California | Administrative Law
Legal Question
In the state of California, with an agreement between two companies, can one of the companies assign the agreement to another company without permission from the other company, even if the agreement is silent on the matter of assignment. If permission is required, is there a particular law/code that says so and where can I look at the exact wording?
Legal Answer
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Read More Answered By: Bryan Whipple |
First, note that "assignment" and "delegation" are closely-related concepts, and that most so-called assignments of contracts will involve both an assignment of rights and a delegation of duties. I'll stick with assignment as a catchall term.
If a contract is silent on the matter of assignment, it is more likely assignable than not. Here is an example similar to one given to first-year law students by the Contracts 101 professor: "if I hire Joe Doakes, a licensed contractor, to paint my house, Joe can assign the contract to John Doe, who is also a licensed contractor. However, if I hire Pablo Picasso to paint my portrait, he cannot assign the contract to John Doe, or even to Henri Matisse." The difference is that the first contract calls for rendering a pretty generic service; the second calls for highly individual talents. In addition to rare talents and special artistic skills, credit worthiness can be a factor in limiting the assignability of a contract, as can other things. Nevertheless, contracts that don't limit assignment of rights and delegation of duties are assignable unless some circumstance points to an implied understanding that the contracting party would render the performance personally.
The clearest and most modern statute on the subject is probably Commercial Code section 2210. The Civil Code has several one-liner statutes that have been held to bear on the subejct; see sections 954, 1044, 1457 and 1458. Although Commercial Code section 2210 technically only applies to contracts for the sale of goods, it is considered to be a pretty close approximation to the law for other contracts as well, such as contracts for services and to some extent for the sale of real property and intangibles.
The California Supreme Court's decision in a 1957 case called Farmland Irrigation Co. vs. Doppelmaier, published at 48 Cal.2nd 208, is widely regarded as a leading expression of the California Courts' view on the subject of assignability and delegability. The case starts on page 208 of Vol. 48 of Cal. 2nd and the part that would be of most interest to you starts at the bottom of page 222 with the words "The statutes in this state clearly manifest a policy in favor of the free transferability of all types of property, including rights under contracts." I think the Doppelmaier case and Commercial Code section 2210 are your starting points for finding "exact wording," although if yoyr contract does not involve the sale of goods you will probably not find anything in the codes that you can point to with certainty.
I'd add that Civil Code 1457 is perhaps your best argument against assignability, but the way it has been interpreted by the courts has not been consistent with what a legal novice might think is its clear meaning, so don't rely on it too heavily. Go back to the Doakes/Doe/Picasso example. That's the way cases are decided. |
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