Assignment and Delegation Clauses

Assignment and delegation are two distinct legal concepts that most contract clauses conflate under the umbrella term "assignment." Understanding the difference is essential because the rules that govern them — and the consequences of getting them wrong — are not the same.

Assignment Defined. An assignment transfers a party's contractual rights to a third party (the assignee). Rights are the benefits you are owed under a contract: the right to receive payment, the right to receive services, the right to receive a deliverable. When you assign your rights, you transfer those benefits to someone else. Example: a freelancer who is owed $10,000 for completed work assigns that payment right to a factoring company — the factoring company now has the right to collect the $10,000 directly from the client.

Delegation Defined. A delegation transfers a party's contractual duties to a third party (the delegatee). Duties are the obligations you owe under a contract: the obligation to deliver work product, to provide services, to maintain a software platform. When you delegate your duties, you assign the responsibility for performing those obligations to someone else. Example: a consulting firm delegates its duty to provide strategic advice to a subcontractor — the subcontractor now performs the work instead.

Why the Distinction Matters Legally. Under general contract law principles (reflected in the Restatement (Second) of Contracts, §§ 317–328), assignment of rights is generally permitted without consent unless the assignment would materially change the obligor's duty, materially increase the obligor's burden or risk, materially impair the obligor's chance of obtaining return performance, or materially reduce the value of the return performance. Delegation of duties, by contrast, is subject to additional restrictions because it affects who performs — which can matter enormously when the original party was chosen for their specific skills, reputation, or relationship.

The "Assumption" Distinction. When a party delegates duties, the delegatee takes on those duties — but critically, the delegator remains liable unless the other party agrees to release them (which constitutes a novation). A freelancer who delegates her graphic design duties to a subcontractor without the client's agreement to release her remains fully liable if the subcontractor delivers inferior work. This is one of the most misunderstood aspects of contract delegation.

Most Contract Clauses Are Sloppy. The clause quoted above is typical — it restricts "assignment of this Agreement or any rights or obligations," treating assignment and delegation as one concept. Courts generally interpret this language to cover both. However, the legal analysis of whether a specific transfer is permissible differs depending on whether you are transferring rights, duties, or both. When you review a contract's assignment clause, think separately about: (a) Am I restricted from transferring my right to receive payment or other benefits? (b) Am I restricted from transferring my obligation to perform? (c) Is there a difference in the consent required for each?

The Contract vs. the Rights Distinction. When a contract says "You may not assign this Agreement," it typically means you cannot assign the entire contractual relationship — the bundle of rights and duties. This differs from assigning a specific right (like a payment claim) or delegating a specific duty. Some courts distinguish between assigning the contract (the relationship) versus assigning a specific right arising from the contract (a payment claim). Anti-assignment clauses typically restrict both, but contract-specific language controls.

Anti-assignment clauses exist on a spectrum from reasonable (mutual restriction with reasonableness standard) to aggressively one-sided (unilateral restriction with absolute veto). Knowing where your clause falls on this spectrum determines your negotiating priorities.

Standard Anti-Assignment Language. A balanced anti-assignment clause restricts both parties from assigning without mutual consent and requires that consent not be unreasonably withheld. This is the form most consistent with commercial reasonableness. It means neither party can freely transfer the contract, but neither party can capriciously refuse a reasonable transfer request. The "not unreasonably withheld" standard is enforced by courts — a party that refuses a demonstrably reasonable assignment request can be found to have breached the consent obligation.

The "Sole Discretion" Problem. The aggressive clause quoted above gives the Client a unilateral veto over any contractor assignment while giving the Client itself the freedom to assign freely. This is a significant power imbalance. In practice, a sole discretion standard means the client can refuse any assignment for any reason — including competitive reasons, personal animosity, or simple leverage. The contractor who wants to sell their business, bring on a partner, or subcontract work is entirely at the client's mercy.

"By Operation of Law" Language. Many anti-assignment clauses include the phrase "by operation of law." This is critical for business planning: transfers that occur automatically by law — such as through inheritance, bankruptcy, or corporate restructuring — may be restricted by this language. If your company undergoes a merger or corporate reorganization, an anti-assignment clause with "by operation of law" language can potentially be triggered, putting you in technical breach of multiple client contracts.

What Constitutes "Assignment" — the Threshold Question. Courts sometimes disagree about what triggers an anti-assignment clause. A direct assignment — signing a document that transfers contractual rights to a third party — clearly triggers the clause. But what about: (a) a change of majority stockholder? (b) a corporate reorganization that transfers assets to a subsidiary? (c) a merger in which the contracting entity is the surviving entity? Most courts hold that changes in corporate ownership or control, absent a change-of-control provision, do not constitute assignment — the contracting entity remains the same legal person even if its ownership changed. However, some contracts include explicit change-of-control definitions that expand what counts as an assignment trigger. See Section 04.

The "Substantially All Assets" Carve-Out. The clause at the top of this section includes a common carve-out: "either party may assign this Agreement to a successor entity in connection with a merger, acquisition, or sale of all or substantially all of its assets." This carve-out is important for M&A transactions — it preserves the ability to transfer contracts as part of a business sale without seeking individual consent for every agreement. However, note the threshold: "all or substantially all of its assets." A partial asset sale, a spin-off, or a divisional reorganization may not qualify for this carve-out.

Assignee Must Accept Obligations. When an assignment does occur (with or without consent), the assignee generally takes the contract subject to all existing defenses the obligor had against the assignor. Under UCC § 9-404 and the common law rule, if the original contractor had breached before the assignment, the client can raise that breach against the assignee. An assignee does not get a cleaner contract than the assignor had.

The consent standard in an anti-assignment clause — reasonableness versus sole discretion — is arguably the most consequential variable in any assignment provision. It determines whether the other party has a legitimate veto or an arbitrary one.

The Reasonableness Standard. When a contract says consent "shall not be unreasonably withheld," courts will examine whether the refusing party had a legitimate business reason for its refusal. Legitimate reasons typically include: (1) the proposed assignee lacks financial capacity to perform; (2) the proposed assignee is a competitor; (3) the proposed assignee has a history of contractual defaults or legal disputes; (4) the assignment would change the nature of the performance in a material way. Illegitimate reasons — including bad faith leverage, desire to extract additional payments, or purely punitive motives — can expose the refusing party to damages for breach of the consent obligation.

