what is the meaning of assignment clause

What Is an Assignment Clause?

An assignment clause is a contractual provision that enables one party to transfer their rights, obligations, or interests to another party, allowing for greater flexibility in managing contractual relationships. This clause can be unrestricted, restricted, or take the form of novation, pro-assignment, anti-assignment, or hybrid clauses. By including an assignment clause, parties can adapt to changing circumstances and business needs. As we explore the intricacies of assignment clauses, you'll discover how they can impact contract obligations and dispute resolution mechanisms, and how they can be used to mitigate risks and optimize contractual agreements.

Table of Contents

Definition of an Assignment Clause

An assignment clause is a provision in a contract that allows one party to transfer its rights, obligations, or interests to another party, often with or without the consent of the other contracting party. This clause is a vital aspect of contract flexibility, enabling parties to adapt to changing circumstances and business needs. In particular, an assignment clause permits the transfer of contractual rights and obligations, allowing parties to reassign their interests to a third party.

The legal language used in an assignment clause is vital, as it determines the scope and limitations of the transfer. The clause must be drafted with precision to avoid ambiguity and reflect the parties' intentions accurately. A well-crafted assignment clause provides clarity on the terms of the transfer, including the extent of the rights and obligations being assigned, the identity of the assignee, and any necessary consents or notifications. By incorporating an assignment clause into a contract, parties can maintain contract flexibility while minimizing potential disputes and facilitating a smoother transfer of interests.

Types of Assignment Clauses

Assignment clauses can be categorized into various types based on the degree of freedom granted to the assigning party, including unrestricted, restricted, and novation assignments. These variations are crucial in understanding the nuances of assignment clauses and their applications in different contractual agreements.

The type of assignment clause used can significantly impact the rights and obligations of parties involved. For instance:

• Unrestricted assignments allow the assignor to transfer their rights and obligations without restrictions.
• Restricted assignments limit the assignor's ability to transfer their rights and obligations, often requiring consent from the other party.
• Novation assignments involve the substitution of a new party, replacing the original party, with the consent of all parties involved.
• Pro-assignment clauses explicitly permit assignment, while anti-assignment clauses prohibit or restrict assignment.
• Hybrid clauses combine elements of different types, offering a tailored approach to assignment.

Understanding these clause variations is essential when drafting assignment templates and negotiating contractual agreements. By recognizing the differences between these types, parties can better navigate the complexities of assignment clauses and ensure their rights and obligations are protected.

When Is Assignment Allowed

Unless explicitly prohibited by the contract or applicable law, assignment is generally allowed when the parties have provided their consent, either explicitly through a contractual provision or implicitly through their actions. This consent can be demonstrated through various means, including contractual language, prior agreements, or even implied consent through the parties' behavior.

In cases where assignment is allowed, it is vital to appreciate the legal nuances and contract flexibility. The parties must verify that the assignment does not violate any contractual provisions or applicable laws. By understanding the circumstances under which assignment is permitted, parties can navigate complex contractual relationships with confidence.

Effects on Contract Obligations

When a contract is assigned, the obligations and rights of the original parties are transferred to the assignee, potentially altering the dynamics of the contractual relationship. This transfer can substantially impact the contract's overall framework, as the assignee assumes the responsibilities and benefits of the original party.

The effects of assignment on contract obligations can be far-reaching. Some key implications include:

• Obligation Shift : The assignee takes on the original party's contractual duties, freeing the assignor from liability.
• Contract Flexibility : Assignment allows for the transfer of rights and obligations, enabling greater flexibility in contract management.
• Novation : The assignment may lead to the creation of a new contract, replacing the original agreement.
• Third-Party Rights : The assignment may affect the rights of third-party beneficiaries, who may need to be notified or consent to the transfer.
• Dispute Resolution : The assignment can impact the resolution of disputes, as the assignee may need to assume the original party's position in any ongoing or future disputes.

Assignment Without Consent

In the absence of consent from the non-assigning party, an assignment can still be valid, although it may lead to legal disputes and complications. This scenario can arise when a party assigns their contractual rights or obligations to a third party without obtaining the required consent. In such cases, the assignment may be deemed valid, but it can also give rise to Contract Risks and Business Liabilities. The non-assigning party may dispute the validity of the assignment, leading to potential litigation and uncertainty.

The assignment without consent can also lead to a breach of contract, causing damages or penalties. Additionally, the assignee may not assume the obligations of the original party, leaving the non-assigning party with unresolved claims. It is crucial for businesses to carefully consider the implications of assignment without consent and take necessary precautions to mitigate potential risks. This includes drafting thorough assignment clauses, obtaining necessary consents, and verifying that all parties are aware of their rights and obligations. By doing so, businesses can minimize the risk of Contract Risks and Business Liabilities associated with assignment without consent.

Notice and Disclosure Requirements

Assignment clauses often stipulate specific notice and disclosure requirements that must be fulfilled by the assigning party to validate a valid and enforceable assignment. These requirements verify that all parties involved are aware of the assignment and its implications, thereby minimizing potential disputes and compliance risks.

Notice and disclosure requirements typically involve providing written notice to the non-assigning party, specifying the terms of the assignment, and disclosing relevant information about the assignee. This transparency is vital to maintain a valid assignment, as it enables the non-assigning party to assess the assignee's credentials and negotiate any necessary adjustments.

Key aspects of notice and disclosure requirements include:

• Specifying the effective date of the assignment
• Providing detailed information about the assignee
• Disclosing the terms and conditions of the assignment
• Confirming compliance with the regulatory framework governing the assignment
• Obtaining written acknowledgment from the non-assigning party

Dispute Resolution Mechanisms

Dispute Resolution Mechanisms are vital components of an Assignment Clause, as they provide a framework for resolving conflicts that may arise during the assignment process. Effective dispute resolution mechanisms guarantee that disputes are addressed efficiently and fairly, minimizing delays and potential losses. This section will explore the various arbitration methods, dispute resolution options, and mediation procedures used to resolve disputes arising from assignment agreements.

Arbitration Methods Available

Various arbitration methods are available to resolve assignment-related disputes, including ad hoc arbitration, institutional arbitration, and online dispute resolution. These methods provide a structured process for resolving disagreements, ensuring that disputes are addressed efficiently and effectively.

• Ad hoc arbitration: a flexible and informal process where parties appoint an arbitrator to resolve the dispute
• Institutional arbitration: conducted through established institutions, such as the International Chamber of Commerce (ICC) or the American Arbitration Association (AAA)
• Online dispute resolution: utilizes online platforms to facilitate the arbitration process, often with faster and more cost-effective results
• Fast Track arbitration: an expedited process for resolving disputes, typically with a shorter timeframe and limited documentation
• Online Platforms: provide virtual environments for arbitration, enabling parties to participate remotely and increasing accessibility

These arbitration methods offer a range of options for resolving assignment-related disputes, allowing parties to choose the approach that best suits their needs. By understanding the available arbitration methods, parties can make informed decisions about dispute resolution and ensure that their assignment agreements are effectively managed.

Dispute Resolution Options

Beyond arbitration methods, parties to an assignment agreement may also opt for other dispute resolution mechanisms to resolve conflicts, including negotiation, mediation, and litigation. These alternatives can be employed individually or in combination to facilitate conflict avoidance and efficient resolution of disputes. Negotiation, for instance, involves direct communication between parties to reach a mutually acceptable agreement. Effective negotiation strategies can help prevent conflicts from escalating, thereby reducing the need for more formal dispute resolution mechanisms. Conflict avoidance is also vital in preventing disputes from arising in the first place. By adopting proactive conflict avoidance measures, parties can minimize the risk of disputes and guarantee a smoother execution of the assignment agreement. Ultimately, the choice of dispute resolution mechanism will depend on the specific circumstances of the assignment and the preferences of the parties involved. By understanding the various dispute resolution options available, parties can make informed decisions and develop effective strategies for resolving conflicts efficiently and effectively.

