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Assignments: The Basic Law
The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.
As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.
The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.
Basic Definitions and Concepts:
An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).
An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.
The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.
Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.
No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.
Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)
The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.
The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)
The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.
More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.
And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.
Novation Compared to Assignment:
Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”
A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.
Equitable Assignments:
An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.
In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.
An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.
Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .
But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.
Enforceability of Assignments:
Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.
In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.
After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.
Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.
Assignment of Contractual Rights:
Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.
If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.
In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).
On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.
The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.
Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.
A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.
Noncompete Clauses and Assignments:
Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.
A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.
Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.
Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.
A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.
Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.
A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.
Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.
It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)
It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.
Conclusion:
In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.
As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.
One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.
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Meaning of assignment in English
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- It was a jammy assignment - more of a holiday really.
- He took this award-winning photograph while on assignment in the Middle East .
- His two-year assignment to the Mexico office starts in September .
- She first visited Norway on assignment for the winter Olympics ten years ago.
- He fell in love with the area after being there on assignment for National Geographic in the 1950s.
- act as something
- all work and no play (makes Jack a dull boy) idiom
- be at work idiom
- be in work idiom
- housekeeping
- in the line of duty idiom
- join duty idiom
You can also find related words, phrases, and synonyms in the topics:
assignment | American Dictionary
Assignment | business english, examples of assignment, collocations with assignment.
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a hollow object, such as a box or a bottle, that can be used for holding something, especially to carry or store it
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Assignment of Rights Agreement: Everything You Need to Know
An assignment of rights agreement refers to a situation in which one party, known as the assignor, shifts contract rights to another party, known as assignee. 3 min read updated on July 26, 2024
An assignment of rights agreement refers to a situation in which one party, known as the assignor, shifts contract rights to another party. The party taking on the rights is known as the assignee.
An Assignment of Rights Agreement
The following is an example of an assignment of rights agreement. Dave decides to buy a bicycle from John for $100 and after agreeing on the price, Dave and John draw up a written agreement. Let's suppose that there will be a one week wait before the bicycle is ready for delivery to Dave and before anything is passed between them.
Meanwhile, John accepts that he will transfer his right to be paid $100 from Dave to Rob, in exchange for Rob paying John $90 immediately. Let's assume that John's motivation is an immediate need for cash. In this context, John is regarded as the assignor and Rob is the assignee.
John is the assignor as he is giving the assignment to Rob and Rob is the assignee because he is acquiring the assignment from John. To put it simply, the assignee is the party who gets something. In this case, Rob will receive $100.
Rules of Assignments
Assignments frequently occur in contracts. It's important to note the following points:
- The assignor (e.g. John) is accountable according to the contract unless the parties make an agreement that states otherwise.
- This means that if Dave does not receive the bicycle, he can sue John for it.
- Assignments are allowed in almost every type of agreement unless the contract includes an explicit ban on assignments or unless a specific exception is applicable.
- The assignor does not need to speak to the other contract party in order to create the assignment. For example, John would not need to ask Dave if John can transfer his right to be paid to Rob.
Exceptions Where a Contract Cannot be Assigned
- Some exceptions dictate that a contract cannot be assigned .
- Unenforceable assignments include the following: a personal services agreement, changing the contract duties, changing the material provisions of the agreement (e.g. time, amount, location, etc.).
- An example of a personal services agreement, which cannot be assigned, would be if you decided to employ a particular professional writer to write a book for you.
- That writer would not be allowed to take your payment and then give the work to another writer because you employed that particular writer to write the book, rather than someone else.
- Some kinds of assignments have to be in writing in order to be enforceable such as assignments of actual property (e.g. selling your house), loans, or debts.
- It's best to look at the statute of frauds for more information on the kinds of agreements that must be in writing.
Delegations and Novations
A delegation is very similar to an assignment in terms of what it involves. A delegation takes place when a party moves his or her obligations (or liabilities) under an agreement to a different party. Assignments, on the other hand, involve the transfer of rights.
If the parties in our previous example had created a novation , Rob would be entirely accountable to Dave and John would be clear of responsibility. A novation replaces the earliest party with a new party.
Contract Assignment
An Assignment Agreement can also be called a Contract Assignment. Another example of this would be if you're a contractor who needs assistance finishing a job. You could give those tasks and rights to a subcontractor, but only if the original agreement does not prohibit the assignment of these rights and responsibilities.
Creating an Assignment Agreement
In an Assignment Agreement, it is important to include details such as:
- The name of the person assigning the responsibilities (known as the assignor)
- The name of the of the party who is taking the rights and responsibilities (the assignee)
- The other party to the first agreement (known as the obligor)
- The name of the agreement and its expiration date
- Whether the first contract necessitates the obligor's approval before assigning rights
- The date of the obligor's consent
- When the contract will be put into effect
- Which state's laws will regulate the contract
If you need help with an assignment of rights agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.
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Definition of assignment noun from the Oxford Advanced American Dictionary
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What Is a Business Plan?
Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.
Key Takeaways
- A business plan is a document detailing a company's business activities and strategies for achieving its goals.
- Startup companies use business plans to launch their venture and to attract outside investors.
- For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
- There's no single required format for a business plan, but certain key elements are essential for most companies.
Investopedia / Ryan Oakley
Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.
Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.
A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.
There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.
While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.
A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.
While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.
Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.
The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.
Common elements in many business plans include:
- Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
- Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
- Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
- Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
- Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.
Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.
2 Types of Business Plans
Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.
- Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
- Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.
Why Do Business Plans Fail?
A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.
How Often Should a Business Plan Be Updated?
How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.
What Does a Lean Startup Business Plan Include?
The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.
A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.
As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.
University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.
Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."
Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."
Harvard Business Review. " How to Write a Winning Business Plan ."
U.S. Small Business Administration. " Write Your Business Plan ."
SCORE. " When and Why Should You Review Your Business Plan? "
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Assignment definition
What does assignment mean.
An assignment is 'an immediate transfer of an existing proprietary right, vested or contingent from one party to another'. Assignments can occur by consent or by operation of law.
A consensual assignment occurs by way of a gift or consideration. Assignments by law can occur during life or on death and will transfer the benefit of rights to the assignee but will not make the assignee personally liable. An attempt to transfer benefits under a contract of personal performance will not be effective.
