You’re staring at an MBE question about whether someone can transfer their contract rights to a third party, and suddenly you’re drowning in terminology. Assignment? Delegation? Are those the same thing? Can the original party still be held liable? The bar examiners love testing assignment and delegation because most students confuse them—and that confusion costs points.
Let’s fix that. Here’s everything you need to know about transferring contract rights and duties on the MBE.
Assignment vs. Delegation: Know the Difference
This is where most students trip up, so let’s get it straight right now.
An assignment is the transfer of contract rights. When a party assigns their rights, they’re giving someone else the power to receive performance under the contract. Think of it as transferring the right to collect money or receive goods.
A delegation is the transfer of contract duties. When a party delegates their duties, they’re asking someone else to perform the obligations they owe under the contract. Think of it as outsourcing the work.
Here’s a simple example: You hire a painter to paint your house for $2,000. The painter assigns their right to payment to the paint supply store (the store can now collect your $2,000). That’s an assignment. If the painter delegates the actual painting work to their assistant, that’s a delegation.
Critical distinction: In an assignment, you’re transferring what you’re entitled to receive. In a delegation, you’re transferring what you’re obligated to do.
The MBE will test whether you can spot which is happening in a fact pattern. Read carefully. If the question involves who gets paid or who can enforce the contract, you’re dealing with assignment. If it’s about who has to perform the work, you’re dealing with delegation.
When Assignment Is Allowed
The general rule is simple: contract rights are freely assignable unless an exception applies.
You can assign your rights without the other party’s consent in most situations. This makes sense—if someone owes you money, you should be able to transfer that right to someone else. The person who has to pay shouldn’t care who they’re writing the check to, as long as they only have to pay once.
But there are important exceptions where assignment is not allowed:
Personal service contracts: If the contract involves personal services or a special relationship of trust, the rights cannot be assigned. For example, if you hire a specific artist to paint your portrait, that artist cannot assign the right to payment to another artist and send them instead. The contract was based on that particular person’s unique skills.
Assignment would materially change the obligor’s duty: If assigning the right would significantly increase the burden, risk, or duty of the other party, assignment is not permitted. Hypothetical: A homeowner has fire insurance on their house. They cannot assign that policy to someone who owns a fireworks factory. The risk profile is completely different.
Contract prohibits assignment: If the contract includes an anti-assignment clause, assignment is generally prohibited. However—and this trips up students—the UCC takes a softer approach. Under UCC Section 2-210, even if a contract says “no assignments,” an assignment of the right to payment for goods already delivered is still valid. The clause can’t block that.
Assignment would violate law or public policy: You cannot assign rights if doing so would be illegal. For example, you can’t assign your right to receive workers’ compensation benefits or certain government benefits.
One more thing that confuses students: even if a contract says assignment is prohibited, an attempted assignment usually isn’t void—it’s just a breach of contract. The assignment itself is effective, but the assignor may be liable for damages to the other party.
Rights of the Assignee
Once a valid assignment occurs, the assignee (the person receiving the rights) steps into the shoes of the assignor (the person transferring the rights).
The assignee can enforce the contract directly against the obligor (the person who owes performance). They don’t need to go through the assignor. If the obligor refuses to perform, the assignee can sue.
But here’s the catch: the assignee takes the rights subject to any defenses the obligor could have raised against the assignor. This is crucial for MBE questions.
Example: Alice contracts to sell her car to Bob for $5,000. Alice then assigns her right to the $5,000 payment to Carol. But the car Bob received was defective, and Bob has a valid breach of contract claim that would reduce the price to $3,000. When Carol tries to collect the full $5,000 from Bob, Bob can raise the defect defense. Carol only gets $3,000 because she takes the rights subject to Bob’s defenses.
The assignee stands in the assignor’s shoes—warts and all.
Gratuitous assignments (assignments without consideration) are revocable until the obligor performs. If you assign your rights as a gift, you can change your mind—unless the assignee has already collected or detrimentally relied.
When Delegation Is Allowed
Just as with assignment, the general rule is that contract duties are freely delegable unless an exception applies.
But delegation has a critical limitation that assignment doesn’t: the delegating party remains liable. When you delegate your duties to someone else, you’re not off the hook. You’re still secondarily liable if the person you delegated to (the delegate) doesn’t perform.
Think of delegation as bringing in a substitute performer, but you’re still the guarantor.
