Question

ABC Builders Inc. owes $500,000 to Alpha Corp., one of its suppliers. ABC Builders has a contract with Mike and Linda Johma to construct a house for $500,000 and wishes to assign its right to payment under this contract to Alpha Corp. in order to pay its debt. Which statement best describes this proposed transaction?

a) Accord and satisfaction
b) Assignment
c) Novation
d) Delegation

Answer 1

The correct term for ABC Builders Inc.'s action of transferring its right to payment under a construction contract to Alpha Corp. to clear a debt is 'assignment'. In legal terms, an assignment involves the transfer of contractual rights from one party to another.

Step-by-step explanation:

The proposed transaction between ABC Builders Inc. and Alpha Corp. where ABC Builders wants to assign its right to payment under a contract to Alpha Corp. to satisfy a debt is known as an assignment. An assignment is a transfer of rights that a party has under a contract to another party. In this case, the builders are assigning their right to receive payment from Mike and Linda Johma to Alpha Corp. This action does not create new obligations or terms, but rather transfers the right to receive the agreed payment from the construction of a house to the suppliers as a form of payment for the existing debt.