Assigning A Contract

One way to get out of a contract is what's called assignment, which is finding someone else to take over your obligations. Because contract rights are considered property, they can be transferred to others just like a piece of property such as a home or car.

Let's say you have a contract to purchase a certain number of gizmos each month from a gizmo seller, at a certain price. The contract runs for a year. You've decided gizmos aren't working out for you, and you'd rather not buy any more. As long as your contract allows it, and it's legal to assign contracts under your state's laws, you can just find someone else who wants to buy the same number of gizmos each month and "assign" your rights and obligations under the contract to him.

Most contracts permit an assignment as long as the other party to the contract approves the assignment. And many contracts require the other party to approve of an assignment as long as the assignment is "reasonable," meaning that the assignment won't jeopardize the security of the other party or increase the other party's risks.

If your contract requires the other party to consent, it's a good idea to get that consent in writing before you commit yourself to a contract assignment.

The down side of assigning a contract is that you may remain responsible for the performance of the contract, if the person to whom you're assigning the contract (called the "assignee") breaches the contract.

The best approach when you're assigning a contract is to make a written assignment agreement. A lawyer can help you draft an agreement tailored to your specific circumstances, with language that clearly spells out everyone's responsibilities and rights. That way, you're less likely to be left holding the contract "bag" if the assignee doesn't live up to his or her contract obligations.

Sherrie Bennett is the former director and staff attorney at the University of Washington Student Legal Services in Seattle.

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