One of the key considerations in structuring merger and acquisition (M&A) transactions is determining which contracts of the target company, if any, will remain in effect for the acquiror following closing. This post will briefly outline: (1) the general rules of contract assignment; (2) the effect of anti-assignment clauses and other exceptions to the general rule of assignability; and (3) the effect of four common M&A structures on contract assignment.
The general rule is that contracts are freely assignable unless the contract itself, a statute, or public policy dictates otherwise. This is true in Washington State, where courts have found that contractual rights are generally transferable unless the contract expressly prohibits assignment in “very specific” and “unmistakable terms.”
The exceptions to the general rule of free assignability fall into two broad categories: (1) contractual prohibitions on free assignability (“anti-assignment clauses”) and (2) case law prohibitions on free assignability of certain types of contracts that arise out of public policy concerns.
Anti-Assignment Clauses
In light of the general rule of free assignability, most business contracts contain a clause – commonly referred to as an “anti-assignment clause” – that expressly prohibits the assignment of contractual rights without the consent of the other party to the contract. These anti-assignment clauses typically take one of two forms. The first, which we will call “simple” anti-assignment clauses, simply prohibit the contractual right from being assigned without the consent of the other party to the contract. For example, a simple anti-assignment clause might state:
This contract shall not be assigned or transferred by Party X without first obtaining the consent of Party Y.
While simple anti-assignment clauses are generally enforceable, certain types of M&A deal structures effectively circumvent such provisions and, accordingly, the necessity of third-party consents (see the discussion below regarding the impact of M&A deal structures on contract assignment for more detail).
Comprehensive Anti-Assignment Provisions
In response to the inability of “simple” anti-assignment clauses to protect contractual rights in certain M&A contexts, many contracts include more robust anti-assignment provisions designed to require third party consent prior to an M&A event, even where the content itself will not be transferred. For example, a comprehensive anti-assignment clause might state:
Party X shall not assign this Agreement in whole or in part without Party Y’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Any change in control of Party X resulting from a merger, consolidation, stock transfer or asset sale shall be deemed an assignment or transfer for purposes of this Agreement that requires Party Y’s prior written consent.
Courts will generally enforce these types of comprehensive anti-assignment clauses and conclude that consummation of a change of control transaction without consent is a breach of contract. Accordingly, to assign contracts with comprehensive anti-assignment provisions, the target must seek the consent of the counterparties to each such contract. Obtaining third party consents in connection with M&A transactions may create sticky situations or cause costly delays. The target company may not want their customers, suppliers or others to know that they are going through an M&A event, while the acquiror may want assurances that important contracts will remain in place. What is more, certain contract counterparties may use the leverage of their consent to renegotiate the terms of the contract or extract concessions from the target company. Accordingly, it is important that the parties identify and address comprehensive anti-assignment clauses early in the process – particularly where the contracts to be acquired make up a large portion of a target company’s value.
Contracts That Involve a “Personal” Right
Contracts involving “personal rights” or contracts deemed “personal” by contractual recital or federal law are considered non-assignable or non-transferable unless specific consent is given by the non-assigning party. Generally, “personal” contracts are those that contemplate personal services, skills or performance from the non-assigning party, such as employment, consulting, and partnership agreements. Courts have found that these types of agreements are not freely assignable as a matter of public policy because assigning personal contracts may result in materially adverse consequences (e.g., a material change in duty, risk, or burden) to the non-assigning party. In addition to general contracts for personal services discussed above, courts have also found many types of intellectual property (IP) licenses to be “personal” in nature due to the profound importance of an IP holder’s right to choose who may use the protected IP. Accordingly, non-exclusive IP license rights pertaining to copyright, trademark, and patent licenses are generally considered non-assignable, unless specific consent is given by the non-assigning party. Personal contracts are also treated differently from other types of contracts in the context of M&A events (see the discussion below regarding the impact of M&A deal structures on contract assignment for more detail). Each of the types of “personal” contracts described above should receive heightened contract-by-contract due diligence to ensure that assignment does not violate applicable law.
Other Considerations
Courts may also consider the subject matter of the contract and the material risks associated with transferring those rights to the acquiror. For example, where the non-merging entity is a competitor to the acquiring entity, courts may find that given the high risk and burden to the non-merging party, the assignment is ineffective on equitable grounds.
The structure employed in a given M&A transaction is critical to determining the treatment of the target company’s various contractual rights. This section will examine the treatment of contractual rights in connection with four common M&A structures: (i) reverse triangular mergers, (ii) forward-triangular mergers, (iii) stock purchases, and (iv) asset purchases. For more information regarding M&A deal structures, please see here and here . While reviewing each of the deal structures that follow, please note that each of the general rules are subject to the exceptions discussed above.
