Contracts & ExecutionQuestion 839 of 1605

A written subcontract requires the general contractor's prior written approval before the subcontractor may assign the subcontract. The subcontractor assigns it anyway with no approval. The assignment is most likely:

a.Ineffective or a breach because the contract expressly restricted assignment
b.Binding on the owner regardless of the clause
c.Automatically converted into a novation
d.Fully valid because assignments are always allowed

Explanation

Parties may contractually restrict or condition the right to assign. When a subcontract expressly requires prior written approval for assignment, an assignment made without that approval violates the clause and is generally ineffective or constitutes a breach. Assignments are not always freely allowed when the contract says otherwise. Ignoring the clause does not create a novation, which needs everyone's consent, and cannot bind the owner in disregard of the agreed restriction.

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Reviewed by Abraham Chen Licensed California General Contractor (CSLB License #1101856 verify)
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