In this section of the What Did You Agree To? series, we are going to look at the concept of an assignment.
When a contract is signed, it is usually done between two "parties". Each side has obligations to the other. You pay money, they give goods, or services. For argument sake we will assume you are leasing a car. There is a year to go in your lease, and you just got a job out of State. You have to get rid of the lease, but how do you do that?
Here is where assignment kicks in.
When you get someone to take over all your responsibilities to a contract, you have assigned it. So you would need someone to agree to all the terms that you agreed to. Then you need to have the finance company, dealer, bank (banks don't lease cars in Canada), to agree to shift the responsibility.
This is a very common situation in leases, both residential and commercial. You want someone to move in because you need to leave early. Most people would think this is a "Sublet".
A SUBLET IS NOT AN ASSIGNMENT. The key difference, a sublet YOU are still responsible for contract. In an assignment the other person assumes responsibility and you are free and clear.
If you sublet the apartment to your friend Marwan, and he burns the carpets, you are on the hook to the landlord. If you assigned your lease to him, with the landlords consent, and he burns the carpet, he is responsible.
Collection Agencies are a great example of how assignments can work. A company is owed money, so they assign the receiving benefits to another company.
Why is this concept important to you? The contract may not allow assignments. Or if it does, then there may be specific rules that need to be followed.
Generally speaking there is a freedom to assign. This means that unless there is something in the contract that specifically sets rules for assigning, then an assignment is permitted. But if there is restrictive language against assignments then you may have to follow the terms in the contract.
If you are entering a long term agreement, such as a Lease, a Time Share, a Gym membership, it is strongly suggested you look at the assignment terms. Make sure you know the rules. If you need flexibility and assignments are not allowed, perhaps it is not the service for you.
Thinking about your long term flexibility will certainly help you spot areas where you feel you may be trapped. If you are a business owner, this is something you need to take into consideration as part of your negotiations.
I always suggest at a very minimum, get written notice of an assignment. Make sure you know where your obligations are going to, and coming from.
If you do have a question about a clause in a contract, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.
Copyright © 2009 Peter MacSweeney. All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.
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