Clause primer
Assignment and change of control clause
Controls whether a party may transfer its rights or obligations under the contract, and whether a change in who owns or controls a party counts as a transfer.
Legal information, not legal advice. What a clause does depends on its exact words, the rest of the agreement and the governing law.
Also called: anti-assignment clause, assignment clause, change of control provision, successors and assigns clause. Where you find it: Nearly all commercial agreements, including licenses, SaaS and services agreements, supply contracts, leases and credit agreements.
SAMPLE CLAUSE (INVENTED FOR THIS PRIMER)
Neither party may assign or transfer this Agreement, or delegate any of its obligations, in whole or in part, without the prior written consent of the other party, which shall not be unreasonably withheld. Either party may, however, assign this Agreement without consent to an affiliate or to a successor in connection with a merger, acquisition or sale of all or substantially all of its assets, provided the assignee is not a competitor of the other party and agrees in writing to be bound by this Agreement. A change of control of a party is treated as an assignment for purposes of this Section. Any attempted assignment in violation of this Section is void.
How it works
Consent requirement
The first sentence covers both assignment of rights and delegation of duties, which the law treats as different things. The "not unreasonably withheld" standard limits discretion, and without it consent may be refusable for any reason, depending on the governing law.
Permitted transfers
The carve-out lets a party move the contract to an affiliate or to a buyer of its business without asking. The competitor exception and the written assumption requirement protect the other party from ending up with an unwanted or unaccountable counterparty.
Change of control as assignment
Without this sentence, a sale of a party's stock may not count as an assignment at all, because the contracting entity stays the same. Read how "change of control" is defined (a voting power percentage, board control or a sale of assets) and whether it applies to both parties.
Void language
Stating that a prohibited transfer is "void" aims to make it ineffective, rather than only a breach supporting damages. Some courts require clear language of this kind before treating a transfer as invalid.
Why it is there
The clause protects each party's choice of counterparty. Change of control language extends that protection to transactions that change who stands behind a party without changing the contracting entity. Permitted transfer carve-outs, in turn, protect each party's ability to reorganize or sell its business without collecting consents from every counterparty.
How it works with other clauses
- Termination provisions may give a separate right to terminate on a change of control, which works differently from a consent requirement.
- Confidentiality and data protection terms affect whether an assignee may receive information and personal data, and may call for new safeguards.
- Under UCC Article 9, some contract terms restricting the assignment of payment rights such as accounts may be ineffective, so a ban on assigning receivables may not work as drafted.
Negotiating it
Who it protects: The non-assigning party and, for change of control terms, the party whose counterparty is acquired.
If it protects you
- Consent rights over both assignment and delegation, with change of control treated as an assignment.
- A competitor exception to any permitted transfer carve-out.
- A requirement that the assignee assume obligations in writing, with the assignor remaining liable where appropriate.
If it runs against you
- Standard ask: mutual terms with a carve-out for affiliates and for a merger, acquisition or sale of substantially all of the business.
- Fallback: consent not to be unreasonably withheld, conditioned or delayed, with deemed consent if no response arrives within a set period.
- Delete change of control as an assignment, or narrow it to acquisitions by a direct competitor.
Escalate before accepting: A one-way clause that lets the counterparty assign freely while giving it sole discretion over your assignments and changes of control, particularly in a contract essential to the business, deserves escalation before signing.
What AI explanations get wrong
- Reading "assignment" as covering a stock sale or merger by default. Check: look for express change of control or "by operation of law" language, and confirm the treatment under the governing law, which differs on whether mergers are transfers.
- Missing the difference between assigning rights and delegating duties. Check: see whether the clause restricts both, and note that the original party may stay liable for delegated performance.
- Treating every anti-assignment term as enforceable. Check: statutes such as UCC Article 9 can override restrictions on assigning certain payment rights.
Where the law varies
Whether a merger, conversion or stock sale counts as an assignment, how courts treat "void" language, and whether consent may be withheld arbitrarily all depend on the governing law and the type of contract. Statutory overrides, including the Uniform Commercial Code as adopted in each state, can also limit what the clause achieves.
Sources
TOOLS
Need a primer like this for a clause in front of you? The Clause Primer Kit, included in All-access, produces one in this format inside the AI tool you already use, with checks built in. For reviewing whole agreements, see the Agent Kit 1: Contract Review and Negotiation.