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Taking Another Look at Short Term Assignments and Talent Mobility
Corporate Relocation , Domestic Relocation , Employee Relocation , Talent Mobility
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The Covid pandemic has spurred companies and employees to reassess work models and locations, and to consider more flexible, cost-effective ways to achieve business objectives. While not new, short-term assignments can be an effective workaround to current obstacles to employee relocation —from reluctance to relocate to a frenzied real estate market and global restrictions.
Short-term assignments are a “lite” form of talent mobility, enabling businesses to achieve specific, finite project objectives with less expense and disruption. International short term assignments have a longer history, arising as a relatively inexpensive alternative to global relocation . Domestic short-term assignments became more popular over the past 15 years, as the U.S. recovered from the Great Recession.
Objective of Short-Term Assignments
Companies originally devised short-term assignments as a developmental opportunity for high potential, junior-level employees. The employee had the opportunity to meet and work with employees in a different company location, master new skills and hone leadership abilities. This opportunity can increase the employee’s job satisfaction and loyalty and help the company to retain a promising employee. Employees who shine in STAs can be candidates for promotion and future STAs or possibly a traditional global assignment.
Short-term assignments also can be an effective way for more experienced employees to share their expertise with other parts of the organization. A company might deploy a manager to oversee the opening of a new company location, lead a merger or acquisition or bring specific IT or other technical expertise to another company location. In these examples, permanent relocation might not be necessary, but a brief business trip wouldn’t be enough.
Tax Implications of Short Term Assignment Jobs
The IRS treats short-term assignments more like business travel than relocation expenses . Relocation expenses are employee benefits and must be reported on the relocating employee’s W-2 for the year. Most companies gross many of these expenses up to cover the tax obligation, creating another expense for the company.
The IRS definition of a short-term assignment is very precise: the company must expect it to last for less than one year and it must actually last for less than one year. In this case, the IRS considers travel, lodging and certain other expenses to be business expenses that are deductible for the employer and not W-2 benefits to the employee.
Assignments can change in scope or length once underway, and this can influence the tax treatment. The minute an employer determines the assignment is going to extend longer than a year, the reimbursed expenses from that point forward become a taxable benefit to the employee. This applies whether the company reimburses the employee directly or pays expenses on his/her behalf.
So short-term assignments can last longer than a year (this is particularly common with rotational assignments), but the company will sacrifice some of the cost-savings of shorter-length assignments. The scope of work will be one consideration in deciding whether a short-term assignment or relocation makes better business sense.
Learn More About Short Term Assignments
Within the mobility arena, short-term developmental assignments are gaining traction with companies looking to support business growth and employee development while controlling costs. This creative strategy allows businesses to deploy talent where needed without making the financial commitment inherent in a permanent domestic relocation or a long-term international assignment, but not without careful consideration. Download the Short Term Assignments White Paper
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Government Contract Novation Vs Assignment of Contract & FAR 42.1204 Novation Clause
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All should be aware that the contracting officer does not have to approve every assignment of contract transactions under the FAR 42.1204 contract novation clause .
- Avoid the costly mistake of assuming that the government must approve all novations.
- If done improperly, contractors can be found in breach of contract terms and can even face suspension or debarment .
Novation Agreement FAR 42.1204 Definition
In federal government contracting, developing a novation can be somewhat unique because depending on the facts of each case, the original parties may still be responsible for performance to the government. Whereas, in the commercial sector, the contract novation definition means that a new party to the contract essential substitutes the original party. In other words in the commercial sector, the original party’s obligation is discharged and substitution of an original party to a contract with a new party, or substitution of an original contract with a new contract.
Federal Government Contract Novation vs Assignment of Contract
Business Asset Purchase Agreement and Contract Assignment Clause Issues
What is the difference between assignment and novation? Simply executing a business asset purchase agreement and a signed novation contact agreement when buying or selling a business is not the end of the legal analysis when there is a government contract involved. The contracting officer must approve the assignment of government contracts and or novation agreement . Your novation letter should address critical issues that answer the contracting officer’s concerns about the risk of performance. Novating government contracts is all about minimizing the risk to the agency.
In one case , SBA OHA ignored the argument that when novating a contract, its purchase and sale contract with the buyer had the legal effect of divesting the seller of any control over the current contracts. In that case, there was no formally approved novation agreement FAR contract. As a result, the whole transaction went to waste because the parties lacked a full understanding of the rules. A Government contract may not be automatically transferred to a third party. See 41 USC 15.
- In government contracting, if there is a performance problem, for example in construction, and a termination for default is an issue, or the surety is called upon for obligations under a performance bond, then the original party may not necessarily be discharged.
- Assignment of government contracts decisions, when there is a purchase and sale agreement involving a company that has existing government contracts, should be met with caution.
On the issue of contract novation vs assignment , although the FAR 42.1204 assignment novation clause allows the buying and selling parties to execute a novation vs assignment agreement due to an asset purchase or stock sale, companies should still assess legal issues related to violation of SBA small business size standards.
- Companies should always keep the agency involved from the beginning of the process to the end.
41 USC 6305 – Contract Assignment Clause – Prohibition on transfer of contract and certain allowable assignments
Under the federal contract assignment clauses, when there are business sales that involve government contracts, the purchase and sale agreement suggests that the contracts would be transferred to the buyer either through a business asset purchase agreement sale or stock sale.
However, the reality is that although FAR 42.1204 allows for a novation of contract agreement, the contracting officer is not obligated to approve it. A federal government contracting agency, only when it determines it to be in its interest, may accept a third party as the successor in interest when the third party’s interest in the contract arises out of the transfer of all of the contractor’s assets or the entire portion of the contractor’s assets involved in performing the contract. FAR 42.1204 (a). See also How Do Federal Government Contractors Deal With COVID-19 Problems ?
- The contracting officer is not forced to approve the FAR novation clause language if the transaction is not in the government’s best interest.
- If the government declines to novate a contract, the original contractor is still responsible for performance. FAR 42.1204 (c) contract novation clause.
- If the assignment of contract is not recognized by the contracting officer, and the original contractor does not perform, the original contractor can be terminated for default.
Potential SBA Size Standard Violations
When assessing government novation contract law rules, the SBA found in one case that since there was no approved assignment of the contract through an approved government novation agreement, the two businesses were deemed affiliated through the identity of interest rule.
On appeal, OHA found that since there was no formal contract novation, the seller was still responsible for the contract performance, and both companies were in the same line of business. In that case, the SBA also found that there was no clear fracture between the buyer and seller. The two businesses were therefore also affiliated with the newly organized concern rule.
