1) Introduction

          Assignment of contract means the transfer of contractual rights and liabilities under the contract to a third party with or without the concurrence of the other party to the contract. It is effected under Transfer of Property Act, 1882.  It requires a written document duly signed.  defective title of the instrument affects the assignee. Negotiable instruments are also actionable claims, and hence can be assigned.


2) Meaning of assignment of contract - 

       The expression assignment literally means 'transfer'. According to Section 130 of the Transfer of Property Act, every actionable claim can be transferred by means of a separate instrument in writing duly stamped and signed by the transferor.  It may take place by Act of the parties and By operation of law.
 
a) Act of the parties -  This is subject to the following rules


         (1) Contracts involving personal skill or ability or other personal qualifications cannot be assigned.

         (2) A promisor cannot assign his liabilities or obligations under a contract.

         (3) The rights and benefits under a contract may be assigned if the obligation under the contract is not of a personal nature.

        (4) An actionable claim can always be assigned but the assignment to be complete and effectual must be effected by an instrument in writing. Notice of such assignment must also be given to the debtor.


b) By operation of law - 

 This takes place in the following two cases:

Death - Upon the death of the Party to a contract his rights and liabilities under the contract (except in the case of contracts requiring personal skill or services) devolve upon his heirs and legal representatives.

Insolvency - In case of a person, his rights and liabilities incurred previous to adjudication pass to the Official Receiver or Assignee, as the case may be.



See also...

Discharge of Contract | Law of Contract

Stranger to Contract can Sue | Exceptions to the Doctrine of Privity of Contract


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