Mediation Procedures Used

In mediation procedures, a neutral third-party mediator facilitates communication between the parties to help them reach a mutually acceptable agreement, often through a combination of joint and separate meetings. This approach enables parties to engage in constructive dialogue, identify common interests, and explore creative solutions. Mediation strategies are employed to promote open communication, build trust, and foster a collaborative environment.

Effective mediation procedures involve:

• Identifying and clarifying issues in dispute
• Encouraging active listening and empathy
• Fostering creative options for mutual gain
• Evaluating and analyzing potential solutions
• Drafting and refining a mutually acceptable agreement

Frequently Asked Questions

Can an assignment clause be added to an existing contract?.

"A post-execution modification, an assignment clause can be added to an existing contract via contract amendments, especially in legacy agreements, provided all parties consent and the alteration is properly documented and executed."

Do All Contracts Require an Assignment Clause?

Not all contracts require an assignment clause, as it depends on the specific Contract Fundamentals and Legal Requirements of the agreement, such as the type of contract, jurisdiction, and parties involved.

Can an Assignment Clause Be Used for Employment Contracts?

In employment contracts, an assignment clause can be employed to balance employee protection with contract flexibility, allowing for adjustments to job responsibilities or work arrangements while maintaining workforce adaptability and business continuity.

Is an Assignment Clause the Same as a Novation Clause?

Distinct from novation clauses, assignment clauses facilitate the transfer of contractual rights and obligations, avoiding contract ambiguity; however, nuances in legal drafting can blur the lines between these clauses, necessitating precise language to guarantee clarity.

Can an Assignment Clause Be Overridden by a Court?

In exceptional circumstances, a court may override an assignment clause through judicial review, balancing contractual freedom with public policy considerations, but this is rare and typically limited to cases involving fraud, illegality, or unconscionability.

Understanding Assignment Clauses in Contracts

Nov 22, 2023 | Contracts

Contracts are an integral part of our daily lives, governing a wide range of transactions from buying goods and services to entering into employment agreements. One often-overlooked yet crucial aspect of contracts is the assignment clause. Understanding assignment clauses is essential for individuals and businesses alike, as they can significantly impact the parties involved. In this comprehensive guide, we will explore the intricacies of assignment clauses, their significance, and how they can affect contractual relationships.

Table of Contents

What is an Assignment Clause?

An assignment clause, also known as a delegation clause, is a provision in a contract that dictates whether one party (the assignor) can transfer its rights, obligations, or both to another party (the assignee). In simpler terms, it outlines whether the original parties to the contract can delegate their responsibilities or transfer their benefits to a third party.

Key Components of Assignment Clauses:

Consent Requirement:

Some contracts explicitly state that an assignment can only occur with the consent of all parties involved. This ensures that no party is forced into a relationship with an unknown or potentially undesirable third party.

Prohibition of Assignment:

Conversely, some contracts expressly prohibit assignment altogether. In such cases, the parties to the contract are obligated to fulfill their roles personally, without the option to transfer their obligations or benefits.

Automatic Assignment:

In certain instances, contracts may include automatic assignment clauses. This means that rights and obligations are automatically transferred to a third party without the need for explicit consent.

Notice Requirements:

Assignment clauses often include provisions regarding notice requirements. These stipulate that the assignor must inform the other party or parties involved in the contract about the assignment, providing transparency and an opportunity for objection if necessary.

Significance of Assignment Clauses:

Risk Management:

Assignment clauses play a crucial role in risk management. For the party assigning its rights or obligations, it’s a way to mitigate potential risks and liabilities associated with the contract.

Flexibility:

From a business perspective, assignment clauses offer flexibility. They allow companies to adapt to changing circumstances, such as mergers, acquisitions, or restructuring, without the need to renegotiate every existing contract.

Investment and Financing:

Assignment clauses are of particular importance in financial transactions. Lenders and investors often look for the ability to assign contractual rights as a way to secure their interests.

Contractual Relationships:

Understanding assignment clauses is crucial for maintaining healthy contractual relationships. When parties are aware of the potential for assignment, they can negotiate terms that protect their interests and maintain the intended balance in the contract.

Common Misconceptions:

Assumption of Liabilities:

One common misconception is that by assigning contractual rights, the assignor is automatically relieved of all liabilities. In many cases, unless explicitly stated otherwise, the assignor may still be responsible for fulfilling the contractual obligations.

Unilateral Assignment:

Parties often assume they can unilaterally assign their rights or obligations. However, many contracts require the consent of all involved parties before an assignment can take place.

Case Studies:

To illustrate the practical implications of assignment clauses, let’s examine a couple of hypothetical scenarios:

Real Estate Transactions:

In real estate, assignment clauses are commonly used. For example, if a buyer signs a purchase agreement and later decides to sell the property before closing, the assignment clause dictates whether such a transfer is allowed and under what conditions.

Business Contracts:

In a business context, consider a company that enters into a service agreement with a third party. If the company undergoes a merger, the assignment clause becomes critical in determining whether the rights and obligations under the service agreement can be transferred to the newly formed entity.

Conclusion:

Understanding assignment clauses is fundamental for anyone entering into a contract, whether as an individual or a business entity. These clauses have far-reaching implications, influencing the flexibility, risk management, and overall dynamics of contractual relationships. By carefully considering and negotiating assignment clauses, parties can ensure that their interests are protected and that the contract remains adaptable to the ever-changing landscape of business and personal transactions.

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What is an Assignment Clause?

Jennifer Tsai • January 12, 2023 • 5 minute read

Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non-assigning counterparties, such as employment agreements and consulting agreements.) For all other contracts, parties may want an anti-assignment clause that allows them the opportunity to review and understand the impact of an assignment (or change of control) before deciding whether to continue or terminate the relationship.

In the mergers and acquisitions context, an assignment of a contract from a target company entity to the relevant acquirer entity is needed whenever a contract has to be placed in the name of an entity other than the existing target company entity after consummation of a transaction. This is why reviewing contracts for assignment clauses is so critical.

Why Do Assignment Clauses Matter?

How do you review assignment clauses in contracts.

After locating all the assignment language in each agreement, the following variables should be noted as part of the review: (1) Scope of assignment provision, (2) Consequences of failure to obtain consent, (3) Standard for refusing consent, and (4) Differences among counterparties in rights to assign.

1. Scope. Assignment provisions may provide exclusions or inclusions to a counterparty’s right to approve an assignment of a contract. See the examples in the following section below.

2. Consequences of Failure to Obtain Consent. Assignment provisions may specify that, if one party attempts to assign the agreement without the required consent of the counterparty:

• The purported assignment is null and void; and/or\
• The applicable contract is void and terminated.

Contracts should be carefully reviewed to determine which of the foregoing scenarios may apply.

3. Standard for Refusing Consent. Assignment provisions frequently include limitations stating that any counterparty’s consent that is required shall not be “unreasonably withheld,” although the reasonableness standard is rarely defined more specifically in the contract.

In an M&A context, the effect of this language is that it provides a target company with some opportunity to challenge a counterparty that withholds its consent to an assignment. Winning this challenge is far from guaranteed, and this opportunity generally comes at a cost of time and expense since it usually involves a legal challenge to the counterparty’s refusal to grant a consent. Consequently, a target company is incentivized to undertake this challenge only when the applicable contract is material to its post-acquisition business or to the consummation of its proposed transaction. Still, undertaking such a challenge may buy the target company time and provide it with some negotiating leverage in seeking a reversal of a counterparty’s refusal to consent to an assignment.

Determining whether consent has been unreasonably withheld is specific to the facts and circumstances underlying each request for consent. For example, in Athar v. Hudson Serv. Mgmt., Inc., 853 N.Y.S.2d 170 (N.Y. App. Div. 2008), a New York appellate court held that this standard requires the non-consenting party to show some reasonable and objective basis for withholding consent. The withholding of consent cannot be arbitrary or based on unique and personal preferences of the non-consenting party. Generally, the burden of proof to show an unreasonable withholding of consent is on the party requesting consent. Also, the party requesting consent is responsible for providing all information required or necessary to determine whether consent should be granted.