Help With Government Contracting Companies for Sale
Oftentimes, buyers and sellers do not understand the complex regulations involved with government contracting companies for sale. Not only are novation agreements a potential issue, the due diligence needed and the ability to address buyers’ other business relationships that can impact their small business size status can be a huge problem. Contact Theodore Watson at 720.941.7200 for immediate help.
Legal Issues Regarding Novation Vs Assignment
Assignment vs novation. Know the difference: There are several legal issues that arise under federal contract novation agreement FAR law during the purchase and business sales, assignment and transfer of federal contracts when government contracts are involved. Common issues that occur with the assignment novation clause terms include: (1) whether the seller is simply trying to sell the contract with no real assets, (2) how to structure the asset purchase agreement and whether wait for contracting officer novation approval first and (3) to what degree does the contracting officer have to approve the novation. The first step is to be proactive in the early stages of the asset purchase or stock sale process.
Having the right contract clauses in the sales agreement is critical in the event that the contracting officer does not approve the contract novation. Other issues with novating a contract include the buyer maintaining its small business status in the event of recertification or option year decisions. Find out more about Signs of Being Under Investigation (Federal)
For additional questions about what is the difference between assignment and novation for federal contractors buying and selling a business that includes an assignment and FAR novation agreement or assignment of contract issues under FAR 42.1204 novation clause, or need help with government contracting companies for sale, call Watson & Associates’ government contract novation law lawyers for immediate help. Call 1-866-601-5518. FREE INITIAL CONSULTATION.
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International Long-Term Assignments
International long-term assignments enable companies to expand their global reach, extend their network of resources, and increase in-house experience, while building a diverse and culturally aware workforce. Long-term assignments are generally a minimum of one year and may last 3-5 years total. The benefits offered typically support both the employee as well as their family.
Program Development
Historically, long-term assignment programs were unilateral – one policy applicable to all employees – and used to deploy highly-skilled talent. However, as globalization continually changes business requirements along with the need to grow and retain a strong global talent pool, some of the reasons companies use long-term international assignments have changed. The employee experience has also become a key consideration of talent retention and growth. As such the need for flexibility, scalability, and efficiency through cost containment has changed the long-term assignment program landscape. With companies taking different approaches to their talent strategies, more are using alternative program configurations, such as tiered policies (often by assignment objective or job level), or structured core/flex programs which provide a set of core benefits to each tier, with flexible options also delineated by tier. For example, in a structured core/flex program, core benefits across all tiers may include compliance items such as tax counseling and immigration assistance as well as basic relocation support such as temporary living, travel to/from the host location, household goods shipment and home leave. A lower-level tier may have only a few flex options available such as language and cultural training or a small miscellaneous expense allowance. A higher tier may include a greater number of flexible options, such as a pre-assignment trip, education assistance, etc. There are many configuration options to support the need for employee flexibility and contain cost, but structure is an essential component of a core/flex program and helps keep exceptions to a minimum.
When developing a long-term assignment program, these initial steps are recommended:
- Consider the overall company culture, mobility philosophy, business objectives of the international long term assignment program, and common assignment objectives.
- Identify employee job levels and demographics.
- Reflect on the importance of the employee experience as well as how the assignment policy can support DEI initiatives.
- Determine the potential traffic patterns, if possible, to estimate the anticipated cost of the benefits under consideration.
These initial steps will, in turn, help the company determine the desired program structure and ultimately, the policy parameters. In addition, having an established, comprehensive program with clearly defined parameters will help the company focus on global compliance with applicable immigration, tax, and employment laws.
A brief description of the components commonly found in international long-term assignment programs follows. It is important to note that not every component has to be included to have a successful program. The business reason for the assignment, regional variances, company culture, employee experience and cost all play a part in a company determining what components are included. It is also important to note that there may be variations on the descriptions included below.
International Long Term Assignment Program Components
Program Component | Description |
---|---|
Candidate Assessment | Allows informed decision-making by the employee and family as to the likely success of an international assignment. Can help protect the company's return on investment as de-selection by the employee is preferable to a failed assignment. |
Base Salary | Company policy regarding base salary, incentives, merit increases, and anticipated payroll practices should be outlined in policy. |
Employee Benefits | Companies may address changes to medical or other benefits in this section. |
Working Hours, Public Holidays and Vacation | The working hours and public holidays of the host location are usually followed while on assignment. Most commonly, home country vacation/paid time off policies continue to apply, though some companies will provide the better of home or host vacation time or may provide additional days off for home leave (and R&R, if applicable) trips. |
Repayment Agreement | Requires repayment of all or a portion of the incurred relocation and assignment-related expenses if employment is terminated within a specific period, most commonly the first 1-2 years of the assignment. Enforceability depends on host country law; helps protect the company's assignment investment. A separate agreement may also be applied to repatriation expenses. |
Immigration Assistance | Assistance provided to obtain passports, work permits, visas, and other documentation for the employee to legally work and live in the host country. Typically, coverage for accompanying family includes any documentation needed to legally enter and live in the host country; work permits for spouse/partner are dependent on company culture and host country laws but are not commonly provided. |
Tax Counseling | Helps the employee and spouse/partner understand the financial implications/tax impact in both the home and host country of an international long-term assignment. May be provided by the company's tax firm before departure, upon arrival and at assignment end. |
Medical Examinations | Coverage for medical examinations and required inoculations for the employee and accompanying family, especially if health certifications are required by the host country. |
Security Briefing | Depending on location and available company resources, provide a briefing to help employee and family understand safety and security procedures and emergency protocols. |
Miscellaneous Expense Allowance (MEA) | An allowance provided to assist with assignment-related expenses not covered elsewhere in policy. Often based on one month’s salary but can be a flat amount. It is best practice to cap the amount and include a list of items in policy for which the MEA is intended to be used. |
Pre-Assignment Trip | Provided to the employee and spouse/partner to find assignment housing and set realistic expectations of the host location. Provides the opportunity for area orientation and can help reduce the need for temporary living upon arrival. Specific trip parameters should be included in the policy to help contain costs. For certain locations, this trip may be offered before final assignment acceptance to allow for informed decision making. |
Destination Services | Provided by a local destination services provider, speeds acclimation for the employee and family. Services can include area familiarization, home finding, school orientation, and settling-in assistance. |
Language Training | Offered to the employee and spouse/partner when needed. Can be a critical component to a successful transition, especially for the spouse/partner. Generally offered both pre- and post-arrival; cost efficient online/virtual options are available. |