Reverse Triangular Merger
A reverse triangular merger occurs when an acquiror forms a subsidiary and the newly created subsidiary merges with and into the target company. The target survives as a wholly-owned subsidiary of the acquiror following the merger, and continues to own its assets, owe its liabilities, and be party to its contracts.
In a reverse triangular merger, simple anti-assignment clauses generally are not triggered because, as a matter of law, no assignment of the contract has occurred (the target company survives and is the same legal entity as the original contracting party). Accordingly, the contracts of the target remain with the surviving entity without the need to obtain third party consents or take other action. Despite the general rule that no assignment occurs in connection with a reverse triangular merger, thorough contract-by-contract due diligence is still required to identify all contracts that include comprehensive anti-assignment provisions and/or may be deemed to be contracts for personal services (and therefore require consent) under applicable law.
Forward Triangular Merger
In a forward triangular merger, the acquiring entity forms a subsidiary corporation and the target corporation merges directly with and into the newly created subsidiary. As a result, the subsidiary survives the merger. Under this structure, the subsidiary obtains all of the target company’s assets and liabilities by operation of law.
Simple anti-assignment clauses are generally not triggered in a forward triangular merger because the rights are vested, and not assigned, by operation of law. Therefore, the target’s contracts generally transfer automatically to the acquiror without the need to obtain third party consents. However, courts have created considerable ambiguity around the applicability of this general rule in the context of forward triangular mergers. Accordingly, acquirors frequently require target companies to obtain third party consent as a matter of risk allocation and to create certainty that important contracts will remain in place after the merger. As with the above, contract-by-contract due diligence is required to identify contracts that contain anti-assignment language or may be considered to be “personal.”
Direct Stock Purchase
In a direct stock purchase, the acquiror purchases all the outstanding shares of the target directly from its stockholders. Instead of owning certain assets and related liabilities, the acquiror owns the entire selling company. The selling company continues to exist as a separate legal entity and wholly-owned subsidiary of the acquiror (assuming 100% of the outstanding stock is purchased).
In a sale of the target company through a direct stock purchase, the individual assets of the target company (including its material contracts) need not be separately assigned because only the ownership rights of the target are being transferred. Like a reverse triangular merger, a direct stock purchase generally does not trigger a simple anti-assignment provision because the assets are not conveyed to a different entity. Accordingly, the contracts of the selling company remain entirely in place without the need to obtain third party consents. However, contract-by-contract due diligence is required to identify any contracts that contain comprehensive anti-assignment language that would be triggered by the change of control that occurs upon consummation of a stock sale and contracts that may be considered “personal” under applicable law.
Asset Purchase
The sale of some or all of the assets of a company is one method of transferring part or full ownership in the underlying business. In an asset purchase, the acquiror purchases certain enumerated assets and liabilities of the target in exchange for the cash, the acquiror’s stock, or other consideration.
In an asset purchase transaction, the acquiror is only responsible for the assets and liabilities specifically enumerated in the purchase agreement. All other assets and liabilities remain with the target. Without the protection of a merger statute, the purchaser of contractual assets will need to become a party to the purchased contracts through the general rule of assignability (and the absence of any exceptions). Therefore, if a contract purchased as part of an asset sale contains an anti-assignment provision (whether “simple” or “comprehensive”) or may be considered “personal”, then the target company must obtain the consent of the counter party in order to convey the contract to the acquiror. In the event that neither of the exceptions to the general rule apply, then the contract is generally assignable to the acquiror.
Although contracts are generally freely assignable, in the context of any M&A transaction or other proposed contract assignment, careful consideration should be given to: (1) whether the contract in question includes an anti-assignment provision and, if so, whether the provision is “comprehensive” ( i.e. , applies to change of control transactions even where, by operation of law, no assignment would be deemed to occur); (2) whether the contract is “personal” in nature; and (3) how the proposed deal structure impacts the treatment of the target’s contractual rights. Given the fact-specific standards for assignment, each of the target’s contracts should be carefully reviewed during the due diligence phase of an M&A transaction to ensure that they are assigned in compliance with applicable law.
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Assignment consent form rating, assignment consent letter form popularity, consent to assign other form names, is assignment of contract legal.
Primary tabs. Assignment is a legal term whereby an individual, the assignor, transfers rights, property, or other benefits to another known as the assignee. This concept is used in both contract and property law. The term can refer to either the act of transfer or the rights/property/benefits being transferred.
Consent to assignment refers to allowing a party of a contract (the assignor) to assign a contract and move the obligations to another party (the assignee).
To transfer rights, property, or other benefits to another party (the assignee) from the party who holds such benefits under contract (the assignor). This concept is used in both contract and property law.
A deed of Assignment is an Agreement between the Seller of a Land or Property and a Buyer of that Land or property showing evidence that the Seller has transferred all his rights, his title, his interest and ownership of that land to that the Seller that has just bought land.
