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Assignment of Contracts: Transferring Rights and Liabilities

Assignment of Contracts: Transferring Rights and Liabilities

Welcome to SQE Contract Law! As solicitors specializing in contract law, we understand the importance of navigating the complex world of assignments. In this blog post, we will delve into the details of assignment of contracts, explaining how it allows parties to transfer rights and liabilities. So whether you’re a business owner or an individual looking to understand the implications of contract assignments, this post is for you.

Definition and Basics of Contract Assignment:

Contract assignment is a legal process that involves transferring the rights and obligations of one party, known as the assignor, to another party, known as the assignee. This assignment effectively allows the assignee to acquire all the benefits, duties, and liabilities of the original contract.

The contract assignment can occur for various reasons. For instance, a seller may assign their rights and obligations to a buyer in a business acquisition scenario. Or, an individual may assign their rights to receive payment under a contract to a third party in return for immediate funds.

Understanding the Parties Involved:

To better grasp contract assignment, it’s crucial to understand the roles of the key parties involved:

1. Assignor: This is the party who currently holds the rights and obligations under the original contract. They are essentially transferring their position to the assignee.

2. Assignee: This is the party to whom the rights and liabilities of the original contract are being transferred. The assignee steps into the shoes of the assignor and assumes all responsibilities and benefits associated with the contract.

3. Obligor: Commonly known as the counterparty, this is the party who is bound to fulfill the obligations under the contract. The obligor’s duties and liabilities remain unchanged despite the assignment.

Legal Requirements and Considerations:

Contract assignment is subject to certain legal requirements and considerations. Some key aspects to keep in mind include:

1. Consent: Generally, consent is required from both the assignor and the obligor for a valid assignment. However, certain contracts may include anti-assignment clauses that restrict or prohibit assignments altogether.

2. Notice: It is important to provide timely notice of the assignment to the obligor. This ensures that the assignee is recognized as the new party with whom the obligor must interact.

3. Liability: It is essential to understand that by assigning a contract, the assignor does not relieve themselves of liability. Unless otherwise agreed, the assignor remains secondarily liable to the obligor in case the assignee fails to fulfill the contractual obligations.

Benefits of Contract Assignment:

Contract assignment offers several advantages to both assignors and assignees. Let’s explore them in more detail:

1. Flexibility: Assigning a contract provides the flexibility to transfer rights and obligations, allowing parties to adapt to changing circumstances or business needs.

2. Profit Generation: For assignors, contract assignment can generate immediate cash flow by transferring the right to receive payment under the contract to a third party in exchange for a lump sum.

3. Risk Mitigation: Assignees might benefit from acquiring a proven contractual relationship, which minimizes risk compared to starting a new contract from scratch.

4. Strategic Partnerships: Contract assignment can help forge strategic relationships between businesses, enabling them to leverage each other’s expertise, resources, or market presence.


In conclusion, the assignment of contracts serves as a valuable tool for businesses and individuals alike. It allows for the transfer of rights and liabilities, offering flexibility, profit generation, risk mitigation, and strategic partnerships.

At SQE Contract Law, our team of experienced solicitors can guide you through the intricacies of contract assignment to ensure a smooth and legally sound process. Contact us today to discuss your specific needs and embark on a successful contract assignment journey.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. It is always recommended to seek professional legal counsel for your specific circumstances.