Contract Assignment

Definition of Contract Assignment

Contract assignment is the transfer of contractual rights, benefits, or obligations from one party (the assignor) to another (the assignee). It ensures continuity of obligations when ownership or operational responsibility changes—such as during mergers, acquisitions, or reorganizations.

A contract assignment clause defines when and how such transfers are allowed, often requiring prior written consent to protect the non-assigning party’s interests.

Why Contract Assignment Matters

Assignments allow businesses to maintain operations through corporate changes without renegotiating every agreement. At the same time, assignment restrictions protect counterparties from being tied to new entities without their consent.

Properly managed contract assignment:

• Maintains business continuity during ownership transitions

• Ensures compliance with consent and notification requirements

• Protects sensitive information and contractual rights

• Minimizes legal risk during asset transfers

Best Practices for Contract Assignment

1. Review assignment clauses before mergers or acquisitions.

2. Secure written consent from counterparties when required.

3. Keep an updated list of assigned contracts in the repository.

4. Align assignment rights with insurance and indemnification clauses.

5. Include notice timelines for transparency.

Example of Contract Assignment in Practice

After an acquisition, the parent company executes contract assignments transferring all vendor agreements to the new entity—each documented and stored for audit purposes.