In order for an assignment to be a legal assignment, the assignment must be agreed in writing, signed by the assignor, and the other party to the contract must be given notice of the assignment.Contracts often require the consent of the other party before any assignment can take place.
A deed of assignment is used to assign just the beneficial interest in land/property from one party to another. A deed of trust can also be used to do this, however it also includes other clauses such as how to sell the property.
In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee.While novation requires the consent of all parties, assignment needs no consent from other non-assigning parties.
The difference between assignment and transfer is that assign means it's legal to transfer property or a legal right from one person to another, while transfer means it's legal to arrange for something to be controlled by or officially belong to another person.
Generally speaking, contracts can be freely assigned to third parties.This contract cannot be assigned to anyone without the written consent of both parties.
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Coast guard.
A retired Army National Guard noncommissioned officer who was once the top Democrat on the House Veterans Affairs Committee could become the next vice president.
Presumptive Democratic presidential nominee Vice President Kamala Harris announced Tuesday that Minnesota Gov. Tim Walz will be her running mate. That puts someone with an enlisted background on both presidential tickets after Republican nominee former President Donald Trump chose Marine veteran Sen. JD Vance of Ohio as his running mate.
Patrick Murphy, an Army veteran who was Walz' roommate when they were both freshmen in Congress, called Walz a "soldier's soldier."
Read Next: A Rocket Attack at an Iraqi Military Base Injures US Personnel, Officials Say
"The two largest federal agencies are DoD and the VA, so someone who has intimate knowledge of both is incredibly important," Murphy, who served as Army under secretary during the Obama administration, said in a phone interview with Military.com. "He was a field artilleryman who has tinnitus as diagnosed by the VA, so he understands the plight of our brother and sister veterans."
Walz enlisted in the Army National Guard in Nebraska in 1981 and retired honorably in 2005 as the top enlisted soldier for 1st Battalion, 125th Field Artillery Regiment, in the Minnesota National Guard, according to a copy of his records provided by the Minnesota Guard. He reached the rank of command sergeant major and served in that role, but he officially retired as a master sergeant for benefits purposes because he didn't finish a required training course, according to the records and a statement from the Minnesota Guard.
His Guard career included responding to natural disasters in the United States, as well as a deployment to Italy to support U.S. operations in Afghanistan, according to a 2018 article by Minnesota Public Radio . Walz earned several awards, including the Army Commendation Medal and two Army Achievement Medals, according to his military records. Working a civilian job as a high school teacher and football coach, the Nebraska native was also named that state's Citizen Soldier of the Year in 1989, according to official biographies.
During the 2022 Minnesota governor's race, Walz' opponent accused him of leaving the Guard when he did in order to avoid a deployment to Iraq, though Walz maintained he retired in order to focus on running for Congress, according to the Star Tribune newspaper .
Far-right commentators and media resurfaced those allegations and knocked him for never serving in combat -- something he has never claimed to do -- in contrast with Vance's deployment to Iraq as a combat correspondent.
"Looks like it is time to bring back Swift Boat Veterans for Truth. Oof. Walz is a really unforced error. He bailed on the military when they decided to send him to Iraq. JD Vance actually served," conservative talk radio host Erick Erickson posted on social media Tuesday.
Walz was first elected to the House of Representatives in 2006, becoming the highest-ranking retired enlisted soldier to serve in Congress.
His tenure in Congress included sitting on the House Veterans Affairs Committee, rising to be its ranking member in 2017.
"Walz' leadership on behalf of his fellow veterans when he was in the U.S. House of Representatives is notable at a time when our all-volunteer force continues to struggle to recruit," Allison Jaslow, CEO of Iraq and Afghanistan Veterans of America, said in a statement praising the choice of a veteran to be vice presidential nominee. "How we care for our veterans is as important to our national security as how we care for our troops, and Walz has a record to prove that he understands that imperative."
As the top Democrat on the committee, Walz was a chief adversary for the Trump administration's Department of Veterans Affairs . He battled with then-acting VA Secretary Peter O'Rourke in 2018 during a standoff over O'Rourke's handling of the inspector general's office, and pushed for an investigation into the influence of a trio of informal VA advisers who were members of Trump's Mar-a-Lago club. An investigation by House Democrats completed after Walz left Congress concluded that the so-called Mar-a-Lago trio "violated the law and sought to exert improper influence over government officials to further their own personal interests."
Walz also opposed the Mission Act, the bill that expanded veterans' access to VA-funded care by non-VA doctors that Trump considers one of his signature achievements. Walz said in statements at the time that, while he agreed the program for veterans to seek outside care needed to be fixed, he believed the Mission Act did not have sustainable funding. VA officials in recent years have said community care costs have ballooned following the Mission Act.