Cultural Training | Essential to prepare the employee and family for life in a different cultural environment as effective cultural integration plays an integral role in assimilation. Online/virtual options are available. |
Home Country Housing | Support for home country housing is declining unless it is known at time of expatriation that the employee will not be returning to the point of origin. If home country housing support is provided, the most common coverage is property management assistance or an allowance to homeowners and/or lease cancellation coverage for renters. Caps are encouraged to contain costs. See also Storage: Home Country and Home Housing Norm. |
Home Country Automobile: Loss on Sale | Support for home country automobile varies based on home country car policies and culture. When offered, the most common coverage is for up to 2 cars (one if single/unaccompanied; 2 if accompanied and family used 2 cars in home location). Options may include loss on sale calculation defined as the difference between actual sale price and established retail value, lease cancellation or a flat allowance. If reimbursing, a cap per car is recommended to help contain costs. |
Shipment of Household Goods | Coverage is generally based on the type of assignment housing (furnished vs. unfurnished) and accompanying family size. If furnished housing, only an air shipment or reimbursement of excess baggage may be provided. If unfurnished housing, both an air shipment and a surface/sea shipment may be provided. Best practice is to stipulate limits in policy, including a list of items that will not be shipped and services that will not be provided. In lieu of a household goods shipment, some companies may provide an allowance option. Unavoidable storage in transit provided as needed for 30-60 days when goods are shipped. |
Home Country Storage | Support for home country storage is declining but tied to benefits for home country housing support. If offered, coverage is for the duration of the assignment and for 30-60 days at assignment end. |
Pet Transportation | Inclusion/exclusion in policy is highly dependent on company culture. If included, usually limited to household pets, such as dogs and cats. May be offered as a reimbursement, allowance or through a pet shipment provider. Limiting the number of pets and including a monetary cap will help contain costs. |
Temporary Living | Provided in both the home and host locations, usually for 30-60 days total. Along with lodging, companies may reimburse for parking and meals during the temporary living period. |
Travel to the Host Location | Coverage for the expenses for the employee and accompanying family to travel to the host location. Specific coverage details should be listed in the policy to help reduce exceptions and contain costs. Travel expenses such as airfare may or may not be aligned with company travel policy. |
Host Housing Assistance | A housing allowance is determined by an independent data provider and is based on employee's salary and family size. Payment may be made directly to the landlord or to the employee, whichever is most tax efficient. It is not intended to replicate home country housing. |
Host Furnishings/Appliances | May be provided at Company discretion and based on host country housing and/or shipping circumstances. Needed furnishings can be rented, reimbursed, or provided via allowance, as applicable. Caps help contain costs. |
Host Location Transportation | Depends on host location practices and company policy. A company car, leased vehicle or transportation allowance may be provided for the assignment. Reimbursement of a rental car or a transportation allowance may be provided upon arrival for 2-4 weeks to give the employee time to purchase a car. |
Goods and Services Differential | Also known as Cost of Living Allowance/Assistance. An allowance to help offset the higher cost of goods and services in the host location while on assignment. Commonly determined by an international data provider and based on the differential in costs between the home and host locations for the employee's income level and family size. Most companies do not apply a negative differential but may cap salary for cost containment. Payment usually starts upon arrival in assignment housing. |
Home Housing Norm | A deduction from employee's pay that represents their contribution toward host housing. Dependent on company philosophy and used less frequently than in the past. The cost offset for elimination of the deduction is no support for home country housing and storage (and often home country vehicles). The company then provides full support for host location housing. If the norm is deducted, calculated by an independent data provider based on employee's income and family size. |
Location Allowance | Provided at company discretion for certain hardship locations to assist with extra costs that may be needed to acclimate. Hardship data is often provided by the company’s international data provider and the allowance is typically based on a percentage of salary paid while the employee is in their assignment housing. Companies may cap for cost containment. |
Education Assistance | When local host location schools do not meet home country schooling standards, companies will provide reimbursement for tuition and required registration/enrollment fees for private or international primary and secondary schooling for accompanying children. Many companies specify a beginning age limit (such as age 4 or 5), since primary school starting ages can vary widely. Pre-school (year prior to primary school) coverage varies greatly but most companies do not cover day care expenses. |
Non-Accompanying Dependent Trave | If unmarried dependent children do not accompany the employee, most companies will reimburse 1-2 trips for the child(ren) to visit the host location. Stipulating an age limit among other parameters such as limiting to economy/coach class airfare helps contain costs. |
Home Leave | Accompanied employees are commonly provided one home leave annually. Round trip travel (airfare, mileage, train fare) to the leave location and ground transportation to/from airport/train station are usually reimbursed. An allowance can also be considered. Companies vary in terms of the leave location, with some requiring leave to be taken at the point of origin. Others allow alternate locations, as long as the cost is equivalent. |
Rest and Relaxation (R&R) Leave | For some hardship locations, companies may provide an additional short leave to a pre-determined regional location on an annual basis. Round trip travel (airfare, mileage, train fare) to the leave location and ground transportation to/from airport/train station are usually reimbursed. An allowance can also be considered. |
Emergency Leave/Evacuation | Policies will define circumstances when the employee/family will be provided with leave for specified emergencies in the home location, and emergency evacuations from the host location. |
Spouse/Partner or Family Support | Companies may provide transition assistance from a third-party provider to help the spouse/partner find employment or help transition to the host location. In some cases, companies may provide work permit assistance (where available) or an allowance payment. |
Repatriation Integration program | Often provided for longer-term assignments (such as over 3 years) but can be helpful for shorter assignments as well. Addresses issues such as reverse culture shock, provides transition strategies, and helps the employee leverage newly acquired global skills in the home (space) work location. Online/virtual options are available. |
Departure Services | Provided at assignment end by the local destination services provider to assist with lease termination and deposit recovery, disconnection of utilities, de-registration with local authorities, etc. |
Return Shipment of Household goods | Usually follows the same parameters as at expatriation. If an allowance was provided at expatriation, a return shipment is not provided. |
Return Travel | Usually follows the same parameters as at expatriation. |
Repatriation Temporary Living | Usually follows the same parameters as at expatriation. A rental car may be provided for a limited time (usually up to 30 days) to allow employee to secure transportation. |
Repatriation Miscellaneous Allowance | Provided by some companies to cover incidental repatriation expenses not covered by policy. Can be the same amount as at expatriation, or a reduced % of the initial allowance. |
Tax Return Preparation | Provided for the tax years of the assignment and any subsequent years if there is residual assignment-related income; usually includes tax return preparation for the home and host countries, as required. |
Tax Equalization | Many companies provide tax equalization for any assignment-related tax liabilities that the employee may incur. Alternatively, tax assistance may be provided. |
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Assignment of Benefits: What It Is, and How It Can Affect your Property Insurance Claim
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Table of Contents
What is an Assignment of Benefits?
