An obligor who could avoid the assignor’s attempt to enforce the rights could avoid a similar attempt by the assignee.
Likewise, under UCC Section 9-318(1), the assignee of an account is subject to all terms of the contract between the debtor and the creditor-assignor.
Assignments are an important part of business financing, such as factoring.
A To effect an assignment, the assignor must make known his intention to transfer the rights to the third person.
The Restatement (Second) of Contracts defines an assignment of a right as “a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires the right to such performance.” The one who makes the assignment is both an obligee and a transferor.
The assignee acquires the right to receive the contractual obligations of the promisor, who is referred to as the obligor (see Figure 14.1 "Assignment of Rights").
Now, if Dealer assigns the contract to Assignee, Assignee stands in Dealer’s shoes, and Buyer could likewise deduct the 0 from payment to Assignee.
The “shoe rule” does not apply to two types of assignments.
Under the UCC, any assignments of rights in excess of ,000 must be in writing, but otherwise, assignments can be oral and consideration is not required: the assignor could assign the right to the assignee for nothing (not likely in commercial transactions, of course). Franklin has the right to receive 0 a month from the sale of a house she formerly owned; she assigns the right to receive the money to her son Jason, as a gift.
The assignment is good, though such a gratuitous assignment is usually revocable, which is not the case where consideration has been paid for an assignment.