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DEED OF ASSIGNMENT - ASSIGNMENT OF CONTRACT

An assignment of contract is used when a person/company who originally was a party to a contract (Assignor) transfers his/its rights under the contract to another party (Assignee).

 

There are several reasons why a party to a contract later on wants to assign their contractual rights to a third party, for example a change in circumstances.  

 

This Deed of Assignment - Assignment of Contract template can be used to transfer the benefit, right and title to and in a wide range of commercial contracts. It allows one party, the Assignor, to transfer a contract to someone else, the Assignee.

 

Please note that in order to be able to assign a contract, the contract must not contain any provision prohibiting or restricting assignment. Without any restriction on or prohibition against assignment, the benefits under a contract may be freely assignable by any party to it.

 

Any contract which is personal to the original contracting parties or which expressly prohibits assignment can only be assigned with the consent of the other party to the original contract (Counterparty). Thus if the contract prohibits assignment or requires the consent of the other party to the contract before it can be assigned then the Assignor must obtain such consent from the Counterparty before executing the Deed of Assignment.

 

This Deed of Assignment - Assignment of Contract has been drafted on the basis that in the original contract there is no prohibition to or restriction on assignment. Therefore, where the original contract allows assignment it can consequently be assigned without the other contracting party's consent.

 

Please note that it is advisable to create a Statutory Assignment (also known as Legal Assignment) instead of an Equitable Assignment.

 

The main difference between the two is that in an Equitable Assignment the Assignee cannot bring an action in their own name against the other party to the original contract. Consequently, if the Assignee seeks to enforce the assigned rights against the other party to the original contract then they must join the Assignor as a party to the action.

 

In order to create a Statutory Assignment the Assignor must notify the other party to the original contract of the assignment but, as long as the original contract does not contain any provision prohibiting or restricting the assignment, it does not need the other contracting party's consent to assign its rights.

 

N.B. A contracting party can only assign its rights, it cannot assign its obligations or liabilities. This means that the Assignee will be entitled to the Assignor’s benefits under the original contract, but the Assignor will still remain liable to discharge its contractual obligations and liabilities. In other words, after the Deed of Assignment has been executed the Assignor will remain bound by any prospective obligations and accrued liabilities arising under the original contract. However we have included a clause in this Deed of Assignment where the Assignee agrees to indemnify the Assignor against any losses, damages or costs the Assignor suffers under the contract after the date of the assignment as a result of the Assignee's failure to perform the obligations it assumes under the assignment.

 

Also, please do not confuse a Deed of Assignment with a Novation Agreement/Deed of Novation. Under a Deed of Assignment only the benefits of a contract can be assigned and not the burden; thus if you want to transfer the burden of a contract as well as the benefits under it, then you have to use a Novation Agreement or a Deed of Novation as novation transfers both the benefits and the burden under a contract. For a Novation Agreement please see: Novation Agreement - Changing a Party to a Contract.

 

This Deed of Assignment - Assignment of Contract contains the following clauses:

 

  1. Definitions and Interpretation
  2. Assignment
  3. Assignor's Warranties, Indemnity and Obligations
  4. Assignee’s Indemnity
  5. Notice of  Assignment
  6. Further Assurance
  7. Counterparts
  8. Notices
  9. Assignment
  10. Successors
  11. Third Party Rights
  12. Variations
  13. Governing Law and Jurisdiction

 

 

This Deed of Assignment - Assignment of Contract is in Microsoft Word format, written in plain English, easy to use and edit.



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