Reassigning Contracts: What You Need to Know

When it comes to contracts, assignment allows for the transfer of rights, obligations, or property from one party to another. This provision is commonly included in contracts to provide flexibility for both parties in the future. Learn more about how assignment of contracts works and why it matters.

Understanding Assignment of Contract

Assignment of contract allows for the transfer of the contract itself, along with any associated property, rights, or obligations, to a new party. This provision is often seen in various types of contracts, such as those involving suppliers, vendors, and intellectual property agreements.

Assignments are typically made to subsidiaries or successors. A subsidiary is a business owned by another company, while a successor is a business that follows a sale, acquisition, or merger. For example, if Ken's lawn mowing service goes out of business, he can assign his contract to his sister-in-law Karrie, who also owns a lawn mowing service.

Key Points to Consider

Before attempting to assign anything in a contract, it's important to review the contract to ensure that assignment is allowed. Notification to the other party is typically required, and the specifics of the assignment should be outlined in a dedicated clause within the contract.

It's essential to note that while rights and obligations in a contract can generally be assigned, there are limitations. Specific abilities, talents, or personal qualities cannot be transferred and are considered non-assignable. Additionally, assignments that substantially alter the terms of the contract may not be enforceable in court.

Assigning Intellectual Property

Intellectual property, such as patents, trademarks, and copyrights, can also be assigned. Patents are considered personal property that can be transferred, while trademarks can be assigned through the USPTO. Licensing and delegation are alternative options for transferring rights to intellectual property without assigning the entire contract.

Considering Alternatives

While assignment of contract is a common practice, there are alternative methods for transferring rights, such as licensing and delegation. These options allow for more flexibility in specific situations and may be preferable depending on the circumstances.

Is Assignment of Contract Necessary?

Assignment of contract can be a valuable provision in various business agreements, especially those involving trademarks, copyrights, patents, or supplier/customer relationships. Before entering into a contract, it's essential to review the assignment clause and seek legal advice if considering an assignment.

In conclusion, assignment of contract is a crucial aspect of business agreements that allows for the transfer of rights, property, and obligations to another party. Understanding the implications of assignment and exploring alternative options can help ensure successful contract management and compliance.