Business Law

Running Head: Case Study 2

Cheryl M Cassagne

Business Law Law-201

Thomas Edison State College

Professor Jessica Wisniewski

July 31, 2011

Under many circumstances an obligee that is entitled of a payment may find it helpful to assign its right to another party. When a debt is owed the assignee “stands in the shoes of the assignor.” (Cheeseman, 2010) This applies when an assignor makes an assignment of a right under a contract. How does one avoid a breach of contract and what legal actions are there?

In this scenario, Andy owes Bill a debt. Bill then assigns the debt to Carl for two hundred dollars. Carl fails to give notice of the assignment to Andy so Andy pays the debt to Bill. In failure to notify Andy who is the obligor, Carl may not sue Andy for any damages because Andy performed according to the original contract. The assignee’s only guideline is to sue the assignor for damages. If Carl notified Andy of the assignment, then he could sue him to recover the payment. In this case, the obligee would pay twice; once wrongfully to the assignor and then correctly to the assignee. This would then leave Andy the right to sue Bill the assignor, for damages.

Now, in another situation Carl has rights against Bill and can sue Bill because Bill now owes that money to him. Bill is now legally obligated to give Carl the payment he received from Andy. Carl has every right to sue Bill for taking the money. I do not believe there were any anti-assignment clauses in this contract pertaining to Andy and Bill. If that were the case, then Bill would not have been able to assign anything to Carl to begin with. In most cases you cannot prohibit right to assignment of money. The obligor’s permission is not needed to assign rights to a contract. A valid assignment does not need notice to be sent to the obligor of an assignment, but it is recommended to avoid confusion.

There are certain circumstances where a contract is prohibited to be...