4. Differences Among Counterparties in Rights to Assign. It is important to note any differences in assignment rights between and among contracting parties and the consequences of those differences, as parties with greater negotiating power often have broader assignment rights. These differences can become important if there is a lag of time between signing and closing an M&A transaction. If a target company is required to obtain consent in order to assign an agreement, but the counterparty has rights to freely assign, care should be taken to ensure that any consent granted to a target company to assign a contract does not become subject to review or alteration by any parties to whom the counterparty may freely assign its rights after it has granted its consent to assignment. This is particularly relevant to consents that may lapse or lose their effectiveness if transactions do not close within a certain period of time. For example, if (i) a landlord or licensor subsequently transfers the contract after granting its initial consent, and (ii) such consent lapses pursuant to its terms, the target company might have to re-submit consent requests to completely different parties.

Software that uses AI to identify and extract Assignment clauses can accelerate the work of finding these clauses, and enables a more comprehensive review than can otherwise be done manually.

Find assignment clauses in your contracts

Identify and extract assignment clauses in your contracts using AI, then export your results to your preferred format.

Examples of Common Exclusions and Inclusions in Assignment Clauses

A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty’s right to consent to the assignment of a contract. Below are five common occurrences in which assignment provisions may provide exclusions or inclusions.

Exclusion for Change of Control Transactions

In negotiating an anti-assignment clause, a company would typically seek the exclusion of assignments undertaken in connection with change of control transactions, including mergers and sales of all or substantially all of the assets of the company. This allows a company to undertake a strategic transaction without worry. If an anti-assignment clause doesn’t exclude change of control transactions, a counterparty might materially affect a strategic transaction through delay and/or refusal of consent. Because there are many types of change of control transactions, there is no standard language for these. An example might be:

In the event of the sale or transfer by [Party B] of all or substantially all of its assets related to this Agreement to an Affiliate or to a third party, whether by sale, merger, or change of control, [Party B] would have the right to assign any or all rights and obligations contained herein and the Agreement to such Affiliate or third party without the consent of [Party A] and the Agreement shall be binding upon such acquirer and would remain in full force and effect, at least until the expiration of the then current Term.

Exclusion for Affiliate Transactions

A typical exclusion is one that allows a target company to assign a contract to an affiliate without needing the consent of the contract counterparty. This is much like an exclusion with respect to change of control, since in affiliate transfers or assignments, the ultimate actors and responsible parties under the contract remain essentially the same even though the nominal parties may change. For example:

Either party may assign its rights under this Agreement, including its right to receive payments hereunder, to a subsidiary, affiliate or any financial institution, but in such case the assigning party shall remain liable to the other party for the assigning party’s obligations hereunder. All or any portion of the rights and obligations of [Party A] under this Agreement may be transferred by [Party A] to any of its Affiliates without the consent of [Party B].

Assignment by Operation of Law

Assignments by operation of law typically occur in the context of transfers of rights and obligations in accordance with merger statutes and can be specifically included in or excluded from assignment provisions. An inclusion could be negotiated by the parties to broaden the anti-assignment clause and to ensure that an assignment occurring by operation of law requires counterparty approval:

[Party A] agrees that it will not assign, sublet or otherwise transfer its rights hereunder, either voluntarily or by operations of law, without the prior written consent of [Party B].

While an exclusion could be negotiated by a target company to make it clear that it has the right to assign the contract even though it might otherwise have that right as a matter of law:

This Guaranty shall be binding upon the successors and assigns of [Party A]; provided, that no transfer, assignment or delegation by [Party A], other than a transfer, assignment or delegation by operation of law, without the consent of [Party B], shall release [Party A] from its liabilities hereunder.

This helps settle any ambiguity regarding assignments and their effects under mergers statutes (particularly in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the merger).

Direct or Indirect Assignment

More ambiguity can arise regarding which actions or transactions require a counterparty’s consent when assignment clauses prohibit both direct and indirect assignments without the consent of a counterparty. Transaction parties will typically choose to err on the side of over-inclusiveness in determining which contracts will require consent when dealing with material contracts. An example clause prohibiting direct or indirect assignment might be:

Except as provided hereunder or under the Merger Agreement, such Shareholder shall not, directly or indirectly, (i) transfer (which term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of its Subject Shares, or any interest therein.

“Transfer” of Agreement vs. “Assignment” of Agreement

In some instances, assignment provisions prohibit “transfers” of agreements in addition to, or instead of, explicitly prohibiting “assignments”. Often, the word “transfer” is not defined in the agreement, in which case the governing law of the contract will determine the meaning of the term and whether prohibition on transfers are meant to prohibit a broader or narrower range of transactions than prohibitions on assignments. Note that the current jurisprudence on the meaning of an assignment is broader and deeper than it is on the meaning of a transfer. In the rarer case where “transfer” is defined, it might look like this:

As used in this Agreement, the term “transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in …

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Contract Central

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An automatic renewal clause is a contractual provision that automatically extends the term for a specified period of time.

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An amendment clause is a contractual provision that establishes rules for changing an agreement’s terms.

Assignment of Contract

Jump to section, what is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

• Direct mailers
• Place newspaper ads
• Make posts in online forums
• Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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Assignability Of Contracts: Everything You Need to Know

The assignability of contracts is when one side of a contract agreement transfers the contract to another entity, so that the new entity fulfills the terms of the contract. 3 min read updated on July 26, 2024

The assignability of contracts is when one side of a contract agreement transfers the contract to another entity, so that the new entity fulfills the terms of the contract. Being able to assign contracts depends on a variety of factors, mainly the language contained in the contract. 

How Contract Assignments Work

Some contracts prohibit assignment altogether, while others may allow it with the other party's consent. An example of a basic contract assignment may look like this: 

• Bob contracts with a dairy to deliver a gallon of cream to his house every day. 
• The dairy assigns Bob's contract to another dairy. 
• As long as Bob is notified of the change in provider and gets his gallon of cream every day, his contract is with the new dairy.

Because the law has a preference for the free alienation of property, parties are free to assign contract rights and delegate contractual obligations. 

Assigning a contract to another doesn't always take away the assigning party's liability. Some contracts include a clause that at least one of the original parties guarantees performance — or fulfills the contract terms — no matter what the assignment.

The performance, however, can't be changed in contract assignment. There's a limit to substitution, so the new party has no power to change the performance per the rights stated in the contract. For example, if the obliging party has pledged to perform only if some event happens (with no certainty that it will happen), no assignment should increase the risk to the obliging party if the event doesn't happen through no fault of the obligor.

The nature of a contract's obligations determines its assignability.

When Assignments Won't Be Enforced

In certain cases, contracts can't be assigned.

• A clause in the contract prohibits assignment. This is usually called an anti-assignment clause.
• Assignments can't take place if they materially alter what's expected under the contract. If the assignment affects the expected performance as outlined in the contract, lowers the value of returns (including anticipated returns), or increases risks for the other contract party (the one who's not assigning contractual rights), it's unlikely that any court will enforce the arrangement.
• If an assignment violates public policy or the law, it won't be enforced. For instance, the federal government prohibits certain claim assignments against the government, and many states prohibit an employee from assigning future wages.

Other assignments may not be illegal, but they could still violate public policy. As an example, personal injury claims can't be assigned because doing so might encourage litigation.

When looking into whether one party can transfer a contract or some rights and obligations in the contract, the transferring party has to check into applicable laws and statutes. That party must also check the contract's express language to determine whether or not it can transfer the assignment without obtaining consent from the non-transferring party.

If the contract requires that consent is given and the transferring party doesn't get that consent, it risks a contract breach as well as an invalid, ineffective transfer.

How to Assign a Contract

Follow these steps to assign contracts, when it's allowed for you to do so.

• Carefully study the contract for prohibitions or limitations, such as anti-assignment clauses. In some cases, there isn't a separate anti-assignment clause, but it may be stated in another way, such as language that says, "This contract may not be assigned."
• Execute the assignment. As long as you're free to assign the contract, prepare and enter into the assignment, which is basically an agreement transferring your rights and obligations.
• Notify the obligor, or the non-transferring party. After you assign contract rights to the assignee, notify the other party that was the original contractor, also known as the obligor. This notice relieves you of any liability as stated in the contract, as long as the contract doesn't say differently — for instance, the contract states that you, as the assignor, guarantee performance under the contract. 