In the context of insured property claims, an assignment of benefits (AOB) is an agreement between you and a contractor in which you give the contractor your right to insurance payments for a specific scope of work . In exchange, the contractor agrees that it will not seek payment from you for that scope of work, except for the amount of any applicable deductible. In other words, you give part of your insurance claim to your contractor, and your contractor agrees not to collect from you for part of its work.
The most important thing to know about an assignment of benefits is that it puts your contractor in control your claim , at least for their scope of work. Losing that control can significantly affect the direction and outcome of your claim, so you should fully understand the implications of an AOB (sometimes called an assignment of claims or AOC) before signing one.
How Does an Assignment of Benefits Work in Practice?
Let’s say you’re an insured homeowner, and Hurricane Ian significantly damaged your roof. Let’s also assume your homeowner’s policy covers that damage. A roofer, after inspecting your roof and reviewing your insurance policy, might conclude that your insurer is probably going to pay for a roof replacement under your insurance policy. The only problem is that it’s early in the recovery process, and your insurer hasn’t yet stated whether it will pay for the roof replacement proposed by your contractor. So if you want your roof replaced now, you would ordinarily agree to pay your roofer for the replacement, and wait in hopes that your insurer reimburses you for the work. This means that if your insurance company refuses to pay or drags out payment, you’re on the hook to your roofer for the cost of the replacement.
As an alternative to agreeing to pay your roofer for the full cost of the work, you could sign an assignment of benefits for the roof replacement. In this scenario, your roofer owns the part of your insurance claim that pertains to the roof replacement. You might have to pay your roofer for the amount of your deductible, but you probably don’t have to pay them for the rest of the cost of the work. And if your insurance company refuses to pay or drags out payment for the roof replacement, it’s your roofer, and not you, who would be on the hook for that shortfall.
So should you sign an AOB? Not necessarily. Read below to understand the pros and cons of an assignment of benefits.
Are There any Downsides to Signing an Assignment of Benefits?
Yes.
You lose control of your claim . This is the most important factor to understand when considering whether to sign an AOB. An AOB is a formal assignment of your legal rights to payment under your insurance contract. Unless you’re able to cancel the AOB, your contractor will have full control over your claim as it relates to their work.
To explain why that control could matter, let’s go back to the roof replacement example. When you signed the AOB, the scope of work you agreed on was to replace the roof. But you’re not a roofing expert, so you don’t know whether the costs charged or the materials used by the roofer in its statement of work are industry appropriate or not. In most cases, they probably are appropriate, and there’s no problem. But if they’re not – if, for instance, the roofer’s prices are unreasonably high – then the insurer may not approve coverage for the replacement. At that point, the roofer could lower its prices so the insurer approves the work, but it doesn’t have to, because it controls the claim . Instead it could hold up work and threaten to sue your insurer unless it approves the work at the originally proposed price. Now the entire project is insnared in litigation, leaving you in a tough spot with your insurer for your other claims and, most importantly, with an old leaky roof.
Misunderstanding the Scope of Work. Another issue that can arise is that you don’t understand the scope of the assignment of benefits. Contractor estimates and scopes of work are often highly technical documents that can be long on detail but short on clarity. Contractors are experts at reading and writing them. You are not. That difference matters because the extent of your assignment of benefits is based on that technical, difficult-to-understand scope of work. This can lead to situations where your understanding of what you’re authorizing the contractor to do is very different from what you’ve actually authorized in the AOB agreement.
In many cases, it’s not necessary . Many contractors will work with you and your insurer to provide a detailed estimate of their work, and will not begin that work until your insurer has approved coverage for it. This arrangement significantly reduces the risk of you being on the hook for uninsured repairs, without creating any of the potential problems that can occur when you give away your rights to your claim.
Do I have to sign an Assignment of Benefits?
No. You are absolutely not required to sign an AOB if you do not want to.
Are There any Benefits to Signing an Assignment of Benefits?
Potentially, but only if you’ve fully vetted your contractor and your claim involves complicated and technical construction issues that you don’t want to deal with.
First, you must do your homework to fully vet your contractor! Do not just take their word for it or be duped by slick ads. Read reviews, understand their certificate of insurance, know where they’re located, and, if possible, ask for and talk to references. If you’ve determined that the contractor is highly competent at the work they do, is fully insured, and has a good reputation with customers, then that reduces the risk that they’ll abuse their rights to your claim.
Second, if your claim involves complicated reconstruction issues, a reputable contractor may be well equipped to handle the claim and move it forward. If you don’t want to deal with the hassle of handling a complicated claim like this, and you know you have a good contractor, one way to get rid of that hassle is an AOB.
Another way to get rid of the hassle is to try Claimly, the all-in-one claims handling tool that get you results but keeps you in control of your claim.
Can my insurance policy restrict the use of AOBs?
Yes, it’s possible that your Florida insurance policy restricts the use of AOBs, but only if all of the following criteria are met:
- When you selected your coverage, your insurer offered you a different policy with the same coverage, only it did not restrict the right to sign an AOB.
- Your insurer made the restricted policy available at a lower cost than the unrestricted policy.
- If the policy completely prohibits AOBs, then it was made available at a lower cost than any policy partially prohibiting AOBs.
- The policy includes on its face the following notice in 18-point uppercase and boldfaced type:
THIS POLICY DOES NOT ALLOW THE UNRESTRICTED ASSIGNMENT OF POST-LOSS INSURANCE BENEFITS. BY SELECTING THIS POLICY, YOU WAIVE YOUR RIGHT TO FREELY ASSIGN OR TRANSFER THE POST-LOSS PROPERTY INSURANCE BENEFITS AVAILABLE UNDER THIS POLICY TO A THIRD PARTY OR TO OTHERWISE FREELY ENTER INTO AN ASSIGNMENT AGREEMENT AS THE TERM IS DEFINED IN SECTION 627.7153 OF THE FLORIDA STATUTES.
