Which statement correctly describes assignment of contract rights?

Which statement correctly describes assignment of contract rights?

• A. An assignment of rights is allowed unless it would substantially impair the obligor's rights, and it does not release liability unless agreed.
• B. An assignment automatically releases the assignor from all liability.
• C. Assignment requires writing signed by both parties and the obligor.
• D. An assignment is never allowed in contracts; all rights stay with the original party.

Answer: (A)

Assignment of contract rights allows a party to transfer the right to receive performance to another person. The rule is that you can assign those rights unless doing so would substantially impair the obligor’s rights under the contract. Importantly, an assignment does not automatically release the original party from liability; the assignor remains liable unless the obligor agrees to release them or the parties enter into a new agreement (a novation) that substitutes the assignee for the original party. This combination—permissible transfers of rights, with protection for the obligor and the potential for continued liability unless there’s an explicit release—best matches the described statement. Contracts can also impose consent or anti-assignment clauses, and while some assignments may require writing in specific circumstances, general assignments don’t universally require signatures from both sides.

Assignment of contract rights allows a party to transfer the right to receive performance to another person. The rule is that you can assign those rights unless doing so would substantially impair the obligor’s rights under the contract. Importantly, an assignment does not automatically release the original party from liability; the assignor remains liable unless the obligor agrees to release them or the parties enter into a new agreement (a novation) that substitutes the assignee for the original party. This combination—permissible transfers of rights, with protection for the obligor and the potential for continued liability unless there’s an explicit release—best matches the described statement. Contracts can also impose consent or anti-assignment clauses, and while some assignments may require writing in specific circumstances, general assignments don’t universally require signatures from both sides.