Before trying to assign a contract to a third party, it's very important to understand if you're allowed to do so. You'll have to research legal statutes as well as the language in the contract to ensure you follow rules and regulations. Otherwise, you risk a breach of contract .

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What Is an Assignment of Contract?

Assignment of Contract Explained

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Assignment of contract allows one person to assign, or transfer, their rights, obligations, or property to another. An assignment of contract clause is often included in contracts to give either party the opportunity to transfer their part of the contract to someone else in the future. Many assignment clauses require that both parties agree to the assignment.

Learn more about assignment of contract and how it works.

What Is Assignment of Contract?

Assignment of contract means the contract and the property, rights, or obligations within it can be assigned to another party. An assignment of contract clause can typically be found in a business contract. This type of clause is common in contracts with suppliers or vendors and in intellectual property (patent, trademark , and copyright) agreements.

How Does Assignment of Contract Work?

An assignment may be made to anyone, but it is typically made to a subsidiary or a successor. A subsidiary is a business owned by another business, while a successor is the business that follows a sale, acquisition, or merger.

Let’s suppose Ken owns a lawn mowing service and he has a contract with a real estate firm to mow at each of their offices every week in the summer. The contract includes an assignment clause, so when Ken goes out of business, he assigns the contract to his sister-in-law Karrie, who also owns a lawn mowing service.

Before you try to assign something in a contract, check the contract to make sure it's allowed, and notify the other party in the contract.

Assignment usually is included in a specific clause in a contract. It typically includes transfer of both accountability and responsibility to another party, but liability usually remains with the assignor (the person doing the assigning) unless there is language to the contrary.

What Does Assignment of Contract Cover?

Generally, just about anything of value in a contract can be assigned, unless there is a specific law or public policy disallowing the assignment.

Rights and obligations of specific people can’t be assigned because special skills and abilities can’t be transferred. This is called specific performance.   For example, Billy Joel wouldn't be able to transfer or assign a contract to perform at Madison Square Garden to someone else—they wouldn't have his special abilities.

Assignments won’t stand up in court if the assignment significantly changes the terms of the contract. For example, if Karrie’s business is tree trimming, not lawn mowing, the contract can’t be assigned to her.

Assigning Intellectual Property

Intellectual property (such as copyrights, patents, and trademarks) has value, and these assets are often assigned. The U.S. Patent and Trademark Office (USPTO) says patents are personal property and that patent rights can be assigned. Trademarks, too, can be assigned. The assignment must be registered with the USPTO's Electronic Trademark Assignment System (ETAS) .  

The U.S. Copyright Office doesn't keep a database of copyright assignments, but they will record the document if you follow their procedure.

Alternatives to Assignment of Contract

There are other types of transfers that may be functional alternatives to assignment.

Licensing is an agreement whereby one party leases the rights to use a piece of property (for example, intellectual property) from another. For instance, a business that owns a patent may license another company to make products using that patent.  

Delegation permits someone else to act on your behalf. For example, Ken’s lawn service might delegate Karrie to do mowing for him without assigning the entire contract to her. Ken would still receive the payment and control the work.

Do I Need an Assignment of Contract?

Assignment of contract can be a useful clause to include in a business agreement. The most common cases of assignment of contract in a business situation are:

• Assignment of a trademark, copyright, or patent
• Assignments to a successor company in the case of the sale of the business
• Assignment in a contract with a supplier or customer
• Assignment in an employment contract or work for hire agreement

Before you sign a contract, look to see if there is an assignment clause, and get the advice of an attorney if you want to assign something in a contract.

Key Takeaways

• Assignment of contract is the ability to transfer rights, property, or obligations to another.
• Assignment of contract is a clause often found in business contracts.
• A party may assign a contract to another party if the contract permits it and no law forbids it.

Legal Information Institute. " Assignment ." Accessed Jan. 2, 2021.

Legal Information Institute. " Specific Performance ." Accessed Jan. 2, 2021.

U.S. Patent and Trademark Office. " 301 Ownership/Assignability of Patents and Applications [R-10.2019] ." Accessed Jan. 2, 2021.

Licensing International. " What is Licensing ." Accessed Jan. 2, 2021.

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Assignments Contract Clauses (8,849)

Grouped into 236 collections of similar clauses from business contracts.

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An assignment clause (AC) is an important part of many contracts, especially for real estate. In this article we discuss:

• What is an Assignment Clause? (with Example)
• Anti-Assignment Clauses (with Example)
• Non-Assignment Clauses
• Important Considerations
• How Assets America ® Can Help

Frequently Asked Questions

What is an assignment clause.

An AC is part of a contract governing the sale of a property and other transactions. It deals with questions regarding the assignment of the property in the purchase agreement. The thrust of the assignment clause is that the buyer can rent, lease, repair, sell, or assign the property.

To “assign” simply means to hand off the benefits and obligations of a contract from one party to another. In short, it’s the transfer of contractual rights.

In-Depth Definition

Explicitly, an AC expresses the liabilities surrounding the assignment from the assignor to the assignee. The real estate contract assignment clause can take on two different forms, depending on the contract author:

• The AC states that the assignor makes no representations or warranties about the property or the agreement. This makes the assignment “AS IS.”
• The assignee won’t hold the assignor at fault. It protects the assignor from damages, liabilities, costs, claims, or other expenses stemming from the agreement.

The contract’s assignment clause states the “buyer and/or assigns.” In this clause, “assigns” is a noun that means assignees. It refers to anyone you choose to receive your property rights.

The assignment provision establishes the fact that the buyer (who is the assignor) can assign the property to an assignee. Upon assignment, the assignee becomes the new buyer.

The AC conveys to the assignee both the AC’s property rights and the AC’s contract obligations. After an assignment, the assignor is out of the picture.

What is a Lease Assignment?

Assignment Clause Example

This is an example of a real estate contract assignment clause :

“The Buyer reserves the right to assign this contract in whole or in part to any third party without further notice to the Seller; said assignment not to relieve the Buyer from his or her obligation to complete the terms and conditions of this contract should be assigning default.”

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Assignment provision.

An assignment provision is a separate clause that states the assignee’s acceptance of the contract assignment.

Assignment Provision Example

Here is an example of an assignment provision :

“Investor, as Assignee, hereby accepts the above and foregoing Assignment of Contract dated XXXX, XX, 20XX by and between Assignor and ____________________ (seller) and agrees to assume all of the obligations and perform all of the duties of Assignor under the Contract.”

Anti-Assignment Clauses & Non-Assignment Clauses

An anti-assignment clause prevents either party from assigning a contract without the permission of the other party. It typically does so by prohibiting payment for the assignment. A non-assignment clause is another name for an anti-assignment clause.

Anti-Assignment Clause Example

This is an anti-assignment clause example from the AIA Standard Form of Agreement:

” The Party 1 and Party 2, respectively, bind themselves, their partners, successors, assigns, and legal representatives to the other party to this Agreement and to the partners, successors, assigns, and legal representatives of such other party with respect to all covenants of this Agreement. Neither Party 1 nor Party 2 shall assign this Agreement without the written consent of the other.”

Important Considerations for Assignment Contracts

The presence of an AC triggers several important considerations.

Assignment Fee

In essence, the assignor is a broker that brings together a buyer and seller. As such, the assignor collects a fee for this service. Naturally, the assignor doesn’t incur the normal expenses of a buyer.

Rather, the new buyer assumes those expenses. In reality, the assignment fee replaces the fee the realtor or broker would charge in a normal transaction. Frequently, the assignment fee is less than a regular brokerage fee.

For example, compare a 2% assignment fee compared to a 6% brokerage fee. That’s a savings of $200,000 on a $5 million purchase price. Wholesalers are professionals who earn a living through assignments.