How Courts Evaluate Reasonableness. Courts applying the reasonableness standard use an objective test: would a reasonable party in the same circumstances have withheld consent? This is fact-specific, but courts have established patterns: refusing consent based on the assignee's creditworthiness (when the assignee is demonstrably solvent) is unreasonable; refusing consent because the proposed assignee is a market competitor is generally reasonable; requiring additional monetary concessions as a condition of consent is often treated as bad faith.

The "Conditioned" Problem. Some parties withhold technical consent but offer to consent "subject to conditions" — conditions that may include increased fees, enhanced insurance requirements, new guarantees, or other concessions. The "not unreasonably withheld, conditioned, or delayed" formulation addresses this: conditions imposed on consent must themselves be reasonable. A party that says "I'll consent if you pay me an additional $50,000" has conditioned consent — courts will evaluate whether the condition is reasonable.

The Sole Discretion Standard. When consent can be withheld "in sole and absolute discretion," the other party has no obligation to be reasonable and no duty to explain their refusal. This is the most restrictive possible consent standard and is especially problematic for long-term contracts. A contractor locked into a five-year service agreement with a sole-discretion anti-assignment clause cannot sell her business without the client's blessing — and the client can use that leverage to demand renegotiated terms, accelerated timelines, or price concessions as a condition of assignment consent.

Deemed Consent Provisions. The first clause above includes a "deemed consent" provision: if the party from whom consent is sought does not respond within 30 days, consent is deemed granted. This is an important safeguard against deliberate delay tactics. Without a deemed consent provision, a party can simply refuse to respond to a consent request indefinitely, holding the assignment process hostage. Deemed consent provisions are reasonable and should be included in any negotiated assignment clause.

The Assignee's Creditworthiness Problem. Courts have generally held that a party is reasonable to withhold consent when the proposed assignee lacks the financial ability to perform the contract's obligations. This means that if you want to assign a significant service agreement to a smaller or less creditworthy entity, you may need to provide financial assurances — parent guarantees, performance bonds, or escrow arrangements — to make the assignment consent reasonable to grant.

Change of control provisions are one of the most consequential — and frequently overlooked — provisions in any long-term contract. They extend anti-assignment restrictions to corporate transactions that would not otherwise qualify as contractual assignments, giving the non-controlling party a potential veto over your company's M&A activity.

Why Change of Control Matters. Under traditional contract law, an anti-assignment clause restricts the direct transfer of contractual rights or duties. However, if Company A is acquired by Company B through a stock purchase — where Company B simply buys 100% of Company A's shares — Company A remains the contracting party. No rights or duties have been transferred; the same legal entity continues to perform. The contract has not technically been "assigned." Without a change of control provision, a stock acquisition would not trigger an anti-assignment restriction.

The Purpose of Change of Control Provisions. Change of control provisions address this gap. They define corporate transactions that effectively change who controls the contracting party — even without a formal assignment — and treat those transactions as requiring consent. From the non-controlling party's perspective, this is legitimate: if you hired a boutique consulting firm for its specific team and leadership, and that firm is acquired by a massive conglomerate that replaces the team, you have a legitimate interest in consenting (or terminating). From the contracting party's perspective, change of control provisions are potential deal-killers: if your company is subject to 50 change-of-control clauses in vendor contracts, an acquisition could require 50 individual consent requests.

The Threshold Problem. Change of control provisions typically specify a percentage ownership threshold — often 50% of voting securities. Consider the implications: a 49% acquisition does not trigger the clause; a 51% acquisition does. For a private equity firm taking a majority stake, this threshold distinction can determine whether the investment triggers a consent cascade. Some sophisticated provisions use lower thresholds (30% or 20%), which cast a wider net.

Asset Sale vs. Stock Sale. Most change of control provisions address both asset sales and stock sales. An asset sale (selling the company's contracts, equipment, and IP to a buyer) almost always constitutes an assignment because the contracting entity changes. A stock sale (selling the company's shares to a buyer, leaving the company as the contracting entity) does not constitute assignment without a change of control provision. When you are reviewing a contract, identify whether the change of control definition covers stock sales, asset sales, or both.

The "Substantially All Assets" Ambiguity. Many change of control definitions include sale of "all or substantially all" assets as a triggering event. "Substantially all" is not defined by statute — courts have used tests ranging from "quantitatively substantial" (a high percentage of total assets by value) to qualitatively important (assets necessary to conduct the business). For a software company, the IP portfolio might be "substantially all" assets even if it represents a fraction of total balance sheet value. This ambiguity creates genuine planning risk.

Permitted Transfers in M&A. When negotiating, always request a "permitted transfer" carve-out for internal corporate restructurings: "Notwithstanding the foregoing, either party may, without consent, assign this Agreement to: (i) a wholly-owned subsidiary; (ii) a parent company; (iii) an affiliated entity under common control; or (iv) a successor entity in connection with a merger or acquisition in which the party is not the surviving entity, provided that the successor assumes all obligations under this Agreement in writing."

The Sally Beauty Problem — When Change of Control Matters Most. In Sally Beauty Co. v. Nexxus Products Co. (7th Cir. 1986), the court held that an exclusive distributorship agreement could not be assigned to a company that was itself owned by a competitor of the product manufacturer. The court applied the personal services exception and the competitor relationship to refuse the assignment. Sally Beauty illustrates why the other party's legitimate interests in knowing who controls the contractor must be balanced against the contractor's M&A flexibility.

The personal services doctrine is one of the oldest rules in contract law and remains practically significant for freelancers, consultants, and professional service providers. It limits the right to delegate duties in contracts where the identity and personal qualities of the performing party are central to the agreement.

The Common Law Personal Services Rule. Under the Restatement (Second) of Contracts § 318(2), a duty may not be delegated if the obligee (the party receiving performance) has a substantial interest in having the original obligor personally perform or control the performance. The classic example is an agreement with a specific attorney, artist, or musician — these contracts were made based on the unique personal skills and reputation of the individual, not just any practitioner of the profession.

What Makes a Contract "Personal." Courts have identified several factors that make a service contract personal and therefore non-delegable: (1) the contract names a specific individual (not a firm); (2) the contract emphasizes the contractor's specific expertise, style, or reputation; (3) the contract was formed because of a prior relationship or demonstrated track record with the specific individual; (4) the nature of the work requires personal trust or confidentiality that is individual-specific. By contrast, routine commodity services — janitorial services, data entry, standard widget manufacturing — are generally delegable because one provider is interchangeable with another.

The Creative Work Problem. Graphic designers, writers, videographers, and other creative professionals occupy a complicated middle ground. When a client hires a specific designer whose aesthetic they admire, the contract arguably has personal service characteristics — the client wants that designer's eye and sensibility, not just any competent designer's work. However, many creative professionals use assistants, subcontractors, and junior team members to execute portions of projects. The key question is whether delegation is a material change in performance that the client reasonably did not anticipate.

