Editorial Assignment

Editorial Assignment-35
The effect of a valid assignment is to extinguish privity (in other words, contractual relationship, including right to sue) between the assignor and the third-party obligor and create privity between the obligor and the assignee.

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However, it is possible to assign the lease, but the new party (assignee) will be subject to the lessor’s credit evaluation process and approval.

Even if the assignee is approved, the existing lessee’s (assignor’s) personal guarantee(s), if any, might not be released unless the assignee’s credit stature is extremely strong.

The common law favors the freedom of assignment, so an assignment will generally be permitted unless there is an express prohibition against assignment in the contract.

Where assignment is thus permitted, the assignor need not consult the other party to the contract.

An assignment may not transfer a duty, burden or detriment without the express agreement of the assignee.

The right or benefit being assigned may be a gift (such as a waiver) or it may be paid for with a contractual consideration such as money.A contract may contain a non-assignment clause, which prohibits the assignment of specific rights and some various rights, or of the entire contract, to another.However, such a clause does not necessarily destroy the power of either party to make an assignment.After the assignment of contractual rights, the assignee will receive all benefits that had accrued to the assignor.For example, if A contracts to sell his car for 0 to B, A may assign the benefits (the right to be paid 0) to C.For assignment to be effective, it must occur in the present.No specific language is required to make such an assignment, but the assignor must make some clear statement of intent to assign clearly identified contractual rights to the assignee.For example, the assignment of a legal malpractice claim is void since an assignee would be a stranger to the attorney-client relationship, who was owed no duty by the attorney and would imperil the sanctity of the highly confidential and fiduciary relationship existing between attorney and client.Torts are not assignable as public policy, and various statutes may prohibit assignment in certain instances.In other cases, the contract may be a negotiable instrument in which the person receiving the instrument may become a holder in due course, which is similar to an assignee except that issues, such as lack of performance, by the assignor may not be a valid defense for the obligor.As a response, the United States Federal Trade Commission promulgated Rule 433, formally known as the "Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses", which "effectively abolished the [holder in due course] doctrine in consumer credit transactions".


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