Frequently, the assignor will require that the assignee deposit the fee into escrow. Typically, the fee is not refundable, even if the assignee backs out of the deal after signing the assignment provision. In some cases, the assignee will fork over the fee directly to the assignor.

Assignor Intent

Just because the contract contains an AC does not obligate the buyer to assign the contract. The buyer remains the buyer unless it chooses to exercise the AC, at which point it becomes the assignor. It is up to the buyer to decide whether to go through with the purchase or assign the contract.

Nonetheless, the AC signals the seller of your possible intent to assign the purchase contract to someone else. For one thing, the seller might object if you try to assign the property without an AC.

You can have serious problems at closing if you show up with a surprise assignee. In fact, you could jeopardize the entire deal.

Another thing to consider is whether the buyer’s desire for an AC in the contract will frighten the seller. Perhaps the seller is very picky about the type of buyer to whom it will sell.

Or perhaps the seller has heard horror stories, real or fake, about assignments. Whatever the reason, the real estate contract assignment clause might put a possible deal in jeopardy.

Chain of Title

If you assign a property before the closing, you will not be in the chain of title. Obviously, this differs from the case in which you sell the property five minutes after buying it.

In the latter case, your name will appear in the chain of title twice, once as the buyer and again as the seller. In addition, the latter case would involve two sets of closing costs, whereas there would only one be for the assignment case. This includes back-to-back (or double) closings.

Enforceability

Assignment might not be enforceable in all situations, such as when:

• State law or public policy prohibits it.
• The contract prohibits it.
• The assignment significantly changes the expectations of the seller. Those expectations can include decreasing the value of the property or increasing the risk of default.

Also note that REO (real estate owned) properties, HUD properties, and listed properties usually don’t permit assignment contracts. An REO property is real estate owned by a bank after foreclosure. Typically, these require a 90-day period before a property can be resold.

How Assets America Can Help

The AC is a portion of a purchase agreement. When a purchase involves a commercial property requiring a loan of $10 million or greater, Assets America ® can arrange your financing.

We can finance wholesalers who decide to go through with a purchase. Alternatively, we can finance assignees as well. In either case, we offer expedient, professional financing and many supporting services. Contact us today for a confidential consultation.

What rights can you assign despite a contract clause expressly prohibiting assignment?

Normally, a prohibition against assignment does not curb the right to receive payments due. However, circumstances may cause the opposite outcome. Additionally, prohibition doesn’t prevent the right to money that the contract specifies is due.

What is the purpose of an assignment of rents clause in a deed of trust and who benefits?

The assignment of rents clause is a provision in a mortgage or deed of trust. It gives the lender the right to collect rents from mortgaged properties if the borrower defaults. All incomes and rents from a secured property flow to the lender and offset the outstanding debt. Clearly, this benefits the lender.

What is in assignment clause in a health insurance contract?

Commonly, health insurance policies contain assignment of benefits (AOB) clauses. These clauses allow the insurer to pay benefits directly to health care providers instead of the patient. In some cases, the provider has the patient sign an assignment agreement that accomplishes the same outcome. The provider submits the AOB agreement along with the insurance claim.

What does “assignment clause” mean for liability insurance?

The clause would allow the assignment of proceeds from a liability award payable to a third party. However, the insured must consent to the clause or else it isn’t binding. This restriction applies only before a loss. After a first party loss, the insurer’s consent no longer matters.

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Questionnaire

Understanding an assignment and assumption agreement

Need to assign your rights and duties under a contract? Learn more about the basics of an assignment and assumption agreement.

Get your assignment of agreement

by   Belle Wong, J.D.

Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She ...

Read more...

Updated on: November 24, 2023 · 3 min read

The assignment and assumption agreement

The basics of assignment and assumption, filling in the assignment and assumption agreement.

While every business should try its best to meet its contractual obligations, changes in circumstance can happen that could necessitate transferring your rights and duties under a contract to another party who would be better able to meet those obligations.

If you find yourself in such a situation, and your contract provides for the possibility of assignment, an assignment and assumption agreement can be a good option for preserving your relationship with the party you initially contracted with, while at the same time enabling you to pass on your contractual rights and duties to a third party.

An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting the assignment is known as the assignee.

In order for an assignment and assumption agreement to be valid, the following criteria need to be met:

• The initial contract must provide for the possibility of assignment by one of the initial contracting parties.
• The assignor must agree to assign their rights and duties under the contract to the assignee.
• The assignee must agree to accept, or "assume," those contractual rights and duties.
• The other party to the initial contract must consent to the transfer of rights and obligations to the assignee.

A standard assignment and assumption contract is often a good starting point if you need to enter into an assignment and assumption agreement. However, for more complex situations, such as an assignment and amendment agreement in which several of the initial contract terms will be modified, or where only some, but not all, rights and duties will be assigned, it's a good idea to retain the services of an attorney who can help you draft an agreement that will meet all your needs.

When you're ready to enter into an assignment and assumption agreement, it's a good idea to have a firm grasp of the basics of assignment:

• First, carefully read and understand the assignment and assumption provision in the initial contract. Contracts vary widely in their language on this topic, and each contract will have specific criteria that must be met in order for a valid assignment of rights to take place.
• All parties to the agreement should carefully review the document to make sure they each know what they're agreeing to, and to help ensure that all important terms and conditions have been addressed in the agreement.
• Until the agreement is signed by all the parties involved, the assignor will still be obligated for all responsibilities stated in the initial contract. If you are the assignor, you need to ensure that you continue with business as usual until the assignment and assumption agreement has been properly executed.

Unless you're dealing with a complex assignment situation, working with a template often is a good way to begin drafting an assignment and assumption agreement that will meet your needs. Generally speaking, your agreement should include the following information:

• Identification of the existing agreement, including details such as the date it was signed and the parties involved, and the parties' rights to assign under this initial agreement
• The effective date of the assignment and assumption agreement
• Identification of the party making the assignment (the assignor), and a statement of their desire to assign their rights under the initial contract
• Identification of the third party accepting the assignment (the assignee), and a statement of their acceptance of the assignment
• Identification of the other initial party to the contract, and a statement of their consent to the assignment and assumption agreement
• A section stating that the initial contract is continued; meaning, that, other than the change to the parties involved, all terms and conditions in the original contract stay the same

In addition to these sections that are specific to an assignment and assumption agreement, your contract should also include standard contract language, such as clauses about indemnification, future amendments, and governing law.

Sometimes circumstances change, and as a business owner you may find yourself needing to assign your rights and duties under a contract to another party. A properly drafted assignment and assumption agreement can help you make the transfer smoothly while, at the same time, preserving the cordiality of your initial business relationship under the original contract.

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• Tech & Sourcing @ Morgan Lewis

Contract Corner: Assignment and Delegation

Tech & sourcing @ morgan lewis.

An assignment and delegation provision is the clause that specifies a party’s ability to assign its rights or delegate its duties under an agreement. It is a provision that is often placed in the “miscellaneous” or “general” sections of commercial contracts, but it should not be thought of as standard “boilerplate” language that never changes.

Contracting parties should carefully consider the potential situations where an assignment would be desired or required, and should carefully draft the clause to address issues of transferability. Below is an overview of some of the key issues that should be considered when drafting an assignment provision for commercial and technology agreements. Note that, technically, a party assigns its rights and delegates its duties. This overview generally refers to assignments for shorthand.

