This is not the first paper about assignments to be presented at the annual State Bar of Texas Construction Law Conference, 2 and it won’t be the last. As construction lawyers, most of us have already run into assigning contracts, assigning claims, or drafting liquidating agreements for pass-through claims. And if you haven’t yet, you probably will. This paper is intended as a starting point.
II. ASSIGNMENTS GENERALLY
In Texas, claims can be freely assigned unless doing so is prohibited by statute or public policy. City of San Antonio v. Valemas, Inc., No. 04-11-00768-CV, 2012 WL 2126932, at *8 (Tex. App.—San Antonio Jun. 13, 2012, no pet.) (mem. op.) (citing State Farm Fire & Cas. Co., v. Gandy, 925 S.W.2d 696, 705–07 (Tex. 1996)). Historically, the common law prohibited assignment of most claims.3 Over time, Texas courts eroded this prohibition, and carved out exceptions to effectively reverse the rule in Texas so that parties could freely assign claims, unless prohibited.4 In sum, the free assignability of claims remains the default rule, subject to specific prohibitions set forth by the Legislature or through public policy (as dictated by the courts). When courts evaluate whether an assignment is allowed under new circumstances (especially when a statute is silent on the issue), they still return to older common-law principles to determine whether public policy prohibits the assignment.5
