Assignment and Novation

A person can transfer their rights, benefits and liabilities under a contract to another person. Where the original contract stays intact and party transfers rights, benefits and liabilities under a contract (the assignor) to a new party (the assignee), this is called an "assignment". An assignment must be absolute with no contractual strings to remain attached between the assignor and the other original contracting party. Nor does an assignment require the permission of the other original contracting party. An assignment is not possible where the services or the consideration was linked to the person of the party which wants to assign the contract. For example, if you hire a special performer, the performer cannot assign the contract to another performer. If an assignment creates a new or special burden to the other original contracting party, it may also be prohibited. Special provincial laws may exist to alter the common law with regards to assignments, such as "judicature acts" and readers are invited to consult these laws for further research.

Sometimes assignment operates under law such as in the case of a bankruptcy where a trustee comes in and takes over all the contracts between the bankrupt and the creditors. Another example of legal assignment is upon death, where the executor assumes the position of the deceased and to whom all contracts of the deceased are assigned.

Novation is the replacement of one contract between two parties with another contract, either between the same parties or others. For example, if I had a contract with you to cut my lawn and if John had a contract with me to cut his lawn, we could novate both contracts and replace it with a single contract wherein you agree to cut John's lawn.

Contrary to assignment, novation requires the consent of all parties. Consideration is still required for the new contract but it is usually assumed to be the discharge of the former contract.

The criteria for a successful novation is the complete acceptance of the liability by the new debtor, the acceptance of the new debtor by the creditor, and the acceptance by the outgoing creditor of the new contract as full performance of the old contract.

Frustration

"Where there is an agreement to sell specific goods, and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided." {Section 11 of B.C.'s Sale of Goods Act.}

No person can be held to a contract if, since acceptance, there has been a radical change which makes performance impossible or illegal. Under certain conditions, a person can be relieved of their duties under a contract under the common law heading of "frustration". For example, an act of God may have destroyed the object of the contract (but see the Atlantic Paper Stock case below).

However, frustration cannot be invoked just because the contract has suddenly become more difficult or expensive for one of the parties, if the party was partly responsible for the intervening event which destroyed the object of the contract, or if the event was foreseeable. Severe sickness of one of the parties is an example where frustration might apply to relieve one of the parties of their obligations under a contract.

In the body of the contract, the parties may specifically bar a defence of frustration and make their contract absolute.

Many provinces have short "frustrated contracts" legislation which sets out the allocation of reimbursements or "restitution" in the case of frustrated contracts. The thrust of most legislation is to allow recovery of benefits conferred before discharge of the contract.

Дата добавления: 2015-11-14