ARBAMINCH UNIVERSITY

SCHOOL OF LAW

GROUP 4 ; DELEGATIONS AND ASSIGNMENT OF OBLIGATION

Course; Contract Law

NAME ID.NO.

1. LIDIYA HENOK-----------------------------------------------SSHR/897/13
2. MESFIN GETU-------------------------------------------------SSHR /998/13
3. KRUBEL SOLOMON-----------------------------------------SSHR/853/13
4. MINTSINOT MAJOREY-------------------------------------SSHR/1037/13
5. KASU KACHINE-----------------------------------------------SSHR/822/13
6. NAHOM MELESE----------------------------------------------SSHR/1101/13
7. NIGUSSE TAREKEGN----------------------------------------SSHR/1134/13
8. MEDIHANT MOLLE------------------------------------------SSHR/1753/13

Submitted To: Yimegnu M. (LLB, LLM)

Submission date; January 21, 2023

Contents

1. INTRODUCTION ............................................................................................................3

2. OBLGATION ..................................................................................................................4

3. DELEGATION OF OBLIGATION UNDER THE ETHIOPIAN CIVIL CODE AND ITS

DEFINITION ..........................................................................................................................5

4. TYPES OF DELIGATION ...............................................................................................7

5. EFFECT OF DELIGATION ON THE THIRD PARTY ...................................................8

6. ASSIGNMENT OF OBLIGATION UNDER THE ETHIOPIAN CIVIL CODE AND ITS

DEFINITION ..........................................................................................................................8

7. DIFFERENCES AND SIMILARITIES OF DELEGATION AND ASSIGNMENT..........9

8. CASE STUDY ............................................................................................................... 10

9. CONCLUSION .............................................................................................................. 11

10. REFERENCES ........................................................................................................... 12

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 1. INTRODUCTION
Contract based on the Ethiopian civil code article 1675 defined as it is a contract is an agreement
whereby two or more persons as between themselves create, vary or extinguish obligations of a
proprietary nature.1 From this definition the definitional element that says ‘as between them
selves’ refers directly for privity effect of the contract. This is to mean a contract lawfully
created is binding not against everybody, however only over the parties contracted to that effect.
Furthermore article 1731 of same code stipulates that the provision of a contract lawfully formed
shall be binding on the parties as though they were law. 2 Again the article emphasis on the fact
that validly formed contracts has a legal binding effect over the parties who consented to that
effect.

Article 1952 on the other hand states that except in the cases provided in this code, contracts
shall produces effects only as between the contracting parties. 3 This provision with its caption of
relative effect of contract provides for the exception of privity principle of contract. Therefore,
relative effect of contract is exception for the privity principle.

Our topic of assignment is delegation and assignment of obligation that is provided under art
1976 – 1985. Before going to the articles let us discuss the meaning of obligation in itself,
delegation and assignment of obligation.

Delegation and assignment is the clause in an agreement that indicates a party’s ability to
designate their duties or rights. This provision is most commonly seen in the general or
miscellaneous sections of a contract. However, it should not be considered standard contract
language that ever changes.

1
Civil Code of the Empire of Ethiopia, 1966, Negarit Gazzeta, Extraordinary issue, Proc. No. 165, 19th year, No. 2,
Art. 1675 herein after the civil code
2
Ibid art 1731
3
Ibid 1952

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 2. OBLGATION
The first people to define obligations based on personal judgment were the ancient Roman
jurists. When one party promises the other party to do something or do some acts, the agreement
is legally binding. The idea was discriminatory in that it only required non-Roman citizens to
perform, grant, or provide rights. Obligation isn't precisely defined, nor is there one. However,
other academics define it in accordance with their own legal framework. For instance, the French
Civil Code divides the sources of responsibilities into three categories: contracts, criminal acts,
and obligations arising from other sources (quasi-contract).4

In the contemporary era, the laws of several nations define the origins of responsibility in clear
terms. For instance, the French Civil Code divides sources of obligation into three categories: I
obligations arising from contracts; ii) obligations arising from circumstances other than
contracts; and iii) obligations arising from unlawful conduct.

Obligations that result from causing bodily harm or property damage

Obligations resulting from the law

There are no definite categories of sources of obligations in the Ethiopian legal system.
However, the Ethiopian Civil Code's Article 1675 describes obligations generally as resulting
from contracts.

Close readings of the civil code's provisions, however, reveal that there are additional sources of
responsibilities, such as those resulting from non-contractual connections (from Articles 2027 to
2178), obligations resulting from unlawful activities.

