Third-party consent: Overview, definition and example
What is third-party consent?
Third-party consent refers to the approval or permission required from an external party (someone who is not part of the contract) before certain actions can be taken under a contract. This consent is necessary when one party’s actions, rights, or obligations affect a third party or when a third party has specific rights under the contract.
Why is third-party consent important?
Third-party consent is important because it ensures that all parties with a stake in the contract are in agreement before proceeding. Without obtaining this consent, a party could face legal issues or risk the contract being invalidated.
For example, when a company is selling a piece of intellectual property, it may need consent from its existing licensees to transfer the rights. Without the licensees’ approval, the deal cannot go forward.
Understanding third-party consent through an example
Imagine a company looking to sublease office space. The lease agreement includes a requirement that the tenant must get consent from the landlord before subletting the space. If the landlord withholds consent, the tenant cannot legally sublet.
In another case, a software company may want to assign its rights under a contract with a third-party vendor. If the vendor's approval is required, the company cannot transfer the rights unless the vendor grants consent.
Example of a third-party consent clause
"The Parties agree that this Agreement is subject to obtaining written consent from [Third Party] within 30 days of execution."
Conclusion
Third-party consent ensures that all necessary approvals are in place before certain actions are taken under a contract. It helps avoid potential disputes and legal issues by making sure all relevant parties are on board. By addressing third-party consent at the outset, businesses can proceed with greater confidence.
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.