Successors and assigns: Overview, definition and example
What does successors and assigns mean?
"Successors and assigns" refers to the individuals or entities that either take over (succeed) or are given (assigned) the rights or obligations of a party in a contract. It ensures that both the current and future parties involved in an agreement are covered, even if the original party transfers their rights or obligations to someone else or undergoes a change in control.
Why is successors and assigns important?
This phrase is important because it guarantees that contracts remain enforceable even if one of the parties changes, whether through sale, merger, or another form of transfer. It ensures continuity and protects both parties, especially in long-term agreements, where ownership or responsibilities might shift.
By including "successors and assigns," businesses can be certain that their contracts are binding not just on the original parties but also on anyone who might inherit or take over those rights or obligations in the future.
Understanding successors and assigns through an example
For instance, a tech company signs a contract to provide software development services to a client. The company later sells its business, and the new owner now has the right to fulfill the contract. In this case, the new owner is considered the successor, and they step into the position of the original company without needing a new contract.
In another example, a supplier agrees to deliver materials to a manufacturer. If the manufacturer assigns the contract to another company, that new company (the assignee) will be responsible for delivering the goods as originally agreed.
Example of a successors and assigns clause
"This Agreement shall bind and inure to the benefit of the parties and their respective successors and assigns."
Conclusion
"Successors and assigns" ensures that the rights and obligations in a contract continue to apply even if a party transfers or succeeds in those responsibilities. It's crucial for maintaining the integrity and enforceability of agreements across business transitions. By understanding this concept, parties can ensure their contracts remain valid even as circumstances change.
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.