Sample Format of Assignment Agreement

Narendra Kumar

15 Jun, 2019

What is Assignment Agreement?

An Assignment Agreement also termed as ‘assignment of contract’ happens when anyone who is a party to an existing contract decides to handover all the contract’s benefits and obligations to another party. Here, the transferor is termed as the ‘assignor’ and the transferee is termed as the ‘assignee’.

Through an assignment agreement, the assignee steps into the shoes of the assigner in reference to the contract in question. The assignee takes over the role of the assignor and with it all of its obligations and rights. One thing that is to be kept in mind in such agreement is to notify the other party of such existing contract.

Examples of Assignment agreements are:-

1. Assignment of contract
2. Assignment of License
3. Assignment of shares
4. Assignment of Copyright
5. Assignment of patent
6. Assignment of IP etc.

Mechanism of Assignment Agreements

In order to understand the mechanism of assignment agreement, it is important to understand who the parties to the agreement are. In general, there can either be two to three parties to the agreement.

For example:

In case if there is an assignment of any intellectual property, there are two parties involved i.e. assignor (or author) and the assignee. Such agreements can include Assignment of trademark, Assignment of patent or copyright etc.

On the other hand, if an agreement is for assignment of any contract, there will be two official parties to the contract as above mentioned. But in addition to them, there will be ‘obligor’ who is the other party in the original agreement. He is also required to be notified for maintaining the validity of an assignment agreement.

In order to successfully execute an assignment agreement, it is important to understand the original agreement. Many times there can be a clause restricting its assignment or it can be conditional in nature.

Under what Situations Assignments is not possible

There are certain cases where the assignment is not possible. Few of such situations are listed out here:

• The assignment is prohibited in the Original Contract: If the original contract explicitly prohibits its assignment and it is stated that any assignment will render the contract void. In such a case the assignment cannot be incorporated.
• Assignment alters the subject matter of the Original Contract: If the assignment results in any sort of alteration in the original contract, like:
• The difference in expected performance of the parties
• Value of return is diminished
• A risk factor is elevated, etc.

Then the assignment will not be valid and cannot be executed.

• The assignment is unlawful or against public policy: Some legal provisions prohibit assignment of certain contracts. Some examples are mentioned here:
• Future wages by an employee cannot be assigned.
• Certain claims against the government cannot be an assignment

On the other hand, there are certain cases which are not prohibited by law but if assigned will violate public policy. Thus are considered un-assignable. For example:

• personal injury claims

What is the process of Assignment?

Any contract can be successfully assigned by following three simple steps:

First Step: Analyze the Original Contract

Before initiating the execution of the assignment agreement it is required to check the original contract thoroughly to check if it contains any kind of limitations or prohibition clause barring its assignment. Sometimes such clauses are included to protect the interest of the parties to the contract thus making assignment impossible. However, if it does not include any such clause then you can proceed with the assignment of the agreement.

Second Step: Execute the contract to assign

If after due analysis it is confirmed that the assignment is not restricted, then the parties can execute an assignment agreement. Such agreement will transfer all the rights and obligations of the assignor to the assignee.

Third Step: Notify the Obligor

In order to successfully execute an assignment contract, it is necessary to send an intimation of such assignment to the obligor. The obligor is the other contracting party in the original agreement. In certain cases, written acknowledgment is required from the obligor.

What are the Components of an Assignment Agreement?

1. Parties to the agreement

At the beginning of the contact details of both the parties (assigner and assignee) to the contract must be mention. These details include name, address and in case of organizations name and address of their authorized signatory.

2. The effective date of Contract

The date of the agreement must also be mentioned. This will be the effective date when all the rights and obligations will be transferred from the assigner to the assignee. And the assigner is free from any obligations of the original contract.

3. Assignment

This part will include the actual assignment of the rights and obligations of one party to another. Here, all the conditions must also be mentioned on which such assignment is dependent.

4. Acknowledgment of Assignment  

It is required that the agreement must all include a clause stating the acknowledgment from the side of the assignee accepting all the rights and obligations assigned to him/her. This helps in avoiding any kind of conflict which might arise in the future.

5. Modification Clause

This part of the agreement should mention the process of modification in the assignment of contract. If after successfully executing the assignment agreement any of the parties to the contract want to modify the agreement or any part of it, then such modification is to be done as per the modification clause.

6. Indemnity Clause

This clause will mention the information as to which party will cover the losses in case of any loss caused in the course of the agreement.

7. Jurisdiction and governing law

The agreement should also mention the jurisdiction i.e. the place of execution of such contract. And what laws will regulate such contract? And in case of any conflict or dispute, such regulating laws will be followed. For settlement purpose.