Brief Fact Summary. Defendant is a general contractor who hired, Kroo Painting Company (Kroo) to work on one of Defendant’s projects. The contract included a clause forbidding Kroo from assigning payment to another party without written permission from Defendant. Kroo assigned payment to Plaintiff without getting permission.
Synopsis of Rule of Law. When the language is clear, a party can forbid assignment of payment on a contract
We have now before us a clause embodying clear, definite and appropriate language, which may be construed in no other way but that any attempted assignment of either the contract or any rights created thereunder shall be void as against the obligor.View Full Point of Law
Issue. Is the non-assignment clause in Kroo’s contract enforceable?
The language is clear in the contract. Such non-assignment clauses are enforceable if the language in the contract is clear. To no hold such clauses unenforceable, would limit the freedom to make contract.
Discussion. Clear language is the test in this case. When language is unclear, courts are more likely to construe the language to mean that the contract may not be assigned, but the right to receive payment under the contract can.