• Yes or no to assignment . The first step is fairly straightforward. Does a party want to allow assignment or prohibit it? Most jurisdictions permit the free transferability of contracts if the contract is silent on assignment, so if there is a desire to restrict assignment, an anti-assignment clause must be included.
• Assignment of entire contract vs. individual rights and obligations . Consider whether the goal is to restrict or allow the assignment of the entire contract or individual rights or obligations. If the clause generally prohibits assignment of the agreement, courts commonly read that language to restrict only the delegation of performance, while permitting a party to assign its rights under the contract (such as license rights or the right to receive payment). To restrict such assignment of individual rights, it is important to include language such as “neither this Agreement, nor any rights or obligations hereunder , shall be assignable or otherwise transferable .”
• Specify when assignment is permitted and what rights and duties may be assigned . Generally, if specific assignment rights are to be granted, best practices are to include the general restriction highlighted above and then to provide any permitted assignment rights (e.g., “provided that either party may assign . . .”). The provision would specify the situations where assignment is permitted and what rights and duties may be assigned, such as an assignment of rights to a party’s affiliates, to an entity into which the party has merged, or to a successor organization.
• Notice and consent . If assignment is permitted, does the assigning party need to obtain the non-assigning party’s consent to the assignment? Or is notice sufficient? If consent is required, consider whether the non-assigning party has complete discretion to withhold consent or whether consent must not be unreasonably withheld or delayed.
• Impermissible transfers . Another key issue to address is what happens when there is an assignment in violation of an anti-assignment clause. Because courts generally interpret anti-assignment clauses narrowly, in the absence of additional language, an assignment that violates an anti-assignment provision will likely be considered a valid assignment in breach of the agreement. In other words, the non-assignment party can claim breach, but cannot prevent the actual assignment. To avoid this scenario, additional language should be included to void the impermissible transfer, such as: “Any attempted assignment in violation of the provisions of this Section shall be null and void.”
• Divested entities, mergers, acquisitions, and change of control . Organizations are likely to undergo a change in structure at some point. It is important to consider such situations and to specify a party’s ability to transfer its rights or duties to a divested entity or through an M&A transaction or other change of control. Frequently, issues related to competition and intellectual property will need to be considered, and these exceptions to an anti-assignment provision can be nuanced and require specific language to achieve the desired results. As part of the drafting process, parties should carefully analyze the types of transactions that could trigger an anti-assignment provision and include language to address the intended outcomes.

This Contract Corner highlights the importance of not assuming the assignment provision in the final “Miscellaneous” section of an agreement is standard language that needs no review. Each of the issues discussed above should be carefully considered and the assignment provision should be drafted to address these issues.

Contract Corner is a regular feature of the Tech & Sourcing @ Morgan Lewis blog. Please be on the lookout for future posts.

When Is An "Assignment" Clause Worth Fighting For?

Contributor.

Q. My small business is negotiating with a vendor who has asked to remove our contract’s “assignment” clause entirely. Is it worth the time to argue over whether to include an assignment clause?

A.  First, it’s important to understand the purpose of the assignment clause. “Assignment” occurs when a party transfers its rights and obligations under a contract to another party. Generally, unless the parties have agreed otherwise, each can assign its rights and obligations freely.

Article 2 of the Uniform Commercial Code, a set of laws governing the sale of goods that has been adopted by 49 states, including New Hampshire, provides that a party can freely assign its rights and obligations to another unless such assignment would materially change the duties of the other party, burden the other party, or decrease the other party’s chances of receiving performance under the contract.

If your vendor eliminates the assignment clause and no agreement on the topic is provided in the contract, your vendor will be free to transfer its obligations to another person or company without giving you notice or obtaining your approval.

Parties do have the ability, however, to mutually decide against the free assignability of a contract and this is often accomplished through an assignment clause. An assignment clause spells out which, if any, of a party’s obligations and rights under a contract are able to be assigned, or transferred, to another party. Free assignability and no assignability are not the only options, and you and your vendor can negotiate terms for assignment that are amenable to both of you.

For example, some clauses allow for assignment with the other party’s consent, meaning, the vendor would have to obtain your approval of the assignee prior to assigning any of its rights or obligations under the contract. Other times, assignment clauses allow for free assignment only to certain persons or entities, such as the vendor’s subsidiaries and affiliates, provided that the vendor gives you notice of such permitted assignment. Another option is to allow for assignment by the vendor provided that it guaranties the assignee’s performance.

Consider potential situations in which the vendor may want to assign the contract and determine whether it’s important to you to have control over assignment in each instance.

Consider discussing situations in which it may be important for the vendor to have freedom of assignment and, instead of removing the provision all together, specify those situations in which assignment is permitted, list those rights or obligations that are assignable, and consider whether, when assignment is permitted, notice, consent or a guaranty will be required.

Published in the Union Leader (2/25/2019)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Corporate/Commercial Law

United states.

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Watch CBS News

Here's why Southwest is assigning seats — and what it means for customers

By Megan Cerullo

Edited By Aimee Picchi

Updated on: July 25, 2024 / 5:04 PM EDT / CBS News

Southwest will start selling assigned seats , marking a major shakeup of a signature policy that has set the low-cost carrier apart from airlines for half a century. The new policy, announced Thursday, will make flying Southwest look and feel remarkably different for customers. 

The shift will affect how customers of the discount carrier select seats and board planes. Southwest passengers, including longtime fans of the open seating policy,   will also be able to choose different types of seats for a price, including those offering more legroom. These changes could affect ticket costs across the board, according to experts, although Southwest has not addressed pricing or indicated that regular seat costs will change. 

Some experts are cheering the move, saying it amounts to an improvement for both passengers and the airline. 

" Southwest's decision to start assigning seats and plan to add extra-legroom seats prove an old dog can learn new tricks," Henry Harteveldt, president of Atmosphere Research Group, told CBS News. "It will make their flights more orderly and comfortable. And it should also improve the airline's bottom line as well."

Southwest will begin selling tickets with assigned seats beginning in 2025. The airline will reveal additional details around changes to the flight boarding process in September. Here are three ways flying Southwest could change. 

Assigned seats

Southwest is ending its open seating policy, in which customers find a cabin seat on a first-come, first-serve basis. When the changes go into effect next year, customers will purchase tickets with assigned seating, eliminating some of the stress associated with the current boarding process. 

"It's a pretty big change for Southwest, which always had an open seating system, and you had to run into the cabin and try to find the seat you want," Clint Henderson, managing editor of The Points Guy, told CBS MoneyWatch. 

Henderson said this turned off some business travelers like himself from choosing to fly Southwest, and he predicted the change could attract a new crop of customers to the airline.

"Many business travelers don't want to fight for a seat and deal with the drama that sometimes entails," Henderson said. 

Tensions can run high on airplanes too, with testy passengers quibbling over limited and sometimes shared real estate.

"Since the pandemic, airline passengers may be less cordial and less amicable," said airline customer experience analyst Marbue Brown. "There are certainly benefits to environments where there is no ambiguity about who owns a seat."

Some seats will have more leg room

In addition to assigned seats, Southwest will introduce premium seating, offering passengers extended legroom on one-third of a cabin's seats. 

Southwest already lets customers pay to be first in line to board aircraft, "but this is a much bigger change now, with premium seats available for purchase," Going.com's Keyes said.  

The airline is likely responding to travelers' penchant for more premium travel experiences following the pandemic, according to Keyes. "The demand is for premium economy, business class and better seats, which Southwest doesn't have to offer," he said. 

Southwest's seats already offer more legroom than traditional carriers', which has been a selling point for the airline. They come with 32 inches of space, versus the industry standard of 30-31 inches. It's possible Southwest's new cabin configuration could shrink its current standard of 32 inches of space, some experts said.

"They haven't announced the new cabin design, but the most likely outcome is we're going to see that 32 inches of legroom to start to shrink for main cabin, and for it to be more like 31 or 30," Scott Keyes, founder of Going.com, told CBS MoneyWatch. "That's normal for people who are used to flying American or United, but cramped for people who fly Southwest." 

Price changes

The new cabin configurations could drive up ticket prices across the board because Southwest's aircraft might contain fewer number of total seats, industry analysts said. On the other hand, the dramatic policy changes could be price-neutral, depending on how Southwest redesigns its plane cabins. 

"Some folks will pay more for extra legroom, and, based on how you reconfigure planes, you might not have to raise prices on other seats," Brown said. 

What remains to be seen is whether Southwest will introduce a bare-bones, basic economy-type offering. 

Currently, all tickets come with free checked bags and free   changes. "But might they start to offer an economy package that includes more restrictions on baggage? That's something we'll have to wait and see," Keyes said. 

Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.