Delegation of Duties Does Not Release the Delegator. Under Restatement § 318(3) and UCC § 2-210(1), the delegation of duties does not discharge the delegator's liability. If you delegate your obligation to deliver software to a subcontractor, and the subcontractor fails to deliver, you remain liable for that failure. Clients should understand this — assignment of duties does not give them a new contracting party; it gives them a subcontractor with the original contractor remaining on the hook. To release the original contractor, the parties must execute a novation (see Section 07).

The Employee Substitution Problem. Many freelancers wonder whether bringing on an employee or associate to help with a project constitutes delegation requiring consent. Generally, using employees or internal team members to assist with work does not constitute delegation — you are still performing the contract through your own resources. Delegation occurs when you transfer performance responsibility to an external, independent third party who is not your employee or agent. However, if the contract specifically designates work as personal to you individually (not your business entity), even employee involvement may raise issues.

Professional Service Contracts. Attorneys, accountants, and licensed professionals occupy a special category. Delegating legal or accounting work to an unlicensed person is not merely a contract violation — it may violate professional licensing regulations and constitute malpractice. For licensed professionals, delegation is constrained not just by contract law but by professional responsibility rules. Subcontracting legal work requires adherence to bar association rules about supervision and disclosure.

Assignment and novation are frequently confused — both involve transferring contractual interests to a third party, but they differ fundamentally in whether the original party remains liable.

Assignment: Original Party Remains Liable. When you assign your contractual duties to a third party (delegation), you remain liable for performance. If the assignee fails to perform, the non-assigning party can sue you — not just the assignee. This is the default rule and one of the most important principles in assignment law. Example: a web development firm is acquired, and the old contracts are assigned to the new entity as part of the acquisition. If the new entity fails to deliver a website, the original firm — even if it no longer exists as an independent business — may still bear liability to the original client.

Novation: Original Party is Released. A novation substitutes a new party for the original party, with the explicit agreement of all three parties: the original obligor (who is being released), the new obligor (who is assuming the obligation), and the obligee (who consents to the substitution and releases the original). After a valid novation, the original party has no further obligation. Example: the same web development acquisition, but this time all three parties — the client, the old firm, and the new firm — sign a novation agreement. The old firm is released; the client looks solely to the new firm for performance.

Requirements for a Valid Novation. Three elements are required: (1) a valid existing contract; (2) the agreement of all parties to extinguish the original obligation and substitute a new one; (3) the assumption of the obligation by the new party and the release of the original party. The critical element is the explicit release — courts will not find a novation unless the intent to release the original obligor is unmistakably clear. An assumption agreement without a corresponding release does not constitute novation.

Why This Matters in M&A Transactions. In business acquisitions, buyers often assume all contracts as part of the purchase. However, this is typically an assignment (with the seller potentially remaining liable) rather than a novation (which would require all counterparties to explicitly release the seller). Sellers who are concerned about post-closing liability on assumed contracts should specifically negotiate for novation agreements with each material contract counterparty — or negotiate representations and indemnities from the buyer covering any claims arising from pre-closing performance.

The Implied Novation Problem. Courts occasionally find implied novations based on course of conduct — particularly when the new party performs the contract for a period of time and the original party has no further involvement. However, implied novation is a high bar; courts require clear intent to release the original obligor. Simply accepting performance from a new party is not sufficient. If you want a novation, document it explicitly with a signed three-party agreement.

Novation vs. Assumption Agreement. An assumption agreement (where the new party agrees with the original party to take on the obligations) does not bind the third party (the obligee) unless the obligee consents. The obligee is not a party to a pure assumption agreement and retains the right to hold the original obligor responsible. This is why true novation requires three-party participation — it is the only mechanism by which the obligee definitively agrees to look solely to the new party.

When to Request Novation. If you are selling your business and want a clean exit from contractual obligations, pursue novations with key clients rather than relying on assignment and assumption. If you are acquiring a business, assess which contracts are material enough to require novation — i.e., contracts where the seller's ongoing liability exposure could be significant and where you need the original party to be fully released to ensure clear expectations going forward.

Not every assignment involves transferring an entire contract. Partial assignments — transferring specific rights or specific duties while retaining others — are common in commercial transactions and can be permitted even under broad anti-assignment clauses.

Partial Assignment of Rights. A party can assign specific rights arising from a contract without assigning the entire contract. The most common example is the payment right assignment illustrated in the clause above: a contractor assigns the right to receive payment to a bank or factoring company as part of an accounts receivable financing arrangement. The contractor retains all duties (performing the services) but transfers the monetary right (collecting the payment). Courts have generally held that payment right assignments are valid even when a contract contains a broad anti-assignment clause — because anti-assignment clauses are typically interpreted to protect the obligor's reasonable expectations, and being required to write a check to a different payee does not materially change those expectations.

The UCC and Payment Assignments. Under UCC Article 9 (Secured Transactions), assignment of accounts receivable — including the right to receive payment under service contracts — is treated as a secured transaction and can be perfected against third parties by filing a UCC-1 financing statement. This framework enables businesses to use their receivables as collateral for lines of credit. Importantly, UCC § 9-406 limits the effectiveness of anti-assignment clauses with respect to the creation and enforcement of security interests in payment obligations, overriding contract provisions that would otherwise prohibit assignment of payment rights.

Partial Delegation of Duties. A partial delegation assigns responsibility for specific duties while retaining others. Example: a consulting firm delegates the data analysis component of a project to a specialized data analytics subcontractor while retaining responsibility for client communication, presentation, and strategic recommendations. Whether partial delegation is permissible depends on whether the contract contains a specific delegation restriction and whether the delegated portion is "material" to the personal service character of the contract.

Defining "Material" Portions. Many contracts with personal service restrictions focus on "material" delegation — prohibiting delegation of substantial portions of the work while permitting delegation of supporting tasks. Courts examine the quantitative and qualitative significance of the delegated work. Delegating 10% of a project — data entry, administrative tasks — is unlikely to constitute material delegation. Delegating 60% of a project — the core technical deliverables — almost certainly does.

Splitting Obligations in Business Sales. Partial assignments arise naturally in partial business sales: if a company sells one division but retains another, it may wish to assign the contracts associated with the sold division while retaining contracts related to the surviving business. Anti-assignment clauses that restrict the "assignment of any rights or obligations" would apply to partial assignments of this type. Carve-outs for divisional transactions are important if you anticipate this kind of business restructuring.

