What Does “Assignment” Mean in a Contract?
Transfer of rights or obligations under a contract to another party.
Detailed Explanation
Assignment transfers contract rights or duties to someone else. Many contracts restrict assignment - you can't just hand off your obligations to another company without consent. The restriction protects parties from suddenly dealing with strangers.
Common exceptions include assignments to affiliates or in connection with mergers. Understanding assignment restrictions matters if you're planning to sell your business or reorganize.
Example in a Contract
“Neither party may assign this Agreement without the prior written consent of the other party, except that either party may assign to an affiliate or successor in connection with a merger or sale of substantially all assets.”
Why It Matters
Assignment restrictions prevent the other party from disappearing and substituting someone you didn't agree to work with. But they also limit your flexibility to reorganize or sell. Understand both sides.
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