Transfer of Contractual Obligations

Chris Vetter

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• Jim bought a car from Oriental Motors for $32,000. After a $2000 down payment, the balance, plus a finance charge were to be paid in installments over the next 48 months. Oriental Motors needed money to restore their stock and sold Jim’s contract to a finance company and told Jim to make all installment payments to the finance company. Is this contract legal?

Answer

• It is legal and when Jim was informed about the sale of his contract, he became obligated to make payments to the finance company.

Vocab

• Contractual Rights-something they will receive under a contract

• Assignor-the party who transfers the contractual right to another

• Assignee-the party who receives the contractual right• Performance-the fulfillment of contractual promises as agreed• Contractual Duties-legal obligations created by a contract• Delegation of Duties-routine duties being transferred to

another party • Obligator-the one who owes a duty under a contract

Non Assignable Rights

• A right created under contact that prohibits the transfer of contractual rights

• Claims for damages for personal injuries• Claims against the United States• Rights to personal services, especially those of a

skilled nature, or when personal trust and confidence are involved

• Assignments of future wages, as limited by state statutes

Obligations

• If a contractual right is transferred, it doesn’t change the legal rights of the other party to the contract. If you are supposed to pay a finance company, and don’t receive your contractual rights, you aren’t obligated to pay the finance company.

• If the obligator breaches, the assignee must sue for the breach, not the assignor

Closing Question

• John hired Ron to come to his home and take care of his children while he was at work. Can Ron legally delegate the child care duties to a well qualified third party?

Answer

• Ron cannot delegate this duty because it involves special qualifications of trust and skill