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Parties in an Assignment: Rights of the Assignee, Assignor & Obligor

Parties in an Assignment: Rights of the Assignee, Assignor & Obligor
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  • 0:05 Assignments
  • 1:19 Assignee
  • 2:56 Assignor
  • 4:43 Obligor
  • 7:24 Breaches and Defenses
  • 8:58 Lesson Summary
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Lesson Transcript
Instructor: Ashley Dugger

Ashley is an attorney. She has taught and written various introductory law courses.

Assignments are common in contracts law. There will generally be at least three parties involved in an assignment. This lesson explains the roles and rights of the assignee, assignor, and obligor.

Assignments

Assignment is a common practice in contracts law, and can be found in a variety of different contractual situations. Assignment generally means that there is a transfer of property, or of a right, from one party to another. There are two different types of assignment.

A contract assignment is when one of the original parties to the contract gives the obligations and benefits of the contract to another party. A party can also assign only the benefits of the contract, and retain the obligations. This is called an assignment of rights.

Assignments involve at least three parties. These parties are the assignee, the assignor, and the obligor. For example, let's say that I sell my TV to Red for $2,000. Red doesn't have $2,000 right now, so he executes an agreement to pay me $100 a month for the next 20 months. I owe Green $1,000, so after the first 10 months I assign this contract to Green. I am the assignor, Green is the assignee, and Red is the obligor.

Assignee

Let's first look at the role of the assignee. The assignee is the party that receives the rights and obligations under the contract, but wasn't an original party to the contract. An assignee usually receives the contract rights and obligations directly from an original party to the contract. An assignee can be an individual, a group, or a business.

In our scenario, I assign my right to receive benefits to Green. Green is the assignee.

An assignee can be assigned anything. This includes such things as real property, real estate, and intellectual property. The benefit can be something tangible, like an antique clock, or something intangible, like life insurance benefits.

Generally, after a valid assignment, all the rights and obligations of the assignor pass to the assignee. The assignee steps into the shoes of the assignor. The assignee is now responsible for fulfilling any remaining obligations under the contract, and the assignee will reap the benefits of the contract. The assignee won't be required to go through the assignor when asserting legal rights under the contract. This means that the assignee can generally sue the other party to the contract if that party doesn't fulfill the contract.

For instance, let's say Red stops making payments. Green can sue Red for the payments. Green doesn't have to ask me first, or ask me to do it for him.

Assignor

Now let's take a look at the assignor's role. An assignor is an original party to the contract. An assignor can be an individual, a group, or a business. The assignor is the party that transfers its contractual rights to another party. In a contract assignment, this means that the assignor transfers both the contractual obligations and the contractual benefits. In an assignment of rights, this means that the assignor transfers just the contractual benefits. In either situation, the assignor transfers to the assignee.

In our scenario, I assign my right to receive payments to Green. I am the assignor.

The assignee steps into the shoes of the assignor, but this doesn't mean that the assignor then walks away with no obligations or liabilities. An assignment doesn't always completely relieve the assignor. Some contracts include an assurance that the original parties guarantee contract performance. This means that the original parties will fulfill the terms of the contract. So, if the assignee fails to perform the contract, the assignor must step back in and do so. Also, remember that an assignment can be only an assignment of rights. In that case, the assignor retains the obligations of the contract even though the assignee reaps the benefits.

For example, let's say I haven't delivered the TV to Red yet. I told him he had to pay for it in full before I'd deliver it. If Red completes his payments to Green, then I still have the obligation to deliver the TV to Red.

Obligor

Next, let's take a look at the role of obligor. As we've discussed, an assignment is a transfer of contractual rights from one party to another party. These parties are the assignor and the assignee. Remember that the assignor was an original party to the contract. The other original party to the contract is the obligor. In our scenario, Red is the obligor.

An obligor is a party that is obligated to do something under the terms of a contract. An obligor can be an individual, a group, or a business. You might be familiar with the term 'obligor' because it's often used to describe a 'borrower' or a 'debtor'. This is because many contracts are debt contracts. In our scenario, Red is a debtor. But obligors can be obligated to duties other than repaying debt. Obligors can be obligated to perform a particular task or to refrain from a particular activity.

Whenever we have an obligor, we will have an obligee. An obligee is the party who will benefit from the obligor's fulfillment of the contract. If the assignment is made to profit another party, then that party is the obligee. In our scenario, Green is the obligee. It's common for the obligee to also be the assignee.

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