MBE Tip of the Day: Contracts and Sales

Answer to the Contracts and Sales MBE Question

Subject: Contracts and Sales

Legal Issue: Assignment and delegation

Legal Rule and Analysis: Parties can contract to prohibit an assignment or a delegation.  The words used in the contract are very important.  If a contract says merely that a party “cannot assign the contract,” then this will be construed as prohibiting a delegation of duties only.  In order to prohibit an assignment of rights, the contract would need to be explicit in prohibiting this.  If the contract does not explicitly prohibit the assignment of rights, then an assignment of rights by a party will be valid.  So, the permission of the other party is not necessary.  When the rights on a contract have been assigned, the assignee can sue the obligor if they fail to perform as promised.

In this case, the contract between the woman and the piano teacher included a provision that states “the parties agree that neither will assign the contract.”  Since this provision does not explicitly prohibit the assignment of rights, it will be construed as merely prohibiting the delegation of duties.  The piano teacher wants to assign the right to collect the woman’s money to the sister.  This would not be prohibited by the contract since it is a clear assignment of only the piano teacher’s right (to collect money) as opposed to duties.  The woman does not have to give her permission for this assignment to be valid.  The sister will be allowed to sue the woman for the agreed-upon fee if she does not pay.

Conclusion: The piano teacher’s assignment is valid and the sister will be able to sue the woman if she does not pay on the contract between her and the piano teacher.

Look at the answer choices provided. Choose an answer choice that matches your conclusion. Review the other answer choices provided. 

The answer choice (D) is correct. (A) is incorrect because the contract did not prohibit the assignment of rights, merely the delegation of duties. (B) is incorrect because it is describing a situation in which the contract does prohibit the assignment of rights but the assignment can still be valid.  In order for an assignment of rights to be invalid, the contract must state that the parties cannot assign their rights and either (a) it must state that an assignment will render the contract void or (b) the assignee has notice of the clause.  If the contract prohibits the assignment of rights but neither (a) nor (b) are met, then the assignment would still be valid but the assignor will be in breach.  Since this contract does not explicitly prohibit the assignment of rights, this situation is not relevant. Finally, (C) is incorrect because the obligor does not need to give permission for an assignment to be valid.

MBE Tip: Pay attention to quoted language!  When the fact pattern quotes the language of the contract or dialogue between the parties, this generally means the precise words used will be important to answering the question.  The Examiners are including the exact language for a reason!  Thus, when you come across quoted language, make sure you read it very carefully and think about all of the implications of exactly what was stated!