Revocability of Assignment: Definition & Explanation

Revocability of Assignment: Definition & Explanation
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  • 0:05 Assignments
  • 1:19 Donative Assignments
  • 2:09 Revocability
  • 4:00 Exceptions to Revocability
  • 5:27 Promissory Estoppel
  • 6:45 Lesson Summary
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Lesson Transcript
Instructor: Ashley Dugger

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

A contract assignment means that one party transfers contract rights to another party. The type of the assignment determines if, and how, the assignment can be revoked. This lesson explains assignment revocability.

Assigments

A contract assignment is a transfer of property, or of a right, from one party to another party. The party transferring rights will be an original party to the contract. This party is the assignor. The party receiving rights will not be a party to the original contract. This party is the assignee.

There are two types of assignment. A party to a contract can assign the entire contract to another party. This means the party assigns both the rights and the obligations of the contract. Or, a party to a contract can assign only the rights or benefits of the contract.

For example, Green makes a contract with Yellow. Green agrees to clean Yellow's apartment, and Yellow agrees to pay Green $20. Green then assigns the benefits of the contract to Orange. This means that once Green cleans Yellow's apartment, Yellow will pay Orange $20. Green is the assignor and Orange is the assignee. Yellow is the obligor because he's obligated to pay $20.

Donative Assignments

An assignment can, itself, be an enforceable contract. Let's add to our scenario a little bit. Let's say Orange agrees to wash Green's car, and in exchange, Green assigns Orange the right to be paid by Yellow. Green and Orange have an agreement with consideration, or an assignment for value.

An assignment can also be given gratuitously, or as a gift. An effective assignment doesn't require consideration. This type of assignment is called a donative assignment. Let's say Green doesn't need Yellow's $20, but he knows that Orange has been working overtime for extra cash. Green can assign the $20 to Orange as a gift.

Revocability

The revocability of an assignment depends on the type of assignment. Assignments made for value, or with consideration, are irrevocable. This means that the assignor cannot cancel or take back the assignment.

Donative assignments, though, are generally revocable. This means that the assignor can cancel or take back the assignment under certain circumstances.

There are four different ways that the assignor can revoke a donative assignment. First, the assignor can simply notify the assignee that the assignor revokes the assignment. In our scenario, Green would simply tell Orange that he's changed his mind.

Second, the assignor can revoke the assignment by directly accepting the obligor's performance. In our scenario, Green would accept the $20 from Yellow rather than having Yellow pay Orange.

Third, the assignor can make a subsequent assignment of the same right to another party. In our scenario, this means that after assigning Orange the right to collect $20 from Yellow, Green would assign Blue the right to collect $20 from Yellow. The subsequent assignment to Blue automatically revokes the assignment to Orange.

Lastly, the assignment will be automatically revoked as a matter of law if the assignor dies or declares bankruptcy. In our scenario, let's say that Green declares bankruptcy shortly after assigning his rights to Orange. If Orange hasn't received the $20 yet, then the assignment will be automatically revoked.

Exceptions to Revocability

Sometimes a donative assignment can't be revoked. There are four general exceptions to the revocability of a donative assignment.

First, the assignor can't revoke the assignment if the obligor has already performed the obligation. In our scenario, this means that Green can't revoke the assignment to Orange if Yellow has already paid Orange.

Second, the assignor can't revoke the assignment if the assignment is made in writing. In our scenario, let's say that Green writes a letter to Orange announcing his assignment to Orange. Green can't then revoke the assignment.

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