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Contracts • Third Parties
K#187
Legal Definition
An assignee can recover from an obligor, but an assignor for consideration cannot recover from the obligor. An obligor has the same defenses against the assignee they would have had against the assignor.
Plain English Explanation
A person who has received the assignment of rights (an "assignee") and the person who assigned their rights (an "assignor") can recover from the person who has an obligation to perform (an "obligor"). However, if the assignee paid for the assignment of rights from the assignor, then the assignor has given up their right to try to recover from the obligor.
Hypothetical
Hypo 1: Bob has an apple tree. Bob sells Sam the right to pick 1 basket of apples from his tree each month for $20 per month. Sam doesn't like apples, but Amy does. Sam sells Amy his rights for $25 per month. One day, Bob cuts down his apple tree. Result: Here, Bob is the obligor, Sam is the assignor, and Amy is the assignee. Since Amy gave consideration to Sam for his rights, Amy can bring a claim against Bob for damages but Sam may not. Sam has essentially given up that right when he assigned his rights to Amy. However, had Sam gratuitously transferred his rights to Amy (for free, as a gift), both Amy and Sam would be able to recover from Bob.
Visual Aids
Related Concepts
In a third-party beneficiary situation, who is the third-party beneificiary, who is the promisor, and who is the promisee?
What are the implied warranties of an assignor in an assignment for consideration?
What defenses may a promisor assert against a third-party beneficiary?
What duties are not delegable?
What is a delegatee?
What is a delegator, delegatee, and obligee?
What is an assignee?
What is an assignment?
What is an assignor?
What is an obligee?
What is an obligor?
What is a promisee?
What is a promisor?
What is the difference between an assignment and a delegation?
What is the difference between an incidental and intended beneficiary?
What is the effect of a clause prohibiting assignment?
What is the effect of a contract containing no language about assignment rights?
What is the effect of consideration on assignment rights?
What is the effect of invalidation language on assignment?
What two types of intended beneficiaries are there?
When are modification agreements between the obligor and assignor effective?
When can an assignee sue an obligor for payments to the assignor?
When do a third party's rights to enforce the contract vest?
When does delegation of duties occur?
Who can sue whom in a suit involving beneficiaries, promisees, and promisors?
Who can sue whom in a suit involving the delegation of duties?
Who prevails when the same rights have been assigned to multiple parties?