These are the general concept of obligation, under contract law obligation emanates and also
bind the contracting party’s there for normally the contract should not affect third party a
contract my only affect its signatories, whether they benefit from it or have to implement
obligation but there is exception in which case a contract may produce effect on third party; the
situations are

 Promise and stipulations concerning third parties – where the contracting party states on
the contract that the contract will have effect on third party.
 Where the right of contractual party is assigned to a third party.
 Where obligation is assigned to a third party.

But whatever the category of third party concerned Article 1952 states this part does not affect
two categories and this are extra contractual liability and agency. 5

4
https://www.abysinianlaw.com last accessed 1/20/2023
5
Id

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 3. DELEGATION OF OBLIGATION UNDER THE ETHIOPIAN CIVIL CODE AND
ITS DEFINITION
Origen: the word comes from Latin (intercession) meaning delegation.

Delegation is a common practice in contract law and also in administrative law. It occurs when a
party to the contract transfers the responsibility and authority for performing a particular
contractual duty to another party. Delegation doesn’t involve the transfer of contractual rights. 6

It is an act of giving another person the responsibility of carrying out the performance agreed to
in a contract. three parties are concerned with this act the party who had incurred the obligation
to perform under the contract is called the delegator; the party who assumes the responsibility of
performing this duty is called the delegatee; and the party to whom this performance is owed is
called the oblige. 7

A delegation will be null and void if it poses any threat to the commercially reasonable
expectations of the obligee. For example task requiring specialized skills or based on the unique
characteristics of the promise cannot be delegated. If a specific celebrity was hired to make a
speech, they could not delegate the take to another person; even if the other person would give
the same speech word by word .how ever a delegation of performance that does not pose such a
threat will be held to be valid. In such a case the obligee will be under an affirmative duty to
cooperate with the delegate to extent necessary for the fulfillments of the delegator’s
obligations. 8

6
https://www.Study.com last accessed at 1/20/2023
7
https://www.abysinianlaw.com last accessed at 1/20/2023
8
Ibid

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This table contain a short and main issues of delegation under contract law and
administrative law.9

Delegation under contract law Delegation under administrative law

 It is an act of giving another third person  Is the process of handing some

the obligation to carry out the administrative action or decision to a
performance agreed in a contract. subordinate. It is achieved through two
 If the delgatee fails to perform mechanisms :
satisfactorily, the oblige may elect to  Where a statute or delegated
treat this failure as a breach of original legislation appoints an authorized
contract by the delegator or assert person to manage the power for a
himself as a third party beneficiary of the minister or CEO.
contract between the delegator and the In this case the delegate acts in their
delegate . own name, and the delegation is
 If the delegation is without consideration apposition that does not cease with
the delegator remains liable for the appointment of a new delegate.
nonperformance while the delegate will  In some circumstance a person in
not be liable for any thing . whom some power is vested can
authorized another person to exercise
that power on their behalf.

In contract law, delegation is the act of giving another party the responsibility of carrying out the
performance agreed to in a contract. The party receiving the responsibility must accept the
responsibility and authority. Some of the consequences of a delegation include:-

 The liability is transferred to the delegator from the delegatee (the party to whom an
obligation is owed).
 The delegatee is only liable to the obligee if the delegatee receives consideration from the
delegator.

Article 1976 of the civil code states the principle governing delegation is that the debtor of a
contractual obligation may substitute himself another debtor to perform the obligation.

In principle the debtor has to ask the creditor to accept a third party as his debtor who
consented to bind himself to him, the consent of a creditor is required as a rule for the
fact that the change of debtor could be very detrimental to the creditor.

9
https://www.en.m.wikipedia.org.com last accessed at 1/20/2023

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 But the Ethiopian law reserves cases where usage or the law itself allows such
substitution of debtors without the consent of the creditor.
But the delegate have rights for instance the delegate may have a claim against the
delegator and raise set-off as a ground the exception for this is he may not raise such
defense against the creditor as per Article (1980(1))of the civil code, but if the delegate
have a valid defense of set-off his debt with the creditor Article (1980(2)) allows him .
For the delegation to be complete the acceptance by the delegate debtor is necessary this
is recalled under Article (1978 ) of the civil code.
This provision puts the consent as a necessary foundation, even if the delegate is also the
debtor of the debtor, he cannot be forced to perform a given liability.
With this being said Article (1979)(2) of the civil code states once the delegate debtor has
consented to the delegation or made performance to the creditor the delegation may not
be revoked by the delegator and also sub (2) states the delegate may accept the liability or
perform the delegated obligation even after the death or incapacity of the delegator.