Payment Waterfall Agreements. In some commercial arrangements, multiple parties share the right to receive payments from a single contractual relationship — a common structure in joint ventures, partner agreements, and subcontracting arrangements. These arrangements are effectively partial assignment structures and may need to be disclosed to the primary obligor to be fully enforceable.

One of the least understood aspects of contract assignment is that assignment — without novation — does not release the original party from its obligations. Both the assignor and assignee can be held responsible, and understanding this dual liability structure is essential for any business transaction involving contract assignment.

The Default Rule: Assignor Remains Liable. Under general contract law, when a party assigns its duties (delegates), the assignor remains secondarily liable for those duties unless the other party explicitly agrees to release them. This is sometimes called "delegator liability" or "assignor's continuing liability." In practical terms: if Company A assigns its service contract to Company B, and Company B defaults on delivery, the client can sue Company A for the breach even though Company B is now the performing party.

Why Courts Impose Continuing Assignor Liability. The continuing liability rule protects the non-assigning party from having a creditworthy, known contracting partner replaced with an unknown or less creditworthy substitute without recourse. If assignment automatically released the assignor, it would be a mechanism for parties to escape obligations by assigning to judgment-proof entities. The non-assigning party must consent to the substitution (i.e., execute a novation) to achieve the release.

Assignee's Liability to Third Parties. The assignee who assumes contractual duties becomes liable to the non-assigning party for those duties. This is true even if the assignment and assumption agreement is between only the assignor and assignee — the non-assigning party is a third-party beneficiary of the assumption agreement and can enforce it directly. The assignee's liability is co-extensive with the obligations assumed: if the assumption covers all obligations from the assignment date forward, the assignee is liable for all post-assignment performance obligations.

Pre-Assignment Defaults. The assignee's liability typically runs from the assignment date forward — they are not responsible for the assignor's pre-assignment defaults. However, this can be a trap in M&A transactions where contracts are assigned as part of an asset purchase: if the seller has been in breach of the assigned contract before the closing date, the buyer (as assignee) takes the contract subject to those existing defenses. The non-assigning party can raise the pre-closing breach against the assignee even though the assignee had nothing to do with it. This underscores the importance of due diligence on assigned contracts in any acquisition.

Indemnification Between Assignor and Assignee. To manage the dual liability problem, sophisticated transactions include indemnification provisions between the assignor and assignee. The assignee indemnifies the assignor for any claims arising from post-assignment performance; the assignor indemnifies the assignee for any claims arising from pre-assignment performance. These indemnification agreements are contractual allocations between the assignor and assignee and do not affect the non-assigning party's rights against both.

The "Subject to" Rule. The assignee takes the contract "subject to" all defenses, setoffs, and counterclaims that the non-assigning party had against the assignor at the time of assignment. This is the "subject to" rule (Restatement § 336; UCC § 9-404). Example: if a client had a $10,000 setoff against the original contractor for defective prior work, and the contract is assigned to a new contractor, the client can assert that same $10,000 setoff against the new contractor even if the new contractor had nothing to do with the defect.

The Uniform Commercial Code provides a distinct framework for assignment in contracts involving the sale of goods. If your contract involves goods — physical products, manufactured items, materials, equipment — the UCC's assignment rules may apply alongside or instead of common law principles.

Scope of UCC Article 2. UCC Article 2 governs contracts for the "sale of goods" — tangible, moveable personal property. It does not govern contracts for services, real property, or intangible assets. Mixed contracts (combining goods and services) are governed by the "predominant purpose" test: if the primary purpose is the sale of goods, UCC Article 2 applies; if the primary purpose is the provision of services, common law applies. A contract to manufacture custom parts is typically a goods contract; a contract to design and build a custom software system is typically a services contract.

UCC § 2-210 — The Assignment Rule for Goods Contracts. Under UCC § 2-210, parties to a goods contract can assign rights and delegate duties subject to important exceptions. Rights that cannot be assigned even under the UCC include: (1) rights where the assignment would materially change the duty of the other party; (2) rights where assignment would materially increase the burden or risk imposed on the other party; (3) rights where assignment would materially impair the other party's chance of obtaining return performance.

The Anti-Assignment Clause Override for Payment Rights. UCC § 9-406(d) provides that anti-assignment clauses are not effective to prevent the creation, attachment, or perfection of a security interest in accounts (payment rights) or to prevent the assignment of those accounts after attachment. This is a critical override: even if a goods contract contains a blanket anti-assignment clause, the supplier can still use its receivables from that contract as collateral in a financing arrangement. The anti-assignment clause is not enforceable against the secured lender's perfected security interest.

Delegation in Goods Contracts. Under UCC § 2-210(1), the delegation of performance is permissible unless the parties have agreed otherwise or unless the non-delegating party has a "substantial interest" in having the original promisor perform. The "substantial interest" exception mirrors the common law personal services doctrine but is applied narrowly in goods contracts — because goods are typically fungible, the identity of the seller is often less critical than in service contracts. A buyer who contracted to purchase steel from Mill A generally cannot object to performance by Mill B if the steel meets specifications.

Output and Requirements Contracts. Output contracts (seller agrees to sell all output to buyer) and requirements contracts (buyer agrees to purchase all requirements from seller) are a special category under UCC Article 2. These contracts have personal service characteristics — their performance depends on the specific operational decisions of one party. UCC § 2-210(5) provides that assignment of rights under a requirements or output contract does not materially change the obligor's duty if the assignee continues the same type of business and the requirements or output do not materially deviate. Nonetheless, courts scrutinize these assignments carefully.

Goods Contracts in M&A — The Supply Agreement Problem. Long-term supply agreements are among the most commercially significant contracts in any manufacturing or distribution business. When those businesses are acquired, the supply agreements may contain anti-assignment clauses that are triggered by the transaction. UCC Article 2 does not override contractual anti-assignment restrictions for operational duties (only for payment rights under Article 9). Acquirers of goods-intensive businesses must conduct specific diligence on supply agreement assignment provisions and plan for consent solicitation or novation negotiations.

Government contracts operate under a distinct legal regime when it comes to assignment. Federal law imposes restrictions on assignment that have no equivalent in commercial contract law, and violations carry serious consequences — including void assignments, potential suspension of payments, and contractor debarment.

