Allhusen v. Caristo Construction

Caristo Construction Corporation ("Caristo"), a general contractor, entered into a sub-contract with Kroo Painting ("Kroo"). Caristo hired Kroo for a painting job in New York City public schools. Their contract prohibited Kroo from assigning any part of the contract to another party unless Caristo provided express written consent.

Nevertheless, Kroo assigned its sub-contract to Marine Midland First Company of New York which in turn assigns its sub-contract to Mr. Allhusen ("Allhusen").

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Kroo completed the painting. However, Caristo refused to pay Allhusen $11,650 (about $132,000 in 2023).

Allhusen sued Caristo for the money due to Kroo's performance of painting.

Allhusen lost in the trial court. The NY Appellate Division affirmed the trial court's dismissal of Allhusen's lawsuit.

Can parties limit the freedom of assignability in specific contracts?

May a party (Caristo) use an anti-assignment clause to prevent another party (Kroo) from assigning its contractual rights?

Caristo argued that it didn't have to pay Allhusen because of the anti-assignment provision in the contract between Caristo & Kroo.

A party may use an anti-assignment clause to prohibit another party from assigning its contractual obligations.