Hmb265 Assignment Of Contract

(1) A party may perform her or his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having her or his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2) Except as otherwise provided in s. 679.4061, unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on her or him by her or his contract, or impair materially her or his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor’s due performance of her or his entire obligation can be assigned despite agreement otherwise.

(3) The creation, attachment, perfection, or enforcement of a security interest in the seller’s interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer’s chance of obtaining return performance within the purview of subsection (2) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller. Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer. A court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.

(4) Unless the circumstances indicate the contrary a prohibition of assignment of “the contract” is to be construed as barring only the delegation to the assignee of the assignor’s performance.

(5) An assignment of “the contract” or of “all my rights under the contract” or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by her or him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.

(6) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to her or his rights against the assignor demand assurances from the assignee (s. 672.609).

History.—s. 1, ch. 65-254; s. 558, ch. 97-102; s. 12, ch. 2001-198.

Note.—s. 2-210, U.C.C.

Contract Assignment in M&A Transactions

Bloomberg BNA Corporate Law & Accountability Report

March 14, 2016, Ryan M. Murphy


Given the pace of M&A transactions and the abundance of issues to be negotiated, there is a danger that transferability of third-party contracts (i.e., the need for consent and obtaining the same) can be lost in the shuffle. The deal complications associated with assignment of contracts—including delays in closing and a third party extracting concessions as a quid pro quo for consent—can erode transaction value. As such, it is incumbent upon deal counsel to identify potential hurdles to assignment and develop a strategy to avoid these potential impediments to closing. This article focuses on the intersection of Delaware law with contract assignment, namely the default rules for transferability as well as guidance on interpreting nonassignment clauses commonly confronted in the M&A context. In addition, practical considerations are offered to develop a strategy to manage the contract assignment process.

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