4. TYPES OF DELIGATION
There are two types of delegation based on the intention of the parties;
 Perfect delegation
 Imperfect delegation
 PERFECT DELIGATION (Article 1981of the civil code)

The contracting parties may agree that the old debt owed by the delegator towards the
creditor will be extinguished and then the original debtor will be relived from the any
obligation so basically the creditor has no right over the original debtor after the delegation
unless the delegate debtor is declared insolvent judicially, 10

For example ATO/ Abera is the creditor to Miss Abrashe and on the other hand Miss
Abrashe is a creditor to Mr,Almu then Miss Abrashe decided to delegate Mr Almu with his
full consent and Mr Abera accepted the delegation after the acceptance Miss Abrash is free
to go without no liability. if Mr Almu is provide sufficient security .

 IMPERFECT DELEGATION (Article 1977of the civil code)

The contracting party may have intended that the old debtor will not be exonerated rather the
creditor will have a second debtor, delegator additionally to the old debtor. Under Article 1977
of the civil code seems to imply distinction between perfect and imperfect delegation. The
creditor retain his right against the original debtor but he may not demand satisfaction from the
old debtor before demanding performance from the delegate debtor this fact is the reason that
imperfect delegation is said to resemble surety ship.11

10
The civil code art 1981 and 1977
11
Law of contract teaching material II, chapter 4

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 5. EFFECT OF DELIGATION ON THE THIRD PARTY
The initial contract may include third parties as sureties (mortgagors, surety givers....). They can
only be assumed to have extended to benefit the delegated debtor in the case of a specific
contract, such as the one between the original creditor and the original debtor. Therefore, unless
they gave their assent to the delegation, they are not accountable, according to Article 1982 of
the Civil Code. This is due to the fact that they have provided a surety with regard to the initial
contract, which links the original creditor and original debtor, and they cannot be assumed to
have extended it to the delegated debtor's advantage. The issue here is what happens if the
delegation fails for whatever reason and the creditor must go back to the original debtor to
collect payment. If the sureties have given their approval for the delegation, it cannot be assumed
that they have accepted anything other than a straightforward debtor substitution. As a result, the
sureties provided by third parties cannot be used as leverage by the creditor if the original debtor
is sued after a delegation was approved. This would entail assuming they consented to
guaranteeing two debts as opposed to just one. 12 Therefore, the creditor will exercise caution and
make sure that this is eventually covered in the document that contains the surety providers'
assent to the delegation.

6. ASSIGNMENT OF OBLIGATION UNDER THE ETHIOPIAN CIVIL CODE AND

ITS DEFINITION
The process of transferring accountability and responsibility is transferred to as an assignment.
There is no need to get a third party to approve a contract in an assignment. The rights within
contracts contain rights, which are held by one of the involved parties. 13

An assignment of rights and obligations under a contract occurs when a party assigns their
contractual rights to a third party. The benefit that the issuing party would have received from
the contract is now assigned to the third party. The party appointing their rights is referred to as
the assignor, while the party obtaining the rights is the assignee. 14 In an assignment contract, the
assignor prefers that the assignee reverses roles and assumes the contractual rights and
obligations as stated in the contract.

Contracts create duties and rights. An obligor is the party who is legally or contractually obliged
to provide a benefit or payment to another, while an obligation is owed to the obligee. The oblige
transfers a right to obtain a benefit owed by the obligator to a third party. At this point, the
obligee becomes an assignor. An assignor is the party that actually creates an assignment.

The party that creates an assignment is both the obliged and a transferor. The assignee receives
the right to acquire the obligations of the promisor/ obligor unless;

12
Law of contract teaching material II and the civil code
13
https://www.upcounsel.com last accessed at 1/20/2023
14
Id, the teaching material

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  Doing so will materially alter the obligation
 Its materially burdening
 It decreases the value of the original contract
 It increase their risk
 Public policy or a statute makes it illegal
 The contract prevents assignment

Articles 1983 to 1985 of the Civil Code discuss special delegations, all of which are based on the
concept of an amalgamation of estates that comprise both assets and liabilities. As a result, it is
particularly challenging to identify specific debts and, as a result, to delegate them precisely.

According to Article 1983 (1) of the Civil Code, the acquirer (buyer) in the case of the
assignment of an estate or an enterprise will be accountable to the creditors for all debts as of the
day he notified them of the assignment or advertised the transaction in the press.
To ensure the success of such publicity efforts, considerable requirements are required.
According to Article 1983(2) and (3) of the Civil Code, the assignee will be held jointly liable
with the assignor for a period of two years beginning with the date of the publicity measures
where debts are due or, in all other circumstances, beginning with the date the debtors reach
maturity.

