What It Does
For in-house counsel, review the restriction against both the counterparty you need and the transactions your own company may pursue. A practical test: walk an affiliate transfer, asset sale, and change of control through the clause, recording any consent requirement, exception, and notice obligation for each.
Restricts transfer of rights, and often delegation of obligations, without consent
May treat a change of control or merger as a deemed assignment
Often carves out affiliate transfers and sales of all or substantially all assets
May depend on whether the clause requires consent to be withheld reasonably
Specifies whether a prohibited assignment is void or merely a breach
The anti-assignment language is the restrictive part of an assignment provision. Check how it applies to your planned transfers, mergers, and changes of control. Purple’s §8 treats a merger or direct change of control, including in bankruptcy, as an assignment, but excludes from its change-of-control definition transactions satisfying any of four stated tests: continuity of a majority of the board; continuity or conversion of voting securities representing more than 50% of voting power; continuing holders retaining substantially the same proportionate ownership and owning substantially all equity of an entity holding all or substantially all of the party’s assets; or survival of the party with its common stock remaining registered under the specified Exchange Act provisions. The board and voting-power tests also address the ultimate parent where the surviving entity is a subsidiary.
When You'll See It
Anti-assignment provisions appear in master services agreements, licenses, supply and distribution agreements, leases, and equity and employment documents. They sit in the general provisions or a successors-and-assigns section. Read the change-of-control and carve-out language against the transactions your company may pursue.
It matters most in two situations: when you depend on a specific counterparty and do not want the deal transferred to someone else, and when you might be acquired or reorganized and need the freedom to bring your contracts with you. The clause cuts both ways, which is why it gets negotiated from both sides.
Examples
Purple Innovation, LLC / Mattress Firm, Inc.
Second Amendment to Master Retailer Agreement
Mutual consent, affiliate carve-out, qualified change-of-control provision
Mutual
2025
"Neither party may assign this Agreement without the prior consent of the other party, except that either party may assign this Agreement to an affiliate without the other party’s prior consent."
Seres Therapeutics, Inc.
Letter Agreement
Absolute bar, including by operation of law
One-Sided
2025
"You may not assign, transfer, alienate, sell, pledge or encumber, whether voluntarily, involuntarily or by operation of law, your rights under this letter agreement."
FutureFuel Corp.
Stock Award Agreement
Company may assign in specified circumstances; holder obligations continue
One-Sided
2025
"The Corporation shall have the right to assign this Agreement to an affiliate or in connection with the sale of all or a portion of its business or assets or otherwise by operation of law, and such assignment shall not in any way release you from any of your obligations under this Agreement, nor preclude or limit the Corporation’s right to enforce the same."
HomeAmerican Mortgage Corporation / U.S. Bank National Association
Twelfth Amendment to Amended and Restated Master Repurchase Agreement
Consent of counterparty required
One-Sided
2024
"...except that the Seller may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Agent."
Negotiate
Seek consent rights that address the transfers and counterparty changes that matter to your business.
Require consent to assignment of rights and delegation of obligations, address transfers "by operation of law," and specify the mergers and changes of control intended to require consent.
Add a change-of-control-deemed-assignment provision in contracts where it matters who controls your counterparty, especially to keep a deal from passing to a competitor.
State expressly if a prohibited assignment is intended to be null and void, and check that result against the governing law and any statutory limits on the restriction.
Seek express exceptions for the transactions your company needs to complete without additional consent.
Carve out assignments to affiliates and assignments in connection with a merger or a sale of all or substantially all of your assets, so the clause does not block your own corporate deals.
If consent is required, make it consent not to be unreasonably withheld, conditioned, or delayed.
Assess whether a change-of-control-deemed-assignment provision gives the counterparty consent rights over your planned M&A, and negotiate exceptions for transactions you need to complete.
Read the change-of-control language, transfer restrictions, and exceptions before signing and again when planning a sale or reorganization.
Red Flags
A change-of-control-deemed-assignment provision in a key contract, which hands the counterparty a consent right and leverage over your M&A.
An anti-assignment clause with no affiliate or sale-of-business carve-out, which can block your own reorganization or exit.
Consent required with no stated standard for withholding it, leaving uncertainty about the counterparty’s discretion and any reasonableness requirement imposed by applicable law.
Silence on whether a prohibited assignment is void or merely a breach, leaving the remedy unclear.
A one-sided clause that lets the stronger party assign freely while binding you to its consent.
Relying on an anti-assignment clause to prevent receivables financing without checking the applicable state’s version of UCC §§ 9-406 and 9-408, the asset type, the transaction, and which assignment or enforcement rights those provisions protect.
FAQs
This content is for informational purposes only and does not constitute legal advice.
