Question

Patty owes Samantha $5,000 under a contract for maid services that Samantha performed. Samantha owes her landlord, Alec, $6,000 in rent. Samantha wants to assign to Alec the right to receive the $5,000 from Patty, but the contract between Patty and Samantha contains a clause prohibiting its assignment. If Samantha assigns the rights anyway, a court will most likely
a. not honor the clause because if honored, it would be a restraint upon alienation.
b. not honor the clause prohibiting assignment because a contract cannot prevent assignment for one to receive monetary payments.
c. honor the clause prohibiting assignment only if the assignment was in writing.
d. honor the clause prohibiting assignment because as a general rule, assignments are forbidden when a clause against it exists in the contract.

Answer 1

Answer:

B) not honor the clause prohibiting assignment because a contract cannot prevent assignment for one to receive monetary payments.

Explanation:

A party engaged in a contract cannot prohibit the other party from assigning the collection of any money owed. For example, I'm working for ABC company (with a standard labor contract) and I assign my payment to a creditor XYZ, ABC must comply and give my paycheck to XYZ.

The logic behind this rule is that an individual is free to assign his pay to anyone he or she wants, and sometimes even if the individual doesn't want to. A court order may assign his paycheck to a third party (e.g. to comply alimony payments).