What is an assignment clause?

An assignment clause controls whether a party can transfer its contractual rights or obligations to a third party, and on what conditions. Most contracts are freely assignable by default, so the clause is how parties restrict or permit transfers.

What is the difference between assignment, delegation, and novation?

Assignment transfers a party's rights to an assignee, and the assignor stays liable unless released. Delegation transfers duties to a delegatee, and the delegating party remains responsible if the delegatee fails. Novation replaces a party entirely and requires all parties' consent, which extinguishes the original party's liability.

What happens if a party assigns without consent?

Under the majority rule, a clause that bars assignment without saying an assignment is void gives the other side only a breach claim, and the assignment still takes effect. Explicit null and void language is what makes an unauthorized assignment ineffective.

Does a change of control count as an assignment?

Not automatically. A stock acquisition usually leaves the contracting entity in place, so a standard clause is not triggered, while a forward merger can trigger an assignment by operation of law restriction. Counsel often define change of control as a deemed assignment to remove the doubt.

Are anti-assignment clauses enforceable?

Generally yes, though courts read them narrowly and statutes override them in places. UCC Section 9-406 makes anti-assignment terms ineffective against a lender taking a security interest in accounts receivable, so a company can finance its receivables regardless of the clause.

Can you carve out affiliate and merger assignments?

Yes, and it is common. A typical carve-out permits assignment to an affiliate and to a successor in a merger, acquisition, or sale of substantially all assets, so ordinary corporate transactions proceed without the counterparty's consent.

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Assignment Clause

A contractual provision that controls whether a party can transfer its rights or obligations under the contract to a third party.

Reviewed by

GC AI Solutions Team

•

Updated

June 2026

Definition

An assignment clause, often drafted as an anti-assignment clause, governs whether and on what terms a party can transfer its contractual rights or obligations to a third party. Most contracts are freely assignable by default, so this clause is how parties restrict that: by requiring consent, by carving out affiliates and merger successors, or by barring assignment outright. Whether an unauthorized assignment is merely a breach or is void turns on the wording. A change of control can count as a deemed assignment, and statutes such as UCC Section 9-406 override anti-assignment limits for certain receivables.

Sets whether a party can transfer its rights or duties, and on what conditions
Requires the other side's consent before an assignment, often qualified by "not to be unreasonably withheld"
Carves out permitted assignments to affiliates and to a buyer in a merger or asset sale
Decides whether an unauthorized assignment is a breach or is void, depending on whether the clause says "void"
Defines whether a change of control counts as a deemed assignment that triggers the clause

Consent-based anti-assignment with an affiliate-and-merger carve-out has become the common middle ground in commercial agreements.

What It Does

Reader, the assignment clause is where a routine deal decides what happens to your contract in an acquisition. Most contracts can be handed off freely unless you say otherwise, so this is the clause that keeps a vendor you vetted from being swapped for one you have never met, and the clause a counterparty can turn into a veto over your own sale.

When You'll See It

"Notwithstanding the foregoing, Consultant may not assign this Agreement without the prior written consent of the other Party."

Source

Negotiate

Push for Flexibility

You may want to assign

Carve out assignments to affiliates and to a successor in a merger, acquisition, or sale of substantially all assets, so a routine corporate transaction needs no consent.
Add "consent not to be unreasonably withheld, conditioned, or delayed" to convert a veto into a reviewable standard.
Remove "void" language so an assignment made without consent is a breach the parties can resolve, not an automatic nullity.
Keep the right to assign payment streams for financing, which UCC Section 9-406 protects regardless of the clause.

Push for Control

You want to vet the counterparty

Require prior written consent for any assignment, including assignments by operation of law.
Define change of control as a deemed assignment so an acquisition triggers your consent right.
Add "any purported assignment in violation of this Section shall be null and void" so an unauthorized transfer has no effect.
Require the assignee to assume all obligations in writing before the assignment is effective.

Assignment is a negotiation between flexibility and control. You want freedom to assign in your own exit, and control over who ends up on the other side of the contract.

Red Flags

A bare "this Agreement may not be assigned" with no "void" language, which usually leaves only a damages claim while the assignment still takes effect.
No carve-out for affiliates or merger successors, which lets the counterparty hold your acquisition hostage for consent.
Consent "in the Company's sole discretion" with no reasonableness limit, which becomes a one-sided veto.
Silence on change of control, leaving it unclear whether an acquisition triggers the clause at all.
A consent right drafted as if it can block a lender's security interest in receivables, which UCC Section 9-406 makes ineffective.

FAQs

Related Clauses

Change of Control

A contractual provision that triggers rights or obligations when one party is acquired or undergoes a change in ownership.

Survival

A contractual provision that keeps specified obligations enforceable after the agreement expires or is terminated.

Governing Law

A contractual provision that selects which jurisdiction’s substantive law will be used to interpret and enforce the agreement.

Severability

A contractual provision that keeps the rest of a contract in force if a court finds one part invalid or unenforceable.

Amendment

A provision requiring any change to the contract to be made in a signed writing, blocking informal or oral modifications.

Indemnification

A contractual provision in which one party agrees to cover specified losses or third-party claims that the other party incurs.

This content is for informational purposes only and does not constitute legal advice.

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