Question

Under what circumstances can the rights and obligations of a contract be assigned without the other party’s consent? When must the other party consent before the assignment can be made?

Answer 1

A person cannot usually assign the obligations under a contract. Contracts that are of a personal nature cannot and would not usually be assigned Commercial contracts usually restrict assignment. Normally, there is either a strict prohibition or assignment is permitted either with the consent of the other party or to a selected group of persons, i.e. A party's group of companies (but there may need to be a stipulation that these rights should be reassigned to the assignor if the recipient leaves the group of companies).Assignments are categorized as either being statutory or equitable. A statutory assignment must:

• be in writing and signed by the assignor

• only transfer the benefit of the contract

• not be by way of charge only

• be absolute

• assign rights that are wholly ascertainable

• give notice of the assignment to the other party to the original contract

Generally, an assignment of rights is a contract that must be supported by valuable consideration. However, valuable consideration does not have to be money. An agreement to exchange services or forego a legal right or obligation can also serve as consideration.

This agreement does not however suffice to transfer the contract. It is also necessary for the other party to give its consent.
If it were only for the assignment of the rights involved, such a consent would in principle not be needed However, the assignment of a contract also involves a transfer of obligations, which cannot be effective without the obliges consent . The assignment of a contract can thus only occur with the other party’s consent.