Also known as: U.C.C. § 2-210(1) · UCC 2-210(1) · delegation of performance
Written by attorneys — see sources below.
A statutory rule permitting a party to a contract for the sale of goods to delegate performance of its duties to another unless the parties have agreed otherwise or the other party has a substantial interest in having the original promisor perform or control the required acts. Delegation of performance does not relieve the delegating party of any duty to perform or of liability for breach.
Upland Industries contracted to deliver specialized equipment to Ulysses Ulrich by a set date. Upland arranged for Ultrasonic Dynamics to make the delivery instead. When the equipment arrived late, Ulysses Ulrich sued Upland for breach. The court held that the delegation did not discharge Upland's duty or liability under the contract.
Uliana Ustinova agreed to install custom software for United Bank under a sales contract. She later arranged for Ulric Unger to perform the installation. The bank experienced errors after installation and sued Uliana. The court ruled that Uliana remained liable because the delegation did not release her from the original duty.
Uma Underwood sold goods to Uriel Urban under a supply agreement. She later assigned the contract in general terms to Ulrike Ulrich. Ulrike accepted and began performing the deliveries. Uriel Urban could enforce the performance promise directly against Ulrike under the assignment language.
A distributor assigned its rights and duties under a goods contract to Sally Beauty. Nexxus Products objected because the assignee was a competitor. The court held the delegation improper under the substantial-interest exception and that the original distributor remained liable.
In 1979 Nexxus Products Company, a California corporation that formulates and markets hair care products, negotiated with Best Barber & Beauty Supply Company, Inc., a Texas corporation in the business of distributing beauty and hair care products to retail stores, barber shops and beauty salons throughout Texas. Between March and July 1979 Mark Reichek, Best’s president, negotiated with Stephen Redding, Nexxus’ vice-president, over a possible distribution agreement between Best and Nexxus. This resulted in an August 2, 1979 distributorship agreement executed in the form of a July 24, 1979 letter from Reichek to Redding under which Best would serve as the exclusive distributor of Nexxus hair care products to barbers and hair stylists throughout most of Texas except El Paso. The July 24, 1979 letter set forth pricing terms, Nexxus’s agreement to underwrite training and seminars, payment by letter of credit, and termination provisions allowing cancellation only on the anniversary date with 120 days’ prior notice and requiring Nexxus to buy back inventory at cost if it terminated the relationship. In July 1981 Sally Beauty Company, Inc., a Delaware corporation with its principal place of business in Texas and a wholly-owned subsidiary of Alberto-Culver Company, acquired Best in a stock purchase transaction and merged Best into Sally Beauty, which succeeded to Best’s rights and interests in all contracts; Alberto-Culver is a major manufacturer of hair care products and a direct competitor of Nexxus. Shortly after the merger Stephen Redding met with Michael Renzulli, president of Sally Beauty, and wrote a letter stating that Nexxus would not allow Sally Beauty to distribute its products because Sally Beauty was wholly owned by a direct competitor. In August 1983 Sally Beauty commenced this action by filing a complaint in the Northern District of Illinois, claiming that Nexxus had violated the federal antitrust laws and breached the distribution agreement. Nexxus moved for summary judgment on the breach claim. The district court granted the motion on January 31, 1985. The remaining claims were dismissed by stipulation in May 1985, and final judgment was entered on the breach of contract claim.
View caseNo. The statute expressly provides that no delegation relieves the delegating party of any duty to perform or of liability for breach. The original promisor remains bound unless the obligee agrees to a novation or release.
Delegation is not permitted if the parties have agreed otherwise or if the other party has a substantial interest in having the original promisor perform or control the acts required by the contract.
An assignment of the contract or of all rights under the contract is treated as both an assignment of rights and a delegation of duties. Acceptance by the assignee creates a promise to perform that is enforceable by the other original party.
No. Neither delegation nor an assumption agreement discharges the delegating party's liability unless the obligee agrees otherwise.