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Fourteenth Amendment , Section 3:

No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Ratified in the Civil War’s aftermath, Section 3 of the Fourteenth Amendment , which is sometimes referred to as the Insurrection Clause or Disqualification Clause, disqualifies any person from being a Senator, Representative, or elector of the President or Vice-President, or from holding any federal or state military or civil office, if that person has: (1) sworn to support the Constitution as a Member of Congress, officer of the United States, member of a State legislature, or state executive or judicial officer; and (2) subsequently engaged in insurrection or rebellion against the Constitution or given aid or comfort to its enemies. 1 Footnote U.S. CONST. amend. XIV, § 3 . Section 3 further provides that Congress may remove the bar from an otherwise disqualifed person by a two-thirds vote in each House.

Section 3 has rarely been applied. 2 Footnote Cf. Enforcement Act of 1870, ch. 114, §§14–15, 16 Stat. 140 , 143 (providing for federal enforcement of the Insurrection Clause). Passage of the Amnesty Act of 1872 halted subsequent federal enforcement of the Clause against those who participated in the Civil War on behalf of the Confederate States of America. See infra note 3. In 1872, Congress removed the disqualification bar from all persons “except Senators and Representatives of the Thirty-sixth and Thirty-seventh Congresses, officers in the judicial, military and naval service of the United States, heads of departments, and foreign ministers of the United States.” 3 Footnote Ch. 193, 17 Stat. 142 . And in 1898, Congress enacted broader legislation removing the remaining Section 3 disability incurred during the Civil War. 4 Footnote Act of June 6, 1898, ch. 389, 30 Stat. 432 ( “the disability imposed by section 3 . . . incurred heretofore, is hereby removed.” ). During the Reconstruction Era, a lower court held Congress first had to adopt legislation providing for removal from office in order to give effect to Section 3 and, absent such legislation, persons in office before the Fourteenth Amendment ’s promulgation continued to exercise their functions lawfully. Griffin’s Case, 11 F. Cas. 7 (C.C.D.Va. 1869) ( No. 5815 ). Furthermore, persons who had participated in the Civil War but had been pardoned by the President before the Fourteenth Amendment ’s adoption were not precluded by Section from holding a U.S. office. 18 Op. Att’y Gen. 149 (1885) . On March 4, 2024, in its only decision specifically interpreting Section 3, the Supreme Court held unaminously in Trump v. Anderson that states cannot enforce Section 3 against federal officeholders or candidates. 5 Footnote Trump v. Anderson No. 23-719 , slip op. at 6 (U.S. Mar. 4, 2024) ( “States have no power under the Constitution to enforce Section 3 with respect to federal offices, especially the President” ). For further discussion on Trump v. Anderson , see Amdt14.S3.2 Trump v. Anderson and Enforcement of the Insurrection Clause (Disqualification Clause). In so ruling, the Supreme Court reversed the decision of the Colorado Supreme Court that had held former President Donald J. Trump to be ineligible for the office of President under Section 3 on the grounds that he had engaged in insurrection and, therefore, could not be listed on the Colorado presidential primary ballot. 6 Footnote Anderson v. Grswold , 2023 CO 63 at 221 ( “We conclude that the foregoing evidence, the great bulk of which was undisputed at trial, established that President Trump engaged in insurrection.” ) Id . at 257 ( “[B]ecause President Trump is disqualified from holding the office of President under Section Three, it would be a wrongful act under the Election Code for the Secretary to list President Trump as a candidate on the presidential primary ballot.” ).

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Harris' border work was on 'root causes' of migration; she wasn't in charge | Fact check

The claim: Kamala Harris was 'put in charge of the border'

A July 21 Instagram post ( direct link , archive link ) by Donald Trump Jr. blames Vice President Kamala Harris for the country's immigration problems.

"She was put in charge of the border and we saw the worst invasion of illegals in our history!!!" reads part of the post, which is a screenshot of a post from X, formerly Twitter.

Similar posts on Threads have described Harris as the Biden administration's "border czar."

The Instagram post was liked more than 200,000 times in a day.

More from the Fact-Check Team: How we pick and research claims | Email newsletter | Facebook page

Our rating: False

The post exaggerates the vice president's role in addressing migration at the southern border. Harris was never put in charge of the border or made "border czar," immigration experts said. President Joe Biden tasked Harris with leading the administration's diplomatic efforts addressing the "root causes" of migration in El Salvador, Guatemala and Honduras.

Harris led effort addressing 'root causes' of migration in Central America

Early in his presidency, Biden tasked Harris with addressing the “root causes” of migration in Central America. The assignment came out of an executive order Biden issued in February 2021 that sought to reduce migration from the Northern Triangle countries of El Salvador, Guatemala and Honduras, where gang violence, trafficking networks and economic insecurity have caused people to flee.

But the vice president’s role was more limited than being put in charge of the southern border, or being named a so-called “border czar,” immigration experts said.

"VP Harris was never made the border czar or charged with managing the border," Andrew Salee , president of the Migration Policy Institute , said in an email. "That role has always been held by the secretary of Homeland Security . She was asked to be the chief diplomatic officer with Central American countries at a time when most of the increase in unauthorized immigration was coming from three countries in Central America and to help lead a private investment strategy in the region."

Homeland Security Secretary Alejandro Mayorkas himself noted the different responsibilities between himself and Harris in June 2021 comments at the El Paso, Texas, border.

"The vice president is leading our nation’s efforts to address the root causes – that fundamental question of why people leave their homes," Mayorkas said. "And it is my responsibility as the secretary of Homeland Security to address the security and management of our border."

In March 2021, Biden announced Harris would lead the administration's diplomatic efforts with the Northern Triangle countries to stem migration to the U.S. southern border and work with these nations to enhance migration enforcement at their borders. Harris said at the time that the administration "must address the root causes that – that cause people to make the trek, as the president has described, to come here."

Aaron Reichlin-Melnick , policy director at the American Immigration Council , said the "root causes" work Harris took on is distinct from border policy because it focuses on different problems and targets.

"Border policy focuses on individuals who have already made the decision to leave home and have made it to the U.S.-Mexico border and aims to either prevent them or to quickly process them for humanitarian relief or deportation once they cross," Reichlin-Melnick said in an email. "By contrast, 'root causes' policy focuses on individuals who have not left their homes yet, and aims to convince them to stay in their home countries either through economic development – which discourages migration for economic opportunities – or through reduction of violence and persecution that forces people to seek protection elsewhere."

The White House released the administration's " Root Causes Strategy " in July 2021. Its implementation was ongoing as of March when the vice president and the Partnership for Central America , a non-governmental organization, jointly announced $1 billion in new private-sector commitments to address the underlying conditions leading to migration in Guatemala, El Salvador and Honduras. The public-private partnership has generated more than $5.2 billion since May 2021 , the White House said.

Fact check : Joe Biden dropped out of presidential race but is finishing term

Elina Treyger , a senior political scientist at the RAND Corporation whose research includes migration and immigration enforcement, also said Harris' diplomatic role with the Central American countries "is in no way a 'border czar'-like position." Treyger said border policy involves many other issues such as enforcement policies, how to process migrants expressing fear of prosecution or torture and how to allocate resources at the border.

U.S. Border Patrol encounters with migrants at the southern border have soared under the Biden administration . Illegal crossings at the U.S.-Mexico border hit a record high of 2.2 million in 2022, and the number of people taken into custody by U.S. Border Patrol has reached the highest levels in the agency's history under Biden, the Washington Post reported .

After a bipartisan border security bill failed to advance in Congress, Biden issued a directive in June to turn away migrants who do not enter the country through legal ports of entry when the number of crossings is high.

Trump, the son of former President Donald Trump, did not immediately respond to a request for comment.

