Assignment is the transfer of a contract right from one party to another.
In plain language, one party gives another person or entity the right to receive a benefit under the contract, such as payment. The original party may still have duties unless those duties are separately handled.
Why it matters
Assignment matters because contract benefits can be transferred in business deals, financing, collections, real estate, insurance, and mergers. The contract may allow assignment, restrict it, or require consent.
The term also matters because assigning a right is not always the same as escaping a duty.
Where it appears
Assignment appears in loan documents, receivables transfers, insurance policies, leases, purchase agreements, service contracts, and business acquisitions.
Practical example
A contractor assigns the right to receive payment from a customer to a financing company. The financing company may then have the right to collect that payment.
How it differs from nearby terms
Assignment differs from delegation. Assignment transfers rights. Delegation transfers performance duties.
It also differs from novation, which substitutes a new party or obligation with consent and can release an original party.
Related terms
Quick knowledge check
Question: What does assignment usually transfer?
Answer: It transfers a contract right, such as the right to receive payment or another benefit.