Assignment clauses govern whether parties can transfer contract rights and obligations to third parties. Assignment provisions heavily impact M&A transactions—acquirers want contracts to transfer automatically, while counterparties want control over who they do business with. The balance depends on bargaining power and relationship importance.
Assignment Clause Options
Comparison of Assignment Approaches
| Approach | What It Means | Best For |
|---|---|---|
| Prohibited (anti-assignment) | No assignment without consent; may be withheld for any reason | Personal service relationships |
| Consent required (reasonable) | Consent required but can't be unreasonably withheld | Most commercial contracts |
| Notice only | Assignment permitted on written notice | Commodity services |
| Free assignment | Either party may assign freely | Standardized agreements |
| M&A carve-out | Anti-assignment except for mergers/acquisitions | VC-backed companies |
Assignment Clause Templates
Anti-Assignment (Strict)
**Assignment.** Neither party may assign this Agreement without the prior written consent of the other party, which consent may be withheld for any reason. Any attempted assignment without such consent shall be void and of no effect.
Consent Required (Reasonable Standard)
**Assignment.** Neither party may assign this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned, or delayed.
With M&A Carve-Out
**Assignment.** Neither party may assign this Agreement without the prior written consent of the other party, except that either party may assign this Agreement without consent to: (a) an Affiliate of such party; or (b) a successor in connection with a merger, acquisition, or sale of all or substantially all assets related to this Agreement. Any permitted assignee must agree in writing to be bound by the terms of this Agreement.
Notice Only
**Assignment.** Either party may assign this Agreement upon thirty (30) days' prior written notice to the other party. The assigning party shall remain liable for performance unless the other party agrees in writing to release the assigning party.
Assignor Liability Provisions
Options for Post-Assignment Liability
| Approach | Language |
|---|---|
| Assignor remains liable | "Assignment does not release Assignor from obligations unless expressly agreed in writing by the other party." |
| Release with assumption | "Assignor is released upon Assignee's written assumption of all obligations and other party's written consent to release." |
| Guarantee requirement | "Assignor shall guarantee Assignee's performance for [period] following assignment." |
Change of Control Provision
**Change of Control.** "Change of Control" means (a) the acquisition by any person or group of more than 50% of the voting securities of a party, or (b) a merger, consolidation, or sale of substantially all assets. Upon a Change of Control of either party: (a) The party experiencing Change of Control shall provide written notice within [10] days; and (b) The other party may terminate this Agreement upon [30] days' written notice if the Change of Control involves a direct competitor.
Affiliate Definition
"Affiliate" means any entity that directly or indirectly controls, is controlled by, or is under common control with a party. "Control" means ownership of more than 50% of the voting securities or the power to direct management and policies.
Frequently Asked Questions About Assignment Clauses
What does "consent not unreasonably withheld" mean?
The party must consent unless there's a legitimate business reason to refuse. Courts will review whether refusal was reasonable. Refusing because assignee is a competitor may be reasonable; refusing arbitrarily is not. This standard balances protection against forced relationships with assignment flexibility.
Should assignment provisions be mutual or asymmetric?
Depends on bargaining power and relationship. Enterprise customers often demand free assignment while prohibiting vendor assignment (asymmetric). Between equals, mutual provisions are typical. Startups should prioritize assignment rights—assignable contracts increase acquisition value.
What's the difference between assignment and change of control?
Assignment transfers the contract directly; change of control transfers ownership of the contracting party. Without change of control provisions, a party can circumvent assignment restrictions by selling ownership rather than assigning the contract. Include both provisions for complete protection.
Should affiliates be allowed to assign freely?
Usually yes—affiliate transfers are reorganizations, not true relationship changes. Add: "Assignment to affiliate permitted provided assignee assumes obligations and assignor remains liable if assignee defaults." This allows corporate restructuring without full consent process.
Can AI help draft assignment clauses?
Yes, AI tools like River's Assignment Clause Generator create tailored provisions. Select your approach (prohibited, consent-required, free), add carve-outs (M&A, affiliates), and specify assignor liability. The AI generates complete clauses ready for your agreement.
Assignment clauses determine contract transferability in corporate transactions. Use River's Assignment Clause Generator to create provisions balancing flexibility with relationship control.