In the educational field, students have homework assigned for them to accomplish during the weekend, and often the term “assignment” is used interchangeably. On the one hand, in the field of law, the same term is used as well, but specifically in assigning parties to be responsible and liable for particular actions. And that’s when an assignment of liability form or contract agreement gets established.
FREE 5+ Assignment of Liability Agreement Samples and Templates in MS Word | PDF
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How to Create an Assignment of Liability Agreement
There are 3 parties of an assignment: the assignor, assignee, and the obligor. Individually, they have roles and liabilities to fulfill. For instance, there’s a loan provider, a financial aid agency, and a borrower. Let’s say that the borrower wanted to borrow money from the loan provider, yet he prefers to pay on an installment basis. Therefore, the loan provider and the borrower gets into a loan contract, and they both sign them. But, along the way, the loan provider needed some financial assistance, too; however, he knew that he couldn’t get the money from the borrower because of the contract. That’s why he goes to the financial aid agency to borrow money. And knowing the borrower still owes from him, he allowed the agency to take over his rights in the contract.
So, to simplify, the financial aid agency is the assignee who gets the rights from the loan provider, and the borrower remains in his obligations to pay the amount he borrowed, making him the obligor in the newly established agreement.
The situation above is just an example of the roles of the involved parties, and the significance of having an assignment of liability agreement. So, read on to know how you can create, not only an agreement but a solid one that can protect the rights of the involved parties and at the same time establish limitations in the duration of the agreement’s terms:
1. Clarify the Roles
Since there are three parties involved in an assignment of liability agreement, you must ensure that you name each party correctly alongside their roles in the agreement. It’s also wise if you distinguish and specify their liabilities, or simply enlist them individually in categories. This method allows the involved parties to be able to focus on their roles, and not to confuse it with the liabilities of the others in the agreement.
2. Specify What’s Being Transferred
An assignment of liability agreement won’t be of use if there’s nothing to transfer legally, such as properties, bank accounts, loans, etc. So, be sure to specify in the agreement form what you are transferring along with the date when the terms of the agreement will take effect or be mandated.
3. Adhere to the Rules of the State
Agreements are legal forms, so, it should meet the rules and laws of the state. How can you do that? Well, you can ask for the assistance of a legal attorney and a lawyer who’s an expert in the field of creating assignment agreements and liability transfers. Aside from that, you can also use sample agreement templates, which are inlined with your state’s formats and requirements.
I will be giving my rights to another party; therefore, I am the assignor, and my recipient is the assignee. Will I still be liable for any terms in the agreement that I previously signed and the assignment of liability agreement that I will be signing?
Yes, you as the assignor will remain to be liable, but with limitations. But, if you prefer to no longer have any liabilities, meaning all your rights, then you can include a legal statement in the agreement indicating that both you and the assignee have agreed to waive your rights and liabilities upon signing in the agreement.
Can I use an assignment of liability agreement to assign interests and benefits?
No, you must use a different assignment form or assignment agreement. If you want to assign interests, then an assignment of interest agreement contract will be the document to use, while the latter requires you to create an assignment of benefits. The general rule is that you must specify what you are assigning to the assignor.
What’s the difference between a novation agreement between an assignment of liability agreement?
The difference between a novation agreement and assignment of liability agreement is quite simple. Since liabilities are being assigned in an assignment of liability agreement, a novation agreement is intended for transferring everything to a third party, including benefits, interests, obligations, and liabilities.
Are assignment of liability agreement forms applicable for tenancy agreements and lease contracts?
Yes, it’s applicable for as long as you are assigning or substituting someone, such as a third party, to be liable for a specific duration on the terms of the agreement. Just make sure that your tenant knows of the agreement, especially since he remains to be the obligor who will provide lease payments to the assignee you choose.
Are there laws that limit my assignee to act on his role in the agreement?
Yes, there are limitations, but they differ state by state. That’s why you and every party involved in the contract should be knowledgeable of the laws. One of the most common is the area of facilitating credits and other financing tactics.
Assignment of liability agreement forms must be used correctly and with the full knowledge of the assignee, assignor, and obligor. Also, all terms and conditions in the agreement should be agreed accordingly and willingly before any signatures of the involved parties will be affixed into it, to ensure that problems and issues will be avoided.
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