SECTION 2B-505. 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. Any transfer or assignment of a party's contractual rights is subject to all contractual use restrictions and, unless the language or circumstances indicate to the contrary, (as in a transfer for security), is a delegation of performance of the duties of the transferor that is subject to Section 2B-506. Acceptance of the transfer constitutes a promise by the transferee to perform those duties. The promise is enforceable by the transferor or any other party to the original contract.

(b) 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 , except to the extent the other party to the original contract agrees to the transfer having that effect.

(c) The other party may treat any transfer that which delegates performance 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-61921.

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).

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.