Entire agreement assignment: Overview, definition, and example
What is entire agreement assignment?
Entire agreement assignment refers to a provision in a contract that ensures that the agreement, as a whole, is assigned or transferred to another party. It means that the entirety of the agreement’s terms and conditions, including rights, obligations, and responsibilities, are handed over from one party (the assignor) to another party (the assignee) without altering or modifying the contract’s substance. This assignment typically requires the consent of all parties involved in the original agreement.
For example, if a business sells its operations to another company, the entire agreement assignment clause would allow for the transfer of all contracts, obligations, and rights under those agreements to the purchasing company.
Why is entire agreement assignment important?
The entire agreement assignment is important because it ensures that all aspects of the original agreement are transferred seamlessly to the assignee, which is vital for maintaining continuity and fulfilling contractual obligations. It also clarifies the intent of both parties that the agreement as a whole, not just parts of it, is assigned to the new party.
For businesses, this provision helps protect them when selling, merging, or transferring operations by ensuring that the assignee assumes all contractual responsibilities. For the assignee, it ensures they are fully bound by the terms of the agreement.
Understanding entire agreement assignment through an example
Imagine a service provider who enters into a contract with a client. Later, the service provider sells its business and assigns the entire agreement to the new owner. The new owner inherits all the rights and obligations in the contract, including the delivery of services, payment terms, and confidentiality provisions. The entire agreement is transferred in its entirety without any changes to the original terms.
In another example, a software company licenses its software to a client under a multi-year agreement. The company decides to merge with another firm and assigns the entire agreement to the newly formed company. The new company becomes responsible for upholding the terms of the software license, including providing updates and technical support.
An example of an entire agreement assignment clause
Here’s how an entire agreement assignment clause might appear in an agreement:
“The Parties agree that this Agreement and all rights and obligations under it shall be assignable in their entirety by the [Assignor] to a third party, provided that such assignment is made with the prior written consent of the [Assignee] and in accordance with applicable laws. Upon assignment, the assignee shall assume all duties and responsibilities outlined in this Agreement as if it were an original party to the Agreement.”
Conclusion
An entire agreement assignment clause is critical when transferring all rights and responsibilities under a contract to another party. It ensures that the original terms and conditions remain intact and are fully enforceable by the assignee. For businesses, it provides clarity and legal assurance during the transfer of contracts, mergers, or acquisitions. Including a well-defined entire agreement assignment provision in contracts ensures that all parties are on the same page regarding the transfer of obligations and helps prevent disputes during business transitions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.