627.7153.
Pro Tip : If you have an electronic copy of your complete insurance policy (not just the declaration page), then search for “policy does not allow the unrestricted assignment” or another phrase from the required language above to see if your policy restricts an AOB. If your policy doesn’t contain this required language, it probably doesn’t restrict AOBs.
Do I have any rights or protections concerning Assignments of Benefits?
Yes, you do. Florida recently enacted laws that protect consumers when dealing with an AOB.
Protections in the AOB Contract
To be enforceable, a Assignments of Benefits must meet all of the following requirements:
- Be in writing and executed by and between you and the contractor.
- Contain a provision that allows you to cancel the assignment agreement without a penalty or fee by submitting a written notice of cancellation signed by the you to the assignee:
- at least 30 days after the date work on the property is scheduled to commence if the assignee has not substantially performed, or
- at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property.
- Contain a provision requiring the assignee to provide a copy of the executed assignment agreement to the insurer within 3 business days after the date on which the assignment agreement is executed or the date on which work begins, whichever is earlier.
- Contain a written, itemized, per-unit cost estimate of the services to be performed by the assignee .
- Relate only to work to be performed by the assignee for services to protect, repair, restore, or replace a dwelling or structure or to mitigate against further damage to such property.
- Contain the following notice in 18-point uppercase and boldfaced type:
YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS AGREEMENT IS EXECUTED, AT LEAST 30 DAYS AFTER THE DATE WORK ON THE PROPERTY IS SCHEDULED TO COMMENCE IF THE ASSIGNEE HAS NOT SUBSTANTIALLY PERFORMED, OR AT LEAST 30 DAYS AFTER THE EXECUTION OF THE AGREEMENT IF THE AGREEMENT DOES NOT CONTAIN A COMMENCEMENT DATE AND THE ASSIGNEE HAS NOT BEGUN SUBSTANTIAL WORK ON THE PROPERTY. HOWEVER, YOU ARE OBLIGATED FOR PAYMENT OF ANY CONTRACTED WORK PERFORMED BEFORE THE AGREEMENT IS RESCINDED. THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM THE DUTIES REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY.
- Contain a provision requiring the assignee to indemnify and hold harmless the assignor from all liabilities, damages, losses, and costs, including, but not limited to, attorney fees.
Contractor Duties
Under Florida law, a contractor (or anyone else) receiving rights to a claim under an AOB:
- Must provide you with accurate and up-to-date revised estimates of the scope of work to be performed as supplemental or additional repairs are required.
- Must perform the work in accordance with accepted industry standards.
- May not seek payment from you exceeding the applicable deductible under the policy unless asked the contractor to perform additional work at the your own expense.
- Must, as a condition precedent to filing suit under the policy, and, if required by the insurer, submit to examinations under oath and recorded statements conducted by the insurer or the insurer’s representative that are reasonably necessary, based on the scope of the work and the complexity of the claim, which examinations and recorded statements must be limited to matters related to the services provided, the cost of the services, and the assignment agreement.
- Must, as a condition precedent to filing suit under the policy, and, if required by the insurer, participate in appraisal or other alternative dispute resolution methods in accordance with the terms of the policy.
- If the contractor is making emergency repairs, the assignment of benefits cannot exceed the greater of $3,000 or 1% of your Coverage A limit.
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Brelly’s tools and resources are your secret weapon to getting your insurance claim filed right, moving fast, and paid fully .
What is fiat money?
History of fiat money, how fiat money works, pros and cons of fiat money, future of fiat money, fiat money: definition, history, and how it works.
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- Fiat money is currency backed by the government that issued it and isn't tied to a commodity such as gold.
- Fiat money issuers can have a lot of influence on the economy by controlling the supply of this currency.
- Overly aggressive monetary policies run the risk of eroding the value of fiat currencies.
You've probably heard the expression, "Backed by the full faith and credit of the US government," in reference to the dollar. That's the principle behind fiat money. Its value is based on people's trust in the authorities that issue it.
While fiat money has been the norm since the early 1970s, the emergence of cryptocurrencies like bitcoin has been gaining acceptance in government and business. Many of the best online brokerages now offer crypto trading in addition to traditional stocks and ETFs.
The US Dollar, Euro, British pound, and Yen are all examples of fiat money backed by an issuing government. Most contemporary fiat money is paper currency.
Here's everything you need to know about fiat money, how it came to be, and its future.
Fiat money is a government-issued legal tender. Unlike currencies tied to the value of physical commodities like precious metals, fiat money doesn't have inherent value like gold or silver. Instead, it derives value from the public's trust in its issuers.
The term "fiat" is derived from the Latin word meaning an authoritative determination or order.
Origins and evolution of fiat money
Fiat money originated in China during the 10th century, primarily during the Yuan, Tang, Song, and Ming dynasties. Due to a limited supply of precious metals (particularly copper during the Song Dynasty), China suffered from a coin shortage. Paper drafts and private notes covered by a monetary reserve became readily accepted soon after and became the only legal tender by the Yuan Dynasty.
France, the Continental Congress, and the American colonies began using paper currency in the 18th century. Government-issued notes were regarded as bills of credit commonly used to pay taxes. Fiat money rose in popularity during times of war to preserve the value of precious metals.
For example, during the American Civil War, people used pieces of paper called "Greenbacks."
Transition from commodity money to fiat money
Most of the world's currency is now fiat money. It began to see widespread use in the 20th century when the US dollar was decoupled from the price of gold.
Commodity money — valued from the underlying price of gold, silver, and other materials — has been used throughout history. Coins made from precious metals were the standard for thousands of years. By the 18th and 19th centuries, paper currencies began to take hold, although many served as promissory notes to pay specific quantities of gold and silver.
Countries like the UK and the US embraced the gold standard, a monetary system tying the value of a standard unit of currency's value to a certain amount of gold. When the Great Depression and two world wars severely affected the global economy, world leaders created an international monetary system, positioning the US dollar as a global currency.
International balances were settled in dollars and converted to gold at a fixed exchange rate. The gold standard was in place until 1971, when US President Richard Nixon, faced with surging inflation and high unemployment, ended it as the amount of foreign-held dollars exceeded the amount of gold in the US reserves.