The Federal Anti-Assignment Acts. Two federal statutes restrict assignment of government contracts. The first (41 U.S.C. § 6305) prohibits assignment of any contract with the federal government or any interest therein and prohibits assignment of any claim against the government arising under such a contract — unless the assignment is made to a bank, trust company, or other financing institution as security for a loan. The second (31 U.S.C. § 3727, the Assignment of Claims Act) prohibits assignment of any claim against the United States unless the assignment is made to a bank or financing institution for loan security purposes, and specific procedural steps are followed.

The Financing Assignment Exception. Both federal statutes preserve the right to assign payment claims (not the contract itself) to financial institutions for financing purposes. This exception mirrors the UCC approach and recognizes that government contractors — who often wait 30-90 days for payment — need access to working capital financing. To use this exception, contractors must: file a notice of assignment with the responsible contracting officer; execute the assignment in the form required by the FAR (Federal Acquisition Regulation); and ensure the assignment covers only the right to receive payments, not contractual performance rights or duties.

Assignment in Connection with M&A — The Novation Agreement Process. When a government contractor is acquired, the acquiring entity must obtain a formal novation agreement with the U.S. government to continue performing the acquired contracts. The FAR (48 C.F.R. Part 42, Subpart 42.12) sets out the detailed process for requesting recognition of a successor in interest as the new contractor. This process requires: (1) an asset purchase agreement or merger documentation; (2) a list of all contracts to be novated; (3) financial statements of both the original and successor contractor; (4) a legal opinion that the transfer was effective; (5) a novation agreement signed by the original contractor, successor contractor, and the government's contracting officer. The process takes months and requires individual approval for each agency and each contracting office involved.

State and Local Government Contracts. State and local government contracts are governed by state law equivalents of the federal Anti-Assignment Acts, which vary significantly. Many states have statutes prohibiting assignment of state contracts without agency consent; others rely on contractual provisions in the contract documents themselves. Before assigning or novating a state government contract, review both the contract's assignment provision and the relevant state statute.

Subcontracting vs. Assignment in Government Contracts. Federal contractors routinely use subcontractors — this is not assignment (which would transfer the prime contract) but rather delegation of specific performance duties. The FAR governs subcontracting requirements and limitations, including small business subcontracting plans and consent requirements for major subcontracts in cost-type contracts. Small businesses performing prime contracts must obtain prior approval for subcontracting more than 50% of performance (for services) or 85% (for manufacturing), with the prime contractor remaining responsible for all performance.

IP Assignment in Government Contracts — Bayh-Dole and DFARS. Government contracts involving R&D and innovation have specialized IP assignment rules. Under the Bayh-Dole Act, a small business or nonprofit that develops an invention using federal funding may elect to retain title — but assignment of that government-funded IP requires compliance with Bayh-Dole's assignment restrictions, including license retention rights by the government. The DFARS (Defense FAR Supplement) imposes additional IP and technical data rights provisions that restrict contractors' ability to assign related IP. Government contractors must separately analyze assignment of IP rights versus assignment of the contract itself.

Contract assignment and IP assignment are frequently confused, but they operate under different legal regimes, can coexist in the same contract, and have different enforceability rules. Understanding the distinction protects your IP rights in business transactions.

What IP Assignment Means. An IP assignment is a permanent transfer of intellectual property ownership — patents, copyrights, trademarks, trade secrets — from the assignor to the assignee. Once assigned, the IP belongs to the assignee as fully as if they had created it. IP assignment is governed by intellectual property law (Copyright Act, Patent Act) rather than general contract law, and the assignment of copyrights must be in writing to be effective (17 U.S.C. § 204(a)).

What Contract Assignment Means in the IP Context. A contract assignment in a services agreement transfers the contractual relationship — the bundle of rights and duties under the agreement. Anti-assignment clauses in service contracts typically restrict this transfer. However, IP rights that have already been assigned under a "work for hire" provision or IP assignment clause are not contractual rights — they are property rights that travel with the IP, not with the contract. An anti-assignment clause in the service contract does not restrict the subsequent assignment of IP that was already transferred.

The Work for Hire Trap. When a contract designates services as "work for hire" under the Copyright Act (17 U.S.C. § 101), copyright vests automatically in the hiring party upon creation. The creator has no copyright to assign — it belongs to the client from the moment the work is created. However, for work for hire to apply to independent contractor work, two conditions must be met: (1) the parties must expressly agree in writing that the work is work for hire; and (2) the work must fall within one of nine statutory categories of works that can constitute work for hire when created by an independent contractor (contributions to collective works, parts of motion pictures, translations, supplementary works, compilations, instructional texts, tests, test answer material, or atlases). Creative works that do not fall within these categories — such as standalone software code, website designs, or general written content — cannot be work for hire for independent contractors, regardless of the contract language. If the work-for-hire designation fails, the default rule is that copyright remains with the creator.

IP Assignment vs. IP License. An assignment transfers ownership permanently; a license grants permission to use IP while the creator retains ownership. Assignments and licenses are often confused in contracts. A clause that says "Client shall have the exclusive right and license to use the Work Product" is a license, not an assignment — the contractor may retain underlying ownership. A clause that says "Contractor hereby assigns all right, title, and interest in the Work Product to Client" is an assignment. For clients, the difference is significant: a licensee's rights can potentially be terminated by the licensor; an assignee's rights cannot.

Downstream Assignment of IP. Once IP is assigned to a client, the client can typically assign those IP rights to others — the creator has no ongoing control. However, if the IP assignment contains express restrictions on downstream assignment (uncommon but occasionally present), those restrictions are contractual obligations that the client must honor. Be cautious about IP assignments that include downstream use restrictions — they are unusual and potentially unenforceable under IP law.

The Developer's Retained License. Sophisticated freelance contracts often include a "retained license" — the developer assigns client-specific work product but retains license rights to underlying tools, libraries, frameworks, and pre-existing IP. This distinction matters when the contract is assigned: the assignment of the contract (or the IP) does not transfer the developer's retained license, which remains with the developer. Assignees of development contracts should specifically confirm which IP components were assigned versus which are subject to retained licenses.

State law governs the interpretation and enforceability of assignment clauses in commercial contracts. While general principles are consistent across states, significant variations exist — particularly around anti-assignment clause scope, the effectiveness of restrictions on rights versus duties, and the treatment of change of control provisions.

California. California courts apply a narrowing construction to anti-assignment clauses — the California Supreme Court in Trubowitch v. Riverbank Canning Co. (1947) established that anti-assignment clauses are strictly construed against the party asserting them. California courts have limited anti-assignment clauses to restrictions on assignment of duties when the language is ambiguous — if the clause restricts "assignment of this Agreement" without specifically restricting assignment of rights, California courts may hold that the right to receive payment can still be assigned. Additionally, California Business and Professions Code § 16600 broadly invalidates restraints on trade, which courts have occasionally applied to restrict overly broad delegation restrictions in independent contractor agreements.

