ContractsContract_assignment_and_novationHARD
James signs a purchase contract to buy a duplex for $250,000 and the contract expressly permits him to transfer his position to a third party. Before closing, James locates an investor willing to step into James's shoes and pay $260,000 to take over the contract. James and the investor sign a transfer document; James collects a $10,000 fee and steps out, while the investor closes with the original seller using the original contract terms. The original seller still has potential recourse against James if the investor defaults. Which mechanism did James use to move his contractual position to the investor?
Correct Answer
A) Assignment
James transferred his right to acquire the duplex to the investor, who closed under the original contract terms. James kept potential residual liability because the seller did not formally release him. Transferring a contractual right to a third party while leaving the original obligor potentially liable is assignment.
Answer Options
A
AssignmentB
DelegationC
NovationD
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Related Topics & Key Terms
Key Terms:
wholesale transferright to acquirefee for stepping outno formal releaseinvestor steps in
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