An assignment and security agreement is a contract that deals with the legal transfer of rights of ownership. Both an assignment and a security agreement are individual components of contract law. While an assignment and a security agreement can overlap, you should generally consider both of these legal concepts separate legal agreements.
A security agreement is a part of contract law that covers financial transactions. These transactions, also known as secured transactions, involve a grantor promising collateral to a grantee. The security agreement in contract law does not cover actual land or real estate. Rather, a security agreement typically covers a vehicle, stock, livestock or some other form of personal property. In a security agreement, if the grantee already possesses the collateral, the grantor may secure the transaction verbally. However, a written security agreement is always preferable to a verbal security agreement in case of a disagreement between parties.
Assignment is part of common law that deals with transferring rights from one individual or party to another. The assignment agreement usually shows up in real estate dealings but can also exist in other contexts as well. However, an assignment is only the contractual transfer of benefits that have accrued or will accrue. With an assignment, the obligations do not transfer alongside the benefits. The obligations will always remain with the assignor. As with a security agreement, a verbal assignment while legally binding, does not provide either party with the legal protections of a written assignment agreement.
What the Agreements Cover
Both types of agreements, or one agreement including both an assignment and a security agreement, can apply to a range of property rights. For example, these agreements could cover the transfer of the rights to stock investments or the promise to use the stocks as collateral. It is also possible for these agreements to cover less tangible types of property. For example, these agreements could apply to creative rights, such as written works or a film production. In the case of creative rights, the benefits typically include future revenues earned from the sale or distribution of said works.
Drafting an Agreement
Although the parties involved may agree on each type of contract verbally, a written contract is always preferred. You can hire an attorney to draft a legal assignment and security agreement for you. However, there are also less expensive services that you can use to assist you in drafting your own contracts. For example, you can purchase software that uses a template to generate assignment and security agreements, or you could purchase a book or generic contract forms at your local bookstore. Unless you have specific legal knowledge about assignments and security agreements, however, you should always consult with an attorney before using any self-generated contract forms. Both assignment and security agreements are complex areas of contract law.
- "West's Business Law"; Kenneth Clarkson, et al; 2005
- "Business Law"; Henry R. Cheeseman; 2009