Contract Clauses: Assignment

It is common to find an assignment clause seeking to allow one party to unilaterally and without consent assign its rights under the contract to a third party. Assignment allows the transferring party to assign its rights to a third party. Assignment does not extend to any assignment of liabilities or obligations, for which a novation agreement would be required.

Where an assignment clause is missing

Where there is no assignment clause, the parties must consent to an assignment by amending the original contract. In some circumstances this may be preferable i.e. where a party does not wish to give a counterparty to a contract the right to assign rights to a potential competitor.

Drafting consideration

The party should consider the extent to which they are comfortable with an assignment and include appropriate restrictions i.e. to ensure that the benefit of a contract does not end up with a competitor.

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Connor James

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