Simply, to assign means to transfer. To transfer refers to an act by what something passes over one person to another, that is to say it is an act of passing over one's rights of something and liability there under from one person to another. Assignment means transfer of contractual rights or liability by a party to the contract to some other person who is not a party to the contract.
The assignment of contract is the exceptional rule of the principle of privity of contract. This principle is popular in Britain, which is established by the British law.
According to this principle only the contracting parties are responsible for the contract. Liability and obligation of the contract is performed by only contracting party. The third party is not responsible to the contract. But, it is not absolute rule. In certain cases, the assignment of contract is admitted as exceptions of such (privity) rule. Under assignment, contractual rights and obligations can be assigned by contracting party to the third person. After the assignment of contract, the new party becomes the party of contact as original party and the original party disappears from that contract. It can not be assigned in case of the contact of personal nature and skill.
Rules Regarding to Assignment of Contract
There are several rules concerning the assignment of contact and some of them have been accepted by the Nepalese Contract Act, 2056. These rules are given below:
1.Assignment by the act of the parties:
- Contract involving personal skill and capacity, can not be assigned.
- Contract can be assigned only after getting the consent of the concerned parties.
- Liability of the contract can be assigned only after getting the consent of the next (second) party.
2. Assignment by operation of law of according to law:
- After becoming unsound mind of death of any contacting parties, rights and liabilities of the contract can be transferred to the legal representative.
- If any of the contracting parties becomes insolvent, the rights and liabilities of the person concerned passes to the official receivers.