Exceptions where delegation is not allowed:
Personal services or special skills: If the contract requires personal performance based on the party’s unique skills, trust, or judgment, duties cannot be delegated. Hiring a specific surgeon, lawyer, or artist means you want that person to perform. They can’t send a substitute without your consent.
Contract prohibits delegation: If the contract includes a no-delegation clause, delegation is not permitted. Unlike assignment clauses under the UCC, anti-delegation clauses are generally enforceable without exception.
Delegation would materially change the obligee’s expectations: If the other party has a substantial interest in having the original promisor perform, delegation is barred. This overlaps significantly with the personal services exception.
Here’s a common MBE trap: a contract says “Assignment is prohibited.” Does that bar delegation? Not necessarily. Courts often interpret anti-assignment clauses narrowly—they only prohibit assignment of rights, not delegation of duties. But if the clause says “Assignment or delegation is prohibited,” then both are barred. Read the language carefully.
Liability After Delegation
This is where students lose points. Pay attention.
When a party delegates duties, three parties are now involved:
- The delegator (original obligor who delegates)
- The delegate (person who agrees to perform)
- The obligee (person entitled to performance)
The delegator remains liable. Delegation does not discharge the delegator’s duty unless the obligee agrees to release them. This release is called a novation.
A novation requires: (1) a valid contract, (2) an agreement by all parties to a new contract, (3) extinguishment of the old contract, and (4) a new valid contract. If the obligee agrees to release the delegator and look solely to the delegate for performance, a novation has occurred. Only then is the delegator off the hook.
Without a novation, the delegator is a guarantor. If the delegate fails to perform, the obligee can sue the delegator.
The delegate is also liable—but only if they received consideration for agreeing to perform. If the delegate is a gratuitous volunteer, they’re generally not liable to the obligee (though the delegator remains liable). If the delegate was paid or received some benefit, the obligee is considered a third-party beneficiary of the delegation agreement and can sue the delegate directly.
Common MBE Traps
Trap #1: Assuming “assignment” means both rights and duties transfer. Wrong. Assignment only transfers rights. If the fact pattern says “X assigned the contract to Y,” that typically means only the rights were assigned. Duties remain with the original party unless separately delegated.
Trap #2: Thinking delegation discharges the delegator. It doesn’t. The delegator remains liable unless there’s a novation with the obligee’s consent.
Trap #3: Confusing anti-assignment clauses under common law and the UCC. Under the UCC, even if a contract prohibits assignment, you can still assign the right to payment for goods already accepted. Common law is stricter.
Trap #4: Forgetting the assignee takes subject to defenses. If the obligor has a defense against the assignor (breach, fraud, failure of consideration), the assignee’s rights are subject to that same defense.
Trap #5: Missing the distinction between assignment of future rights and present rights. An assignment of a right not yet in existence (like future lottery winnings) is generally treated as a promise to assign, not a present assignment. It may require consideration to be enforceable.
What to Memorize for the MBE
Here’s your cheat sheet for assignment and delegation questions:
Assignment = transfer of rights (right to receive performance)
Delegation = transfer of duties (obligation to perform)
Default rule: Both are allowed unless an exception applies.
Exceptions to assignment: (1) personal services, (2) materially changes obligor’s duty, (3) contract prohibits (but UCC allows assignment of right to payment), (4) violates law/policy.
Exceptions to delegation: (1) personal services/special skills, (2) contract prohibits, (3) materially changes obligee’s expectations.
Assignee’s rights: Can enforce directly against obligor, but takes subject to all defenses obligor had against assignor.
Delegator’s liability: Remains liable even after delegation unless there’s a novation (agreement by obligee to release delegator and substitute delegate).
Delegate’s liability: Liable to obligee only if delegate received consideration (then obligee is third-party beneficiary).
Assignment and delegation problems appear regularly on the MBE, often combined with third-party beneficiary issues or UCC Article 2 questions. If you want all the contract rules for assignment, delegation, third-party beneficiaries, and conditions organized in a format built for active recall, FlashTables Contracts covers these rules in structured two-column tables that make pattern recognition faster. The side-by-side format helps you spot the distinctions the bar examiners are testing—like whether a clause prohibits assignment, delegation, or both.
Master the terminology. Know when each is allowed. Understand who remains liable. Do that, and you’ll handle these questions confidently on exam day.