Government issuance and regulation
Since fiat money doesn't have intrinsic value and isn't linked to physical commodities, its value derives from people's confidence and trust in the government that issues it. Financial and Federal Reserve authorities strictly regulate and oversee it to maintain and encourage a stable, reliable money system that protects consumers and businesses alike.
The lack of tangible backing allows governments more flexibility in managing and regulating currency. In the US, the Federal Reserve controls the supply of dollars, and the European Central Bank controls the supply of the euro common currency.
Role of central banks
The government's flexibility in regulating its own currency also allows central banks to greatly influence the economy because they can control the money supply. Monetary policies and economic conditions — including interest rates, reserve ratios for banks, and supply and demand — largely determine the value of fiat currency.
However, fiat money is also vulnerable to political instability. This may lead to a weakening currency and diminished value. Another concern is hyperinflation through overprinting, which could lead to an economic disaster.
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Fiat money has been a reliable global financial system for decades, trusted to facilitate day-to-day transactions, purchases, and trades. But, the emergence of digital money and decentralized assets is quickly reshaping money. A gradual decline of fiat money may be on the horizon.
With the advent of cryptocurrencies such as bitcoin and ether, there's been debate about whether such digital assets could ultimately supplant fiat money as the preferred medium of exchange or at least provide an alternative.
"Like with any incumbent technology for an existing system, it kind of mostly works most of the time," says Andy Edstrom, CFA and financial advisor at WESCAP Group .
But, as inflation rises and more fiat units are printed, "the cracks are starting to appear in the system," says Edstrom.
Some people fear that the financial authorities cannot employ effective strategies to manage inflation and prevent hyperinflation. There are also concerns about the impact of national debt levels on fiat currency. Long-term, unsustainable debt can diminish people's confidence and lead to further economic instability.
Digital currencies and fiat money
The advent of cryptocurrencies has spurred a debate about the future of fiat currencies and whether they'll ultimately give way to digital coins. Cryptocurrencies such as Bitcoin aren't fiat money because they aren't issued, controlled, or backed by any central authority. In some cases, the total maximum supply is designed to be capped at a certain amount.
The price volatility of cryptocurrencies is one reason some skeptics say they are unlikely to supplant fiat money as the dominant medium of exchange. However, acceptance of crypto has been growing, with the SEC approving two spot crypto ETFs to be traded on the traditional stock market in 2024.
Some cryptocurrencies, called stablecoins , can be pegged to commodities or fiat money, intended to make them less volatile. Some cryptocurrencies have utility, such as transferring payments or powering decentralized networks and applications. Others are created for fun, and some can be scams.
Edstrom explains that cryptocurrencies can be used transactionally but haven't been fully adapted as money due to their volatile nature. "But if Bitcoin reaches its potential over the next decade or two," he says, "then it's likely that the volatility will reduce, and it's likely that Bitcoin will become used commonly as money in the economy as it matures."
Time will tell how cryptocurrencies will ultimately be used for financial transactions and where they'll eventually fit in the international monetary system. For now, keep an eye on the developments and consider the pros and cons of fiat money when making decisions about saving and investing.
Fiat money is currency backed by the public's faith in the government or central bank that issued it. It is the standard throughout most of the world. Unlike commodity currency, which is linked to commodity prices such as gold or silver, fiat money has no intrinsic value. Instead, it derives its value from people's trust in the governments that issue it.
Fiat money originated in China during the 10th century, primarily due to a lack of precious metals. It didn't appear in the West until the 18th century, as government-issued notes were primarily used to pay taxes. Fiat currency became more widely used in the US during the 20th century when the US dollar was decoupled from the price of gold.
The main advantage of fiat money is that it allows the government to have greater control of its own currency and economic stability. Fiat money is also cheaper and easier to make than commodity-backed currencies.
The main disadvantage of fiat money is the risk of inflation if it is overprinted. Overprinting can cause a potential loss of value due to its lack of intrinsic worth and dependence on government stability.
Fiat money affects the economy by permitting governments and other regulatory bodies to implement monetary policies that influence interest rates, inflation, and overall economic stability. The government has more flexibility to regulate its own currency, but fiat money must be closely regulated to prevent instability and hyperinflation.
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Synonyms of assignment
- as in lesson
- as in appointment
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Thesaurus Definition of assignment
Synonyms & Similar Words
- responsibility
- undertaking
- requirement
- designation
- appointment
- authorization
- installment
- installation
- destination
- emplacement
- investiture
- singling (out)
Antonyms & Near Antonyms
- dethronement
Synonym Chooser
How does the noun assignment contrast with its synonyms?
Some common synonyms of assignment are chore , duty , job , stint , and task . While all these words mean "a piece of work to be done," assignment implies a definite limited task assigned by one in authority.
When is it sensible to use chore instead of assignment ?
While the synonyms chore and assignment are close in meaning, chore implies a minor routine activity necessary for maintaining a household or farm.
When is duty a more appropriate choice than assignment ?
Although the words duty and assignment have much in common, duty implies an obligation to perform or responsibility for performance.
When might job be a better fit than assignment ?
The synonyms job and assignment are sometimes interchangeable, but job applies to a piece of work voluntarily performed; it may sometimes suggest difficulty or importance.
When could stint be used to replace assignment ?
In some situations, the words stint and assignment are roughly equivalent. However, stint implies a carefully allotted or measured quantity of assigned work or service.
When can task be used instead of assignment ?
The meanings of task and assignment largely overlap; however, task implies work imposed by a person in authority or an employer or by circumstance.
Thesaurus Entries Near assignment
assignments
Cite this Entry
“Assignment.” Merriam-Webster.com Thesaurus , Merriam-Webster, https://www.merriam-webster.com/thesaurus/assignment. Accessed 27 Jul. 2024.
More from Merriam-Webster on assignment
Nglish: Translation of assignment for Spanish Speakers
Britannica English: Translation of assignment for Arabic Speakers
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Southwest Airlines Will End Its Longstanding Open-Seating Policy
The airline said it was scrapping its trademark, 50-year tradition of offering open seating, where passengers choose seats once they have boarded the plane.
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By Jenny Gross and Danielle Kaye
Southwest Airlines will start assigning seats to passengers, ending its longstanding policy of allowing passengers to pick their seats once they have boarded, the airline said on Thursday.
The new procedure will be implemented to increase revenue and in response to feedback from customers, 80 percent of whom report preferring an assigned seat, Southwest said.
