Last week, I discussed the use of an agent to enter contracts on your behalf. This week we discuss other people in the context of when you have a contract and you either like to assign it or delegate it to a 3rd party.
Delegating Your Duties
So just remember this: you can only pull a double duty and you have the right to make an ass out of yourself . . . . You must be reading that and thinking, huh? It’s my mnemonic to remember that you can only delegate duties (DD) and assign rights. Don’t confuse them! I have posted before you can quickly discern the parties involved and the type of agreement going on by reading the label given to the parties.
From the orange perspective he has the duty to deliver tables and chairs to blue, and the right to receive payment. From the blue perspective he has the right to receive chairs and tables and the duty to pay once those items are received.
Anyway, let’s talk delegation of duties.
Example: So you have a contract formed already, and the other party is expecting you to delivery chairs and tables for an event. However, you only have one driver and another delivery worth more to you. What do you do?
You delegate your duty to perform. Specifically, you contracted to do the duty of delivering the chairs and tables in exchange for money. However, unless the contract specifies it has to be you can delegate this to another delivery company.
Let’s say you are the orange person. Let’s say something comes up, you can delegate your duty of the delivery of chairs and tables to a 3rd party to do for you. This will not violate the contract (unless specified otherwise).
Sometimes, depending on what is being contracted you cannot delegate the duties. For example, singing. If you hire one celebrity singer for her talent, she cannot say she is easily replaceable with another and delegate her duty to sing to a 3rd party singer.
Assigning Your Rights
Generally, assigning rights tends to be more flexible because your ability to receive something is less likely to frustrate the performance of the contract if the party is changed. The most likely right to be assigned is the transfer of money.
Example: Let’s continue with the example above. The right to receive money comes from when you perform your duty and deliver the chairs and tables. However, let’s say you have fallen behind your payment to a supplier. In that instance, you would tell the other party you are assigning your right to payment to another, the supplier.
Once again, let’s say you are the orange person. Let’s say you are in debt to your gray supplier, therefore you assign your right to payment under the contract of delivering chairs and tables to your supplier. The payor will then have to pay the money you would have received to the supplier.
Assigning rights tends to be easier and less restrictive. A couple things to note though, most assignments are required to be put in writing and you cannot assign a right if the assignment would increase the risk or cost of the other party.
Last Word: Take a look at the “Miscellaneous” Section
A lot of times people look at the beginning of their contract, basically how much is it who are the parties, going to cost, what is the duration of the agreement, and what do they get out of the agreement. As discussed in the Boilerplate Blurb series of posts from last year, you want to look at the Miscellaneous section. Why?
The discussion above about assignments and delegations can only happen if you are allowed to do so within the contract. Many times, businesses prefer to restrict this ability due the fact they do not know who you may assign your rights or delegate your duties to. This is especially, the case for delegation. Can you imagine the situation where you expect the party to perform their duties only to have a new person show up the next day?
[author] [author_image timthumb=’on’]http://www.alohastartups.com/wp-content/uploads/2011/09/RyanKHew.png[/author_image] [author_info]I am a practicing attorney in Honolulu, HI helping small businesses with their transactional and compliance needs. Contact Me Today: Web| 808.944.8400 @RKHewEsq Ryan K. Hew, Attorney At Law[/author_info] [/author]
*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.