contracts

assignment

Assignment is the transfer of one party's rights under a contract to another person, called the assignee. The assignee takes over the rights, but the original party (assignor) usually remains secondarily liable for performance unless released. Most real estate contracts may be assigned unless they prohibit it or involve personal services. Assignment differs from novation, in which a new contract replaces the old one and fully releases the original party.

Exam tip: Contrast assignment (original party still liable) with novation (original party released). Personal service contracts, like listings, generally cannot be assigned.
Example: A buyer under contract for $300,000 assigns the contract to an investor for a $5,000 fee; if the investor defaults, the original buyer may still be liable.

1. A buyer under a contract silent on assignment assigns the contract to an LLC she controls, and the seller does not consent. Which statement is most accurate?

Answer & explanation

Answer: A. Contracts are generally assignable unless they prohibit assignment or involve personal performance, such as seller financing that relies on the buyer's credit. Assignment does not release the assignor; only a novation substituting the new party does.

Related terms & state variants

assignment of lease novation purchase agreement sublease

Sources

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Last verified: 2026-10-23