“This is the right choice — at the right time — for our customers, our people and our shareholders,” said Bob Jordan, the president and chief executive of Southwest.
Even though the airline has been known for its unique seating model for more than 50 years, preferences have evolved, with more customers taking longer flights where they prefer a seat assignment, the statement said. The new policy was reported earlier by The Wall Street Journal .
The changes bring Southwest, which for years has distinguished itself by offering low prices and a simple business approach, more in line with conventional airlines like American Airlines and United Airlines.
Southwest makes a little less than $1 billion from fees it charges for the ability to board early and “ancillary” services, Mr. Jordan said Thursday on a conference call with analysts to discuss the company’s second quarter results. The company expects that earnings from the move to assigned seating and offering seats with extra legroom will be “substantially north of that,” he said.
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ON ASSIGNMENT meaning: 1. Someone who is on assignment is doing a particular job or piece of work, usually in a particular…. Learn more.
Assignment: An assignment is the transfer of an individual's rights or property to another person or business. For example, when an option contract is assigned, an option writer has an obligation ...
Assignments: The Basic Law. The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States. As with many terms commonly used, people are familiar with the ...
The meaning of ASSIGNMENT is the act of assigning something. How to use assignment in a sentence. ... , joan C. Williams, Harvard Business Review, 15 July 2024 There's still no decision on whether Giancarlo Stanton ... Share the Definition of assignment on Twitter Twitter. Legal Definition. assignment. noun. as· sign· ment. 1
ASSIGNMENT meaning: 1. a piece of work given to someone, typically as part of their studies or job: 2. a job that…. Learn more.
ASSIGNMENT definition: 1. a piece of work given to someone, typically as part of their studies or job: 2. a job that…. Learn more.
a business/special assignment ; I had set myself a tough assignment. on an assignment She is in Greece on an assignment for one of the Sunday newspapers. on assignment one of our reporters on assignment in China
The name of the of the party who is taking the rights and responsibilities (the assignee) The other party to the first agreement (known as the obligor) The name of the agreement and its expiration date. Whether the first contract necessitates the obligor's approval before assigning rights. The date of the obligor's consent.
1 [countable, uncountable] a task or piece of work that someone is given to do, usually as part of their job or studies You will need to complete three written assignments per semester. She is in Greece on an assignment for one of the Sunday newspapers. one of our reporters on assignment in China I had given myself a tough assignment. a business/special assignment
An assignment of contract occurs when one party to an existing contract (the "assignor") hands off the contract's obligations and benefits to another party (the "assignee"). Ideally, the assignor wants the assignee to step into their shoes and assume all of their contractual obligations and rights. In order to do that, the other party to the ...
Assignment (law) Assignment [a] is a legal term used in the context of the laws of contract and of property. In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee. [1] An assignment may not transfer a duty, burden or detriment without the express agreement of the assignee.
An assignment of contract is defined as the handing off of an existing contract's obligations and/or benefits to another party. Assignment of contract is often used in property and contract law ...
Business Plan: A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals. A business plan lays out a written plan from a ...
7 meanings: 1. something that has been assigned, such as a mission or task 2. a position or post to which a person is assigned.... Click for more definitions.
1. : a job or duty that is given to someone : a task someone is required to do. [count] My assignment was to clean the equipment. = They gave me the assignment of cleaning the equipment. The students were given a homework assignment. The reporter's assignment is to interview the candidate. The reporter is here on an assignment.
Commercial. An assignment is 'an immediate transfer of an existing proprietary right, vested or contingent from one party to another'. Assignments can occur by consent or by operation of law. A consensual assignment occurs by way of a gift or consideration. Assignments by law can occur during life or on death and will transfer the benefit of ...
The IRS definition of a short-term assignment is very precise: the company must expect it to last for less than one year and it must actually last for less than one year. In this case, the IRS considers travel, lodging and certain other expenses to be business expenses that are deductible for the employer and not W-2 benefits to the employee.
Novating a contract that involves a federal government contract can be painless so long as buyers and sellers of businesses understand how the process works. In addition, before committing to a future sale or purchase of a business, understand the difference between an assignment vs novation.. All should be aware that the contracting officer does not have to approve every assignment of ...
The business reason for the assignment, regional variances, company culture, employee experience and cost all play a part in a company determining what components are included. It is also important to note that there may be variations on the descriptions included below. International Long Term Assignment Program Components
Assignment of benefits, widely referred to as AOB, is a contractual agreement signed by a policyholder, which enables a third party to file an insurance claim, make repair decisions, and directly ...
What is an Assignment of Benefits? In the context of insured property claims, an assignment of benefits (AOB) is an agreement between you and a contractor in which you give the contractor your right to insurance payments for a specific scope of work.In exchange, the contractor agrees that it will not seek payment from you for that scope of work, except for the amount of any applicable deductible.
Definition of a routing number. A routing number is a number that can be used to identify your financial institution. It's also called an ABA routing number (ABA stands for "American Bankers ...
A strategy that could backfire Continued attacks on Harris' race or gender could ultimately backfire against Republicans, according to Glynda Carr, president of Higher Heights for America, a ...
Fiat money is currency backed by the government that issued it and isn't tied to a commodity such as gold. Fiat money issuers can have a lot of influence on the economy by controlling the supply ...
A Russian court has sentenced Alsu Kurmasheva, a Russian-American journalist, to six-and-a-half years in prison, state news agency TASS reported Monday.
Synonyms for ASSIGNMENT: task, job, duty, project, mission, chore, responsibility, function; Antonyms of ASSIGNMENT: dismissal, discharge, firing, expulsion ...
Southwest Airlines is shifting to assigned seats for the first time in its history, a change that will allow the low-fare carrier to charge a premium for some of the seats on its planes. The ...
Southwest Airlines will start assigning seats to passengers, ending its longstanding policy of allowing passengers to pick their seats once they have boarded, the airline said on Thursday. The new ...
The company that caused a massive computer outage across the world says a flawed update has been rolled back - but that doesn't necessarily help the thousands of businesses that have been ...
It marks a major shakeup to its business model. Southwest Airlines is shifting to assigned seating and will offer some premium seating with extra legroom, the low-cost carrier announced on Thursday as part of a significant shakeup to its traditional business model.. Why it matters: The changes come the same day the airline reported second quarter results that beat some expectations following a ...