obligor who receives notice of the assignment from the assignee will want to be sure the assignment has really occurred.

For that reason, there are various rules that limit both the holder in due course and the waiver rule.

Certain defenses, the so-called real defenses (infancy, duress, and fraud in the execution, among others), may always be asserted.

An obligor who could avoid the assignor’s attempt to enforce the rights could avoid a similar attempt by the assignee.

Likewise, under UCC Section 9-318(1), the assignee of an account is subject to all terms of the contract between the debtor and the creditor-assignor.

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