What is the exam-ready distinction?
| Official syllabus topic | Contracts: Assignment, Delegation, Substitution, and Liability |
|---|---|
| Official PSI area | Contracts |
| Published weight | 19% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual comparison. Use the source, document, actor, event, and timing stated in the question before applying a memorized definition.
Side-by-side comparison
Read across each row. The terms are deliberately compared on identical dimensions so the difference remains clear when the exam hides the vocabulary inside a scenario.
| Decision dimension | Assignment | Novation |
|---|---|---|
| Core effect | Transfers a contractual right; related duties may be delegated when permitted | Substitutes a new party or obligation through a new agreement |
| Consent | Depends on the contract and law; assignment can be restricted | Requires agreement of the parties whose rights and duties change |
| Original party | Usually remains liable for delegated performance unless released | Is released when a valid novation replaces that party |
| Exam clue | Transfer without an express release | Substitution plus consent and release |
Decision rule
Georgia-specific distinction
Worked example
Scenario. A buyer assigns purchase rights to the buyer's LLC under a contract that permits assignment. The seller never agrees to release the buyer.
Reason it through. The rights moved to the LLC, but the facts contain no new agreement releasing and replacing the original buyer.
Answer. This is an assignment, and the original buyer may remain liable rather than receiving a novation release.
Common exam traps
- Calling every transfer a novation
- Ignoring an anti-assignment clause
- Assuming delegation erases liability
- Treating assignment of rights and delegation of duties as identical
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1A buyer assigns the rights under a Georgia purchase contract to the buyer's LLC. The contract permits assignment, and the seller signs nothing releasing the buyer. What is the original buyer's position?
- A. Released, because the LLC became the buyer under a novation
- B. Released, because the assignment moved every duty to the LLC
- C. Out of the deal, because the assignment rescinded the contract
- D. Possibly still liable, because no release was ever agreed
Show answer and explanation →
Answer: D. Possibly still liable, because no release was ever agreed
An assignment transfers rights, and the original party usually stays liable unless the other party agrees to a release. Nothing here releases the buyer, so this is an assignment, not a novation. The novation answer is plausible because a new name appears, but novation needs a new agreement that substitutes the party and releases the old one.
Question 2A seller, a buyer, and a new purchaser sign an agreement under which the new purchaser takes over the contract and the seller expressly releases the original buyer. What has occurred?
- A. An assignment
- B. A novation
- C. A rescission
- D. A delegation
Show answer and explanation →
Answer: B. A novation
A novation is a new agreement that substitutes a party and releases the one being replaced. All three parties agreed and the seller expressly released the original buyer, which is the mark of novation. An assignment alone would move the rights but leave the original buyer responsible.
Question 3A purchase contract says the buyer may not assign it without the seller's written consent. The buyer assigns it to a relative anyway without asking the seller. What is the first issue to analyze?
- A. Whether the relative has enough money to close
- B. Whether the transfer turned the deal into a novation
- C. Whether the assignment breached the anti-assignment clause
- D. Whether the licensee can declare the buyer released
Show answer and explanation →
Answer: C. Whether the assignment breached the anti-assignment clause
Assignability depends on the contract and the law, and this contract restricts assignment without the seller's written consent, which the buyer never got. No release or substitution was agreed, so calling it a novation misreads the facts, and a licensee should not declare anyone released when the documents do not say so.
Ready to move on?
You have this distinction down when all of these are true.
- Define every compared term without using the other term as the definition.
- Rebuild the comparison table from memory.
- State the decision rule and Georgia distinction without notes.
- Solve the worked example after changing one key fact.
- Explain the rule or fact that makes each distractor wrong.
- Answer all three original questions correctly in mixed practice on a later day.
Recommended next lesson
Continue with Rescission Versus Cancellation Versus Termination. Swapping a party is one way a contract changes, and the next page covers how one ends: rescission tries to restore both parties to where they started, while cancellation and termination end the deal under a stated right or stop future duties.
Return to the complete exam-concept library or the Contracts hub.