Our fact-check sources:

• Aaron Reichlin-Melnick , July 22, Email exchange with USA TODAY
• Andrew Salee , July 22, Email exchange with USA TODAY
• Elina Treyger , July 22, Email Exchange with USA TODAY
• White House, Feb. 2, 2021, Executive Order on Creating a Comprehensive Regional Framework to Address the Causes of Migration, to Manage Migration Throughout North and Central America, and to Provide Safe and Orderly Processing of Asylum Seekers at the United States Border
• White House, Feb. 6, 2023, FACT SHEET: Vice President Harris Announces Public-Private Partnership Has Generated More than $4.2 Billion in Private Sector Commitments for Northern Central America
• White House, March 24, 2021, Remarks by President Biden and Vice President Harris in a Meeting on Immigration
• White House, June 25, 2021, Remarks by Vice President Harris, Secretary of Homeland Security Mayorkas, Chairman Durbin, and Representative Escobar in Press Gaggle
• White House, July 29, 2021, FACT SHEET: Strategy to Address the Root Causes of Migration in Central America
• White House, March 25, FACT SHEET: Vice President Harris Announces Public-Private Partnership Has Generated More Than $5.2 Billion in Private Sector Commitments for Northern Central America
• White House, July 2021, U.S. Strategy for Addressing the Root Causes of Migration in Central America
• Department of State, Aug. 1, 2023, Central America Forward
• The Washington Post, Feb. 11, Trump vs. Biden on immigration: 12 charts comparing U.S. border security
• U.S. Embassy in Honduras, March 25, FACT SHEET: UPDATE ON THE U.S. STRATEGY FOR ADDRESSING THE ROOT CAUSES OF MIGRATION IN CENTRAL AMERICA
• USA TODAY, July 17, Border security takes center stage at RNC. Here's the actual data under Trump, Biden

Thank you for supporting our journalism. You can subscribe to our print edition, ad-free app or e-newspaper here .

USA TODAY is a verified signatory of the International Fact-Checking Network, which requires a demonstrated commitment to nonpartisanship, fairness and transparency. Our fact-check work is supported in part by a grant from Meta .

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4 takeaways from President Biden’s Oval Office address

Domenico Montanaro

President Biden speaks during an address to the nation about his decision to not seek reelection in the Oval Office at the White House on Wednesday. Evan Vucci/Pool/AFP via Getty Images hide caption

For the latest on race for president, head to NPR's Election 2024 page.

It’s not often that a politician takes a step back.

They are often their own biggest champions. But in rare cases, when the writing is on the wall, because of age, health — or politics, they do.

In an address to the nation from the Oval Office Wednesday night, President Biden said he will serve out his term as president, noting there are still things he wants to accomplish. But he explained that he is not seeking reelection, in part, because he wants to “pass the torch to a new generation.”

Here are four takeaways from what Biden had to say:

1. Biden tried to send the message that no one person is bigger than the country — and that what America stands for is at stake.

“Nothing can come in the way of saving our democracy,” Biden said. “That includes personal ambition.”

It was a remarkable statement for Biden, 81, who has held public office for more than half a century and ran for president multiple times — unsuccessfully until Donald Trump came along — and was ushered into office at 78 years old, the oldest person ever to be elected president.

Biden's brand was overcoming obstacles. But this one, he couldn't beat

Biden invoked past presidents — Abraham Lincoln, he said, urged Americans to “reject malice;” Franklin Delano Roosevelt implored the country to “reject fear.” He cited George Washington, who, by stepping aside after two terms despite his popularity, “showed us presidents are not kings.”

“I revere this office,” Biden said, “but I love my country more. It's been the honor of my life to serve as your president, but in the defense of democracy, which is at stake, I think it's more important than any title.”

In other words, Vice President Harris gives those who see former President Trump as an existential threat to that democracy the best chance to win because of Biden’s diminished capabilities to prosecute the case against him.

It's a case that Biden sees as necessary for someone to make effectively, considering Trump's unwillingness to accept the results of the 2020 election and his refusal to agree to accept the results of the upcoming election.

6 political takeaways from Biden's decision to step aside

In Washington’s farewell address on Sept. 19, 1796, he also warned that “cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.”

“The great thing about America is,” Biden said, “here, kings and dictators do not rule; the people do.”

Biden and others see that foundational American principle as lost on someone like Trump, who, when he visited Mount Vernon, Washington’s estate in Virginia, in 2019 with French President Emmanuel Macron, said of the nation’s first president, per Politico :

“If he was smart, he would’ve put his name on it. You’ve got to put your name on stuff or no one remembers you.”

2. Biden desperately wants to be seen as a uniter, but that’s been a struggle for him as president — and maybe one of his biggest personal disappointments.

President Joe Biden pauses before he addresses the nation from the Oval Office of the White House in Washington on Wednesday about his decision to drop his Democratic presidential reelection bid. Evan Vucci/Pool/via AP hide caption

The president cited the need for unity among Americans multiple times:

“America is going to have to choose between moving forward or backward, between hope and hate, between unity and division.” “In this moment, we can see those we disagree with not as enemies, but as fellow Americans.” “The sacred cause of this country is larger than any one of us, and those of us who cherish that cause … a cause of American democracy itself, [we] must unite to protect it.” “So I've decided the best way forward is to pass the torch to a new generation. That's the best way to unite our nation.” “Let's act together, preserve our democracy.”

The idea of uniting the country is something Biden ran on in 2020. But it hasn’t worked out that way. He’s been sharply criticized by the right and views of him — in this hyperpolarized environment where people get their information largely from sources that reinforce their previously held beliefs — are as partisan as any president before him, including Trump.

Just 43% said they had a favorable view of Biden, according to an NPR/PBS News/Marist poll taken before the debate between him and Trump. That included just 38% of independents and only 10% of Republicans.

3. This is the start of a review of Biden’s legacy — and that views of it may take a long time to set in.

Biden defended his legacy and laid out what he believes he’s accomplished and what he still hopes to do.

“I believe my record as president, my leadership in the world, my vision for America's future, all merited a second term,” he said, “but nothing, nothing can come in the way of saving our democracy. That includes personal ambition.”

Poll: Presidential race hits a reset with Harris vs. Trump

The latest NPR poll , taken this week after Biden said he would not continue to run for reelection, tested what people think of his presidency. It showed most, right now, are unimpressed.

Despite the record of legislative accomplishments Biden cited, only slightly more than a quarter of respondents said he would be remembered as an above average president or one of the best presidents in U.S. history. Half said he would be remembered as below average or one of the worst.

Those views can change with time, especially when a president is no longer in the political arena. President Obama’s favorability, for example, has improved since leaving office and views of his signature legislative achievement, the Affordable Care Act, have hit record highs.

A 2022 survey of historians found Biden rated as the 19th best president of the 46 that have served. Trump was in the bottom five at No. 43. But, at this point, Americans overall, feel differently.

4. After seeing Harris for a few days, the contrast with Biden is clear.

Vice President Harris speaks to supporters during a campaign rally at West Allis Central High School on Tuesday in West Allis, Wis. Jim Vondruska/Getty Images hide caption

Biden could have made the determination years ago, after saying he would be a “transitional” president during the 2020 election, that he would not run for reelection.

But the realities of his personal limitations after his dismal debate performance last month, and how his political support had cratered in swing states led to this moment.

Biden had a problem with young voters. Can Harris overcome it?

Trump tries out attack lines on Kamala Harris as her campaign heats up

For years now, Democrats have been holding their breath with every public appearance he made. They crossed their fingers that he would acquit himself at least decently well, but they knew one bad speech, interview or… debate… could sink his — and their party’s — chances to hold onto the White House.

After watching Harris' first couple of days of campaigning, from her first speech before staffers to her first official campaign rally in Wisconsin, Democrats have been breathing a bit easier.

She has spoken clearly and coherently, and there has been energy from the grassroots. Whether that lasts or if it resonates with swing voters is still to be decided.

Biden didn’t explicitly lay out Wednesday night why he stepped aside, but watching what was an, at times, halting address, the contrast was like night and day.

It was very much a moment in history with a president, who appeared in many ways, to be delivering something of his own farewell. He was recognizing he cannot be as effective a campaigner as he would have liked, so he is taking a step back from the public eye, handing over the reins of the campaign to his vice president for the next 103 critical days in American democracy.

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