New York. New York courts enforce anti-assignment clauses strictly and broadly. The New York Court of Appeals has held that anti-assignment clauses apply to both rights and duties unless specifically limited, and that the "by operation of law" language captures transfers occurring through legal process including bankruptcy. New York is the preferred governing law for many commercial contracts precisely because it provides predictable, pro-enforcement interpretations. However, New York courts distinguish between anti-assignment clauses (which create conditions) and void-ab-initio language ("any purported assignment shall be void") — the latter provides stronger protection and is more commonly used in sophisticated New York contracts.

Texas. Texas courts enforce anti-assignment clauses as written and are generally reluctant to imply limitations on clear contractual restrictions. Texas case law supports the proposition that a valid anti-assignment clause creates a condition to effective assignment, not merely a personal covenant — meaning an assignment made without consent is completely void, not just a breach. This distinction matters: in states where anti-assignment operates as a covenant (not a condition), the assignment is effective but the assigning party is liable for breach; in Texas (and states with similar rule), the assignment itself is invalid.

Delaware. Delaware is the incorporation state for most large U.S. corporations and its contract law is highly developed. Delaware courts enforce anti-assignment clauses strictly and apply a plain reading to their scope. Delaware courts have held that change of control provisions, if drafted clearly, are enforceable without requiring a direct assignment — a mere change in ownership triggers the provision. Delaware's courts are generally favorable to sophisticated commercial parties and enforce agreements as written with minimal implication of reasonableness requirements.

Illinois. Illinois follows the general common law rule that anti-assignment clauses restrict delegation of duties more narrowly than assignment of rights. Illinois courts have held that an anti-assignment clause alone does not restrict a party's ability to assign the right to receive money — the clause must specifically address payment rights to restrict them. Illinois recognizes the UCC § 9-406 override for accounts receivable financing.

Florida. Florida courts enforce anti-assignment clauses as written and have held that assignments made in violation of an anti-assignment clause are void (not merely a breach). Florida courts apply change of control provisions strictly when they are clearly drafted. Florida's statute of frauds requires anti-assignment clauses to be in writing to be enforceable; oral anti-assignment restrictions are not binding.

Washington. Washington courts apply a reasonableness standard to consent requirements implied in anti-assignment clauses, even when the clause does not expressly include a reasonableness requirement. Washington courts have also been receptive to implied assignment restrictions in cases involving personal service elements, independently of express contract language.

Georgia. Georgia enforces anti-assignment clauses strictly and broadly. Georgia courts have found that blanket anti-assignment clauses restrict assignment of any contractual interest, including the right to receive payment, unless payment assignments are specifically excluded.

Massachusetts. Massachusetts courts apply the general rule that anti-assignment clauses are enforceable but are construed narrowly against the party seeking to restrict assignment. Massachusetts recognizes the distinction between assignment of rights (more freely permitted) and delegation of duties (more restricted), and applies the personal services doctrine as an additional limit on delegation in professional service contracts.

New Jersey. New Jersey courts follow the Restatement approach and give anti-assignment clauses their plain meaning while applying the reasonableness standard to consent decisions where the clause requires consent. New Jersey courts are among those that have applied unconscionability concepts to anti-assignment clauses in adhesion contracts.

Assignment clauses operate very differently across industries — the business dynamics, regulatory environments, and practical stakes differ enough that industry-specific considerations are essential to navigating them correctly.

SaaS Agreements. Assignment clauses in SaaS agreements often have two faces: the vendor can assign freely (or with minimal restriction) in connection with M&A; the customer cannot assign without vendor consent. This asymmetry reflects the vendor's legitimate business interest in controlling who uses its platform (credit risk, compliance, competition) but may be unfair if the customer is a growing business that expects to change corporate form, bring in investors, or be acquired. SaaS customers should negotiate: (a) the right to assign to affiliates and subsidiaries without consent; (b) the right to assign in connection with an acquisition where the acquirer agrees to the platform terms; (c) express confirmation that a change in the customer's equity ownership does not constitute assignment. The practical stakes are high — if an acquired startup cannot transfer its SaaS contracts, it faces disruption and renegotiation at exactly the moment it is trying to integrate with an acquirer.

Freelance and Independent Contractor Agreements. Assignment clauses in freelance contracts raise two distinct concerns for contractors: (1) the client's ability to assign the contract to a successor, which might mean the contractor ends up performing for an entirely different entity than the one they contracted with; (2) the contractor's ability to subcontract or delegate work. On the client side, a broad assignment right — especially without a consent requirement — means the contractor could find their services "owned" by an unknown third party. On the contractor side, without explicit subcontracting rights, using a virtual assistant or junior contractor may technically violate the agreement. Freelancers should negotiate: mutual consent for assignment; express subcontracting rights for a defined percentage of work; and a change of control provision requiring the client to provide notice when the client's business changes hands.

Consulting Agreements. Consulting agreements for strategic advisory services are among the most personal-service-intensive contracts and therefore have the strongest anti-assignment restrictions. The client typically hired the firm based on specific partners or principals. If the consulting firm is acquired and the key individuals leave, the client has a legitimate interest in terminating or renegotiating. Consulting agreements should include: (a) a key-person clause permitting termination if specific named individuals leave; (b) mutual anti-assignment restrictions with consent required; (c) change of control provisions applying symmetrically to both parties; (d) an explicit subcontracting provision defining which work can be delegated to junior staff and which requires partner-level involvement.

Real Estate Contracts. The standard real estate purchase contract clause quoted above ("binding upon successors and assigns") is effectively a consent-to-assign provision — it explicitly contemplates that contract rights may be assigned to heirs and successors. This is typical because real estate transactions involve many participants and flexible assignment rights facilitate normal market activity (wholesaling, assignment to LLCs, estate transfers). However, specific real estate contract types — such as listing agreements with brokers and property management agreements — typically have strong personal service characteristics and anti-assignment restrictions. Lease agreements frequently restrict tenant assignment (subletting) but permit landlord assignment (selling the property).

Employment Agreements. Employment agreements have unique assignment dynamics because of the personal service doctrine — employment is inherently personal, based on the specific employer-employee relationship. When a business is acquired, employment agreements are typically assumed by the acquirer rather than "assigned" in the strict legal sense — the acquisition restructures the employment relationship. However, specific provisions in employment agreements — non-compete covenants, IP assignment obligations, confidentiality restrictions — have been held not assignable in some jurisdictions because they restrict the employee's personal activities and cannot be transferred without the employee's consent. In California, courts have found that non-compete obligations cannot be assigned by the employer to a successor employer — the employee's obligations are personal to the original employment relationship.

