Assignment of Contracts in California: Anti-Assignment Clauses and Disputes

Last updated: November 2026

Assignment of a contract in California transfers one party's rights under it to someone else. Rights are generally assignable without the other side's consent, but the burden of performing cannot be transferred without that consent, and an anti-assignment clause will usually be enforced according to its terms. Statutes override those clauses for some payment rights and limit how they are read in sales of goods. Kolmogorov Law, P.C. litigates assignment disputes for businesses in Orange County, Los Angeles, and across California.

Call (909) 235-6116 or contact us online to discuss a contract that was assigned without consent, an assignee trying to enforce against you, or a deal held up by an anti-assignment clause.

Assignment versus delegation

The words get used loosely, and the distinction decides cases. Assignment transfers a right: the right to be paid, the right to receive goods, the right to sue. Delegation transfers a duty: the obligation to perform the work.

California treats the two differently. A right arising out of an obligation is the property of the person to whom it is due and may be transferred as such. (Civ. Code, § 1458.) A thing in action arising out of an obligation may likewise be transferred by its owner. (Civ. Code, § 954.) The burden of an obligation, by contrast, generally may be transferred only with the consent of the party entitled to its benefit. (Civ. Code, § 1457.)

So a vendor can sell its right to be paid on an invoice without asking the customer. It cannot hand its service obligations to another company and walk away. Even where delegation is permitted, the original party remains on the hook; in a sale of goods, no delegation of performance relieves the delegating party of any duty to perform or any liability for breach. (Com. Code, § 2210, subd. (1).)

When a contract cannot be assigned even without a clause

Some contracts are not assignable by their nature. A contract for personal services, where the identity and skill of the performer was the point, cannot be assigned to a substitute performer. In a sale of goods, rights may be assigned unless the assignment would materially change the other party's duty, materially increase its burden or risk, or materially impair its chance of obtaining return performance. (Com. Code, § 2210, subd. (2).)

How anti-assignment clauses are read

Most business contracts include a clause barring assignment without consent. California enforces these clauses, but reads them narrowly, because the law favors the free transfer of rights.

Three rules of construction do most of the work. First, in a sale of goods, a prohibition on assignment of "the contract" is construed as barring only delegation of the assignor's performance, not assignment of its rights, unless the circumstances indicate otherwise. (Com. Code, § 2210, subd. (4).) Second, courts distinguish between a clause that merely makes assignment a breach, which gives the non-assigning party a damages claim but leaves the assignment effective, and a clause that declares an assignment void, which does not. The difference is in the words chosen. Third, where a commercial lease requires the landlord's consent to a transfer but states no standard, the law implies that consent may not be unreasonably withheld, with the tenant bearing the burden of proving unreasonableness. (Civ. Code, § 1995.260.) Our commercial lease disputes guide covers the lease rules in depth.

A fourth rule is statutory and overrides the clause entirely. A term in an agreement between an account debtor and an assignor that prohibits, restricts, or requires consent to the assignment of an account or payment intangible is ineffective. (Com. Code, § 9406, subd. (d).) That is why a customer's "no assignment" clause does not stop its vendor from factoring the receivable or granting a lender a security interest in it.

How these disputes come up for business owners

A company sells substantially all of its assets, including its customer contracts, to a buyer. Several contracts bar assignment without consent and no consent was obtained. The customers want out, or want better terms, and the buyer wants the revenue it paid for. Whether each clause makes the assignment void or merely a breach, and whether the customers waived the clause by continuing to perform, decides each contract. Our business purchase agreement page addresses the deal side of the problem.

A contractor factors its receivables. A customer, citing an anti-assignment clause, refuses to pay the factor and pays the contractor instead. The factor sues the customer under section 9406.

What the assignee gets

An assignee stands in the assignor's shoes. It gets the assignor's rights and takes them subject to every defense the obligor had against the assignor before notice of the assignment: setoff, prior breach, failure of conditions, limitation periods.

An assignee can also step into a lawsuit. An action does not abate because an interest in it has been transferred; it may continue in the name of the original party or the court may substitute the transferee. (Code Civ. Proc., § 368.5.) Assignment is also a common workaround when a nonparty lacks standing as a third-party beneficiary.

Remedies when an assignment is disputed

For the party objecting to an assignment, the remedies are a declaration that the assignment is ineffective where the clause voids it, damages for breach where it does not, and, in some contracts, termination. For the assignee, the remedy is enforcement of the assigned right against the obligor. For the obligor who paid the wrong person, the exposure is paying twice. Our unpaid invoices page addresses collection by assignees and factors.

What we do, and where these cases are heard

We read the anti-assignment language for the void-or-breach distinction, check whether a statute overrides it, and trace what each party did after the assignment, since conduct frequently amounts to consent or waiver.

These cases are heard in the Superior Court, usually the Central Justice Center in Santa Ana for Orange County and the Stanley Mosk Courthouse for Los Angeles, or in the Central District of California where federal jurisdiction exists.

What to bring to the first meeting

Bring the original contract with its assignment clause and the assignment agreement or purchase agreement that transferred it. Add any consent requests and responses, the notice of assignment sent to the other party, and the payments or performance exchanged after the assignment.

Frequently asked questions

Can a contract be assigned without consent in California?

Rights usually can, because a right arising from an obligation is property and may be transferred. (Civ. Code, § 1458.) Duties cannot be transferred without the consent of the party entitled to the performance. (Civ. Code, § 1457.) A valid anti-assignment clause can restrict even the transfer of rights, subject to the statutory exceptions for payment rights.

What happens if you assign a contract with an anti-assignment clause?

It depends on the clause. If it declares assignments void, the assignment is ineffective and the assignee gets nothing. If it merely prohibits assignment, the assignment is generally effective but the assignor has breached, and the other party may claim damages or terminate if the contract allows.

Can my customer refuse to pay a factor or lender I assigned my receivables to?

Generally not on the basis of an anti-assignment clause. A term restricting assignment of an account or payment intangible between an account debtor and an assignor is ineffective. (Com. Code, § 9406, subd. (d).) Once the customer has notice of the assignment, it must pay the assignee, and paying the original vendor instead does not discharge the debt.

Does a merger or change of control count as an assignment?

Often not, unless the clause says so. In a stock sale, the contracting entity stays the same and no assignment occurs. In an asset sale or many mergers, the contract moves to a new entity and the clause applies.

Can an assignee sue in its own name?

Yes. The assignee owns the right and may sue on it, and if the claim is assigned after a lawsuit is filed, the action continues in the original party's name or the court substitutes the assignee. (Code Civ. Proc., § 368.5.) The assignee takes the claim subject to the defenses the obligor had against the assignor.

Talk to a California breach of contract attorney

If an assignment is in dispute, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and represents businesses in Orange County, Los Angeles, and throughout California.

This page provides general information about California law and is not legal advice. Outcomes depend on the assignment clause, the conduct of the parties after the transfer, and the court.