The Civil Code's Articles 1984 and 1985, respectively, cover the topic of corporate mergers
(amalgamations) and the conversion of a sole proprietorship into a general or limited partnership.
According to Article 1984 of the Civil Code, the newly created undertaking would be held
accountable for the debts of each merging undertaking when two or more undertakings with
independent legal personalities of their own join by mutually transferring their assets and
liabilities.

The last time an assignment of responsibilities may take place is when a sole proprietorship or
individual business without its own independent legal personality changes into a general or
limited partnership. Following the transformation, a new legal entity is created that, in
accordance with Article 1985 of the Civil Code, assumes the obligations of the former individual
undertaking.

7. DIFFERENCES AND SIMILARITIES OF DELEGATION AND ASSIGNMENT

An assignment occurs when an original party to the contract transfers the rights and duties of the
contract to another party. A party can assign the entire contract, meaning that the party assigns
both the rights and the obligation of the contract. Alternatively, the party can assign only the
right, or benefit, due under the contract. The party making the assignment is called the assignor.
The party receiving the assignment is the assignee. It’s helpful to remember that the assignee
steps into the shoes of the assignor.

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Delegation, on the other hand, involves only a portion of the contract. With delegation, a
particular contractual task or activity is transferred. Delegation means that an obligation is
transferred, but no rights are transferred. The party making the delegation is called the delegator.
The party receiving the delegation is the delegatee. The delegatee doesn’t assume responsibility
for the entire contract or receive the benefits of the contract. Therefore, the delegatee doesn’t
step into the shoes of the delegator.

The main difference between delegation and assignment relates to contract rights. In an
assignment, the rights, or benefits, of the contract are assigned to another party. On the other
hand, in a delegation the delegator retains the rights, or benefits, of the contract, as well as the
overall obligations of the contract.

8. CASE STUDY (illustrative)

ON DELEGATION
Issue; - the creditor named ato mekasha has consented to discharge the delegator. But his during
the process warned him that ato mintesnot might be insolvent. Later on ato mekasha found out
that ato mintesnot’s business has gone bankrupt. Now, ato mekasha is bringing case against w/ro
ayelech and she is defending back by stating that the insolvency of the delegatee ocuredafter the
delegation. After hearing both sides the court decided that based on art 1981 (1) the creditor who
has releaved the debtor has no remedy against him. Therefore, the creditor is expected to foresee
some sort of risks. Ato mekasha in this illustrative case didn’t say anything and released w/ro
ayelech knowingly. Therefore, there is no right to recourse.

ON ASSIGNMENT OF OBLIGATION
Issue; - there are xyz enterprise engaged in furniture production; following a serious
disagreement among the members they sold their business for mr. kefyalew. However, the
enterprise owned 100000 debts from bank and discharged 30000 thereof. After three years the
bank claimed payment against the business. Mr. kefyalew raised the former owners are jointly
and severally liable to pay the debt. After a long trial the court rendered decision based on art
1983 (2) the joint liability ceases after two years.

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 9. CONCLUSION

A final remark can be made in respect of relative effect of contract. The principle of relative
effect of contract mentioned under art 1952 of the civil code is putting an exception to the rule of
privity. Contracting parties decide upon the contract and affected by the outcome thereof.
Relative effect is when the third party got included.

Privity of contract means the right and obligations emanating from the contract are private to the
parties who consented. While relativity means the obligations or rights emanated from the
contract relatively affect third party.

In case when the contracts concluded by other party which the contract produce effect on third
parties. Our title describes one of the situations that is delegation and assignment of obligation;
we can understand that liability can be delegated or assigned. Delegation is that the debtor of a
contractual obligation may substitute himself to perform the obligation he made. There are two
types; direct and indirect one. The economic importance of delegation is simplifying transaction
and, two payments will be made successively. Assignment it includes both assets and liabilities.
In this case the acquirer will be liable from the day he notified them of published it to newspaper.

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10. REFERENCES

 Civil Code Of The Empire Of Ethiopia, 1966, Negarit Gazzeta,

Extraordinary Issue, Proc. No. 165, 19th Year, No. 2
 Law Of Contract Teaching Material II
 Https://Www.Stimmel-Law.Com
 Haramaya University Research Gate
 Ethiopian Law Of Contract, Mulugeta Mengist Ayalew

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