Not all assignment clauses are created equal. These nine red flags identify the most dangerous provisions — and the realistic contract language that signals each problem.

Red Flag 1: One-Way Assignment Rights.

*What it looks like:* "Client may assign this Agreement without restriction. Contractor may not assign this Agreement without Client's prior written consent."

*Why it's dangerous:* The asymmetry means the client can transfer the relationship to anyone — including competitors, hostile parties, or financially weak entities — without your consent, while you cannot even transfer your payment rights without approval. This is particularly problematic in long-term service agreements where the client is acquired by a competitor.

Red Flag 2: Sole Discretion Consent Standard.

*What it looks like:* "Contractor's consent to any assignment by Client shall not be required. Client's consent to any assignment by Contractor may be withheld in Client's sole, subjective, and absolute discretion."

*Why it's dangerous:* "Sole and absolute discretion" eliminates any obligation to act reasonably. The client can refuse assignment for any reason — to extract concessions, create leverage in a renewal negotiation, or simply because they prefer the current arrangement.

Red Flag 3: Broad "By Operation of Law" Coverage.

*What it looks like:* "Contractor may not assign this Agreement by operation of law or otherwise, including through any reorganization, restructuring, or change in corporate form."

*Why it's dangerous:* This language can be triggered by routine internal restructurings — converting a sole proprietorship to an LLC, reorganizing from one state to another, or changing your corporate structure as part of a financing round. Routine corporate housekeeping could put you in technical breach of dozens of contracts.

Red Flag 4: Change of Control Clause with Low Threshold.

*What it looks like:* "A 'Change of Control' means any acquisition of more than twenty percent (20%) of Contractor's outstanding equity interests by any person or entity."

*Why it's dangerous:* A 20% threshold is extremely low — it means bringing in a single angel investor or venture fund could trigger the change of control provision and require the client's consent. Any meaningful outside investment becomes a contractual negotiation with every client.

Red Flag 5: Blanket IP Assignment Covering Pre-Existing Materials.

*What it looks like:* "Contractor hereby assigns to Client all intellectual property rights in and to all materials created, contributed to, or used in the performance of this Agreement."

*Why it's dangerous:* "Used in the performance of this Agreement" can sweep up pre-existing tools, libraries, templates, and frameworks you routinely use across client engagements. You could inadvertently assign ownership of your core workflow tools to a client.

Red Flag 6: No M&A Carve-Out for Either Party.

*What it looks like:* "Neither party may assign this Agreement for any reason without the other party's prior written consent, including in connection with any merger, acquisition, or business combination."

*Why it's dangerous:* Without an M&A carve-out, a business sale requires individual consent from every counterparty. For a business with many vendor or client contracts, this creates a consent solicitation logistical nightmare that can delay or derail transactions.

Red Flag 7: No Timeframe for Consent Response.

*What it looks like:* "Contractor shall request Client's consent for any proposed assignment in writing. Client shall respond to such request at Client's convenience."

*Why it's dangerous:* Without a response deadline, the client can sit on a consent request indefinitely, effectively holding your business planning hostage. In M&A contexts, deal timelines are critical; indefinite consent windows can be lethal to transactions.

Red Flag 8: Assignment Without Assumption of Obligations.

*What it looks like:* "Client may assign this Agreement to any successor entity. The successor entity shall be bound by all obligations of Client under this Agreement upon such assignment."

*Why it's dangerous:* This looks reasonable but fails to release the original client from liability. If the successor breaches, you should pursue both the original client and the successor — but the clause as written may create confusion about who is the primary obligor. A better provision specifies that the assignee assumes all obligations and the assignor is released from post-assignment obligations.

Red Flag 9: Silent on Subcontracting When Personal Service Language Is Present.

*What it looks like:* "Services under this Agreement are personal in nature and require Contractor's direct involvement. Contractor's unique skills and expertise are the basis for this Agreement."

*Why it's dangerous:* "Personal services" language without any subcontracting carve-out can be read to prohibit even the use of an employee or virtual assistant. If you routinely use team members or assistants on projects, this provision could put you in breach on virtually every project.

Negotiating assignment clauses requires a tiered strategy: identify your true priorities, understand the other party's legitimate interests, and make targeted modifications that address your needs without requiring the other party to accept unreasonable risk.

Understanding the Other Party's Legitimate Interests. Before negotiating, ask: why does the other party want assignment restrictions? Typically: (1) they contracted with you specifically and do not want to end up performing for or with an unknown third party; (2) they have competitive concerns — the contract might end up with a competitor; (3) they have financial concerns — the assignee may not be creditworthy; (4) they want leverage in a future renegotiation — assignment consent is a valuable bargaining chip. Understanding these interests allows you to address them directly rather than asking for a blank check.

Tier 1 — Must-Have Modifications (Non-Negotiable)

*Mutual restriction.* If the contract allows one party to assign freely while restricting the other, the restriction must be mutual. This is not just a fairness issue — it is a fundamental commercial principle that both parties' interests deserve protection.

*Affiliate carve-out.* You must preserve the ability to assign to entities you control — subsidiaries, parent companies, entities under common ownership. This is essential for routine corporate housekeeping and has no legitimate downside for the other party (they are contracting with your affiliated business family, not a stranger).

*M&A carve-out with assumption.* Preserve the right to assign in connection with a business sale or acquisition, provided the successor assumes all obligations in writing. This is the most important carve-out for business planning — without it, every exit is contingent on dozens of consent negotiations.

*Payment assignment right.* Preserve the right to assign payment claims to financial institutions for receivables financing. This is often achievable even when the other party insists on a strong anti-assignment clause for operational duties.

Tier 2 — Important But Often Negotiable

*Reasonableness standard for consent.* Push for "not unreasonably withheld, conditioned, or delayed." If the other party insists on stronger control, push for a list of enumerated reasonable grounds for withholding consent — this gives the other party protection while constraining arbitrary refusals.

*Deemed consent provision.* Add a 30-day response deadline — consent is deemed granted if not denied in writing within 30 days of receipt of written notice. This prevents indefinite holdout on consent.

*Change of control threshold.* Push for a 50% threshold rather than a lower percentage, and define "control" to exclude passive portfolio investments.

