Impact of Article 2B

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This is an unofficial draft of Article 2B from April 15, 1998. For the current official version, see the University of Pennsylvania Law School (Official NCCUSL) site at http://www.law.upenn.edu/library/ulc/ulc.htm

SECTION 2B-5045. EFFECT OF TRANSFER OF CONTRACTUAL RIGHTS.

(a) A transfer of "the contract", or of "all my rights under the contract", or a transfer in similar general terms, is an assignment of all contractual rights.

(b) The following rules apply to a A transfer or an assignment of a party's contractual rights:

(1) The transferee is subject to all contractual use restrictions

(2) and, uUnless the language or circumstances indicate to the contrary, as in a transfer for security, the transfer is a delegation of performance of the duties of the transferor that is subject to Section 2B-5056.

(3) Acceptance of the transfer constitutes a promise by the transferee to perform the delegated ose duties. The promise is enforceable by the transferor or any other party to the original contract.

(4b) The A transfer of contractual rights does not relieve the transferor of a duty under the contract to pay or perform, or of liability for breach of contract, unless the other party to the original contract agrees that to the transfer has having that effect.

(bc) The other party may treat any transfer that delegates performance without its consent as creating reasonable grounds for insecurity and may without prejudice to its rights against the transferor demand assurances from the transferee pursuant to Section 2B-62019.

Uniform Law Source: 2-210; 2A-303.

Committee Action: Discussed without substantial comment.

Notes to this Draft: Edited to conform to Section 2-210(4). Subsection (c) added to conform to 2-210(5).

Reporter's Note:

1. This section conforms to current Article 2 and Article 2A. The recipient of a transfer is bound to the terms of the original contract and that obligation can be enforced either by the transferor or the other party to the original contract.

2. This section also clarifies that an effective transfer (assignment or otherwise) of rights under a contract constitutes a transfer of those contract rights and, a delegation of duties if accepted by the transferee. This language follows Article 2 (which uses the word assignment) and Article 2A (which refers to transfers).

3. Subsection (b) also follows current law and provides that the transfer does not alter the transferor's obligations to the original contracting party in the absence of a consent to the novation.