Non-assignability: Overview, definition, and example
What is non-assignability?
Non-assignability refers to a contract provision that prevents one party from transferring its rights or obligations under the agreement to someone else without the other party’s consent. It restricts assignments to third parties, such as in mergers, acquisitions, or subcontracting situations.
Why is non-assignability important?
This clause protects both sides of a contract from being forced into a relationship with someone they didn’t originally agree to work with. It helps maintain trust, control, and stability—especially when performance depends on the specific parties involved. For example, a client might not want their service provider to hand off the work to a subcontractor or competitor without approval.
Understanding non-assignability through an example
Suppose a small business signs a software contract with a boutique vendor known for personalized support. If that vendor tries to assign the contract to a much larger company, the client may lose the tailored service they originally expected. A non-assignability clause would block this transfer unless the client agrees in writing.
Example of a non-assignability clause
Here’s how a non-assignability clause may appear in a contract:
"Neither this Agreement nor any of the rights or obligations hereunder may be assigned or transferred by either party without the prior written consent of the other party, except that either party may assign this Agreement in connection with a merger, acquisition, or sale of substantially all of its assets."
Conclusion
Non-assignability clauses give businesses control over who they’re contracting with and help prevent unexpected changes in the relationship. They’re especially useful in service agreements, partnerships, and IP-related deals. When drafting or reviewing contracts, businesses should understand when assignment is allowed and whether exceptions apply.
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.