*Subcontracting rights.* Define what subcontracting is permitted without consent — a percentage of project value (e.g., up to 30%) with notice, or by category of activity (administrative, technical support, data analysis).

Tier 3 — Nice to Have

*Walk-away trigger.* Add a provision that if the other party assigns to an entity that is a competitor of yours, you have the right to terminate the contract on 30-60 days' notice.

*Assignee financial qualification standard.* Define objective criteria for reasonable consent to assignment — the proposed assignee must have financial resources comparable to the original party and no history of material contractual defaults.

*Assignment of subcontracts.* Specify that when you assign the contract, your subcontracting arrangements are also assigned (or terminated) — to prevent the subcontractors from being in limbo.

The Negotiating Script. Frame modifications in terms of the other party's interests: "The M&A carve-out protects you too — it ensures that if we are acquired, the acquirer assumes all our obligations in writing, rather than the assignment being void and leaving the contract in limbo." "The deemed consent provision prevents the assignment process from becoming a bottleneck that delays legitimate business transactions for both parties." "The affiliate assignment right means you will always be dealing with an entity we control and are responsible for — that's more protection than the alternative."

When to Walk Away. An assignment clause that combines all of the following is a serious red flag: sole discretion consent; no M&A carve-out; no affiliate carve-out; no payment assignment right; change of control threshold below 30%. This combination effectively traps you — you cannot sell your business, restructure, bring in investors, or finance your receivables without this counterparty's blessing. For long-term contracts, this is an unreasonable constraint that should be a dealbreaker. For short-term projects, the practical risk may be low enough to accept.

Can a contract be assigned without the other party's consent? It depends on the contract and governing law. If there is no anti-assignment clause, most contracts are freely assignable at common law — subject to the personal services exception for certain service contracts. If the contract contains an anti-assignment clause requiring consent, assignment without consent is a breach (in some states, the assignment is also void). If the contract has a "consent not to be unreasonably withheld" standard, you can assign as long as the other party has no reasonable objection.

What happens if I assign a contract in violation of an anti-assignment clause? Two possible outcomes, depending on the jurisdiction and how the clause is drafted: (1) The assignment is a breach — it is effective, but you owe damages to the non-assigning party for the breach; or (2) The assignment is void — it has no legal effect, and the assignee acquires no rights. States differ significantly on which outcome applies. Clauses that say "any purported assignment without consent shall be null and void" clearly intend the second outcome.

If my client is acquired, do I have to keep performing for the new owner? Generally yes, unless your contract contains a change of control provision giving you termination rights, or the acquisition constitutes an assignment requiring your consent and you withhold it. The default rule is that the contract survives a change in ownership of the contracting entity — you continue to perform, and the new owner steps into the client's position. Review your contract for a change of control definition and any associated termination or renegotiation rights.

Can I assign my right to be paid, even if I cannot assign the whole contract? Often yes. Courts have generally held that the right to receive payment can be assigned even under broad anti-assignment clauses, because being paid by a different party does not materially change the obligor's position. Additionally, UCC § 9-406 specifically overrides anti-assignment clauses with respect to the creation of security interests in accounts receivable, enabling factoring and receivable financing regardless of anti-assignment language.

What is the difference between assignment and subcontracting? Assignment transfers your contractual position (rights and/or duties) to a third party. Subcontracting delegates specific performance duties to a third party while you retain contractual responsibility. When you subcontract, you remain the party of record — your client's counterparty — and remain fully liable for performance. A subcontractor performs work for which you are responsible; an assignee stands in your shoes as the contracting party. Anti-assignment clauses typically do not restrict subcontracting unless they specifically do so.

Does a non-assignment clause apply to assignment by operation of law — such as in bankruptcy? In bankruptcy, there is a specific framework for executory contracts. Under the Bankruptcy Code (11 U.S.C. § 365), a bankruptcy trustee or debtor-in-possession may assume or assign most executory contracts despite anti-assignment clauses. This federal override is a significant limitation on anti-assignment clause effectiveness — if the other party goes bankrupt, you may not be able to rely on an anti-assignment clause to prevent the contract from being assumed and assigned to a third party.

If I delegate my duties and the delegatee messes up, am I still liable? Yes. Delegation does not release you from liability unless all parties agree to a novation releasing you. The delegatee's failure is your breach. Your client can sue you for damages resulting from the delegatee's performance failure, and you in turn would have claims against the delegatee under any indemnification or performance warranty provisions in your subcontracting agreement.

What is a "no-assignment" clause versus an "assignment-consent" clause? A "no-assignment" clause prohibits assignment entirely — "neither party may assign this Agreement." An "assignment-consent" clause permits assignment subject to consent — "neither party may assign this Agreement without the other's prior written consent." The practical difference: if a no-assignment clause prohibits assignment absolutely, the analysis ends there. If an assignment-consent clause requires consent, the analysis turns on whether the consent is being unreasonably withheld and what remedy is available.

Can I negotiate an assignment clause after I've already signed the contract? Yes, through contract modification. Any agreed modification of assignment provisions should be in writing and signed by both parties. If you discover a restrictive assignment clause after signing that affects an upcoming transaction, you can approach the other party to negotiate a one-time consent or permanent amendment to the clause. This works best before any dispute has arisen — during the relationship when both parties have incentive to cooperate.

What should I do if I receive notice that a contract has been assigned to me? Confirm the assignment was authorized under the original contract's anti-assignment clause. Verify whether you have received notice of any existing defaults or disputes between the original parties — these may be defenses you must honor. If you did not consent to the assignment (as the non-assigning party), determine whether the assignment required your consent; if so, you may be able to challenge it. Review the assumption agreement if any, to confirm what obligations the assignee has expressly assumed.

What is a delegation provision in an arbitration clause, and how does it relate to assignment? As shown in the quote at the top of this FAQ, some contracts contain "delegation provisions" in their arbitration clauses — clauses specifying that the arbitrator (not a court) decides threshold questions about the arbitration clause's scope and validity. This is a different use of "delegation" than the contract law concept discussed in this guide. In the arbitration context, "delegation" refers to delegating the gateway question of arbitrability to the arbitrator. Do not confuse this with the concept of delegating contractual duties to a third party.

Can an assignment clause prevent me from licensing my IP to multiple clients? An assignment clause restricts assignment of the contract, not separate licensing arrangements you may have with third parties. If you license your pre-existing IP (software, templates, designs) to multiple clients, that is a licensing transaction — not an assignment of the contract with any single client. However, if your contract contains an exclusive license or exclusive services provision, a separate licensing arrangement with a third party may breach that provision — which is a different issue from the assignment clause.