Walz supported another bill that Trump touts as a top achievement, the Department of Veterans Affairs Accountability and Whistleblower Protection Act, which sought to make it easier for the VA to fire employees accused of misconduct or poor performance. But the implementation of that law was later part of Walz' fight with O'Rourke . The law also faced legal challenges that prompted the Biden administration to stop using the expedited firing authorities granted by the bill.
Walz was also an early proponent of doing more for veterans exposed to toxins during their military service, sponsored a major veterans suicide prevention bill and advocated for the expansion of GI Bill benefits. And he repeatedly pushed the VA to study marijuana usage to treat PTSD and chronic pain, something that could come up in a future administration if the Department of Justice finalizes reclassifying marijuana into a category of drugs considered less dangerous.
Walz' time in Congress also included a stint on the House Armed Services Committee, a perch he used to advocate for benefits for members of the National Guard .
Walz consistently voted in support of the annual defense policy bill, as well as advocated for repealing the "Don't Ask, Don't Tell" policy that effectively banned gay and lesbian service members.
"He was my battle buddy in the fight to repeal 'Don't Ask, Don't Tell,' and it wouldn't have happened if we didn't have Command Sgt. Maj. Tim Walz helping lead the fight," Murphy said.
Since becoming governor of Minnesota in 2019, Walz' role as commander in chief of the Minnesota National Guard has come under a spotlight several times. In response to a request from the Minneapolis mayor, he activated the Guard in May 2020 to assist law enforcement when some protests over the Minneapolis police killing of George Floyd turned destructive. At the time, Minneapolis' mayor accused Walz of being too slow to order the deployment, a charge he denied.
"It is time to rebuild. Rebuild the city, rebuild our justice system, and rebuild the relationship between law enforcement and those they're charged to protect," Walz said in a statement when he announced the activation.
He also activated the Guard to protect the Minnesota state Capitol in January 2021 amid fears that Trump supporters could riot at state houses like they did at the U.S. Capitol that month. And he's used the Guard for missions that are more routine for the service, such as to help after heavy flooding earlier this summer .
As news broke Tuesday of Walz' selection, he quickly won praise from other Democratic veterans.
"Having a person who wore the uniform and who deployed around the world adds to the ticket someone who can connect with veterans and military families in a way that no one but a veteran can," Jon Soltz, chairman of liberal political action committee VoteVets, said in a statement.
-- Steve Beynon contributed to this story.
Related: Here's Kamala Harris' Record on Veterans and Military Issues
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There were no immediate reports of injuries or property damage.
The changes have been met with skepticism by some past and present Coasties.
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"Unfortunately, we have learned from generations of veterans the creeping, silent danger of toxic exposures."
COMMENTS
If there is language in the contract that states it can't be assigned, the other party must consent to an assignment before you can proceed. Second, the parties must execute an assignment. Create an agreement that transfers the rights and obligations of one party to the assignee. Third, notify the other party of the contract.
Editor's Note: Many commercial agreements provide that any assignment by a party requires the written consent of the non-assigning party.The restriction applies both to voluntary, contractual assignments between one of the contract parties and a third-party assignee as well as involuntary assignments resulting from a change in control.
In light of the above, we kindly request your written consent to assign any and all rights of ours under the Contract to the above-referenced Assignee. In consideration of your consent, we are willing to offer: ii) a guarantee of the performance of the Assignee under the Contract. With your signature below, you will consent to our assignment of ...
A generic form of request for consent to the assignment of a commercial contract, which can be used by a party that is assigning its rights or delegating its performance obligations under the contract, or both, to a third party, if the non-transferring party's consent is required. This Standard Document has integrated notes with important explanations and drafting tips.
An assignment of contract is simpler than you might think. The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party. When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement.
This request for consent to assignment template can be used by a party to a commercial contract when the terms require a party to request and obtain the consent of the other party before assigning the contract. This template includes practical guidance, drafting notes, and alternate clauses. This template presumes that the underlying contract requires consent to assignment.
The assignment and assumption agreement. An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting ...
Assignment Agreement. An assignment agreement is a contract that authorizes a person to transfer their rights, obligations, or interests in a contract or property to another person. It serves as a means for the assignor to delegate duties and advantages to a third party while the assignee assumes those privileges and obligations.
A generic form of request for consent to the assignment of a commercial contract, which can be used by a party that is assigning its rights or delegating its performance obligations under the contract, or both, to a third party, if the non-transferring party's consent is required. This Standard Document has integrated notes with important explanations and drafting tips.
A contract assignment agreement is a document that transfers the contractual rights and duties of one party to another. The other party involved in the contract must agree to the terms of the transfer as well as they will now be in a contractual agreement with a different party. Contract of assignment agreements must not violate any other laws ...
This Contract Assignment Agreement document is used to transfer rights and responsibilities under an original contract from one Party, known as the Assignor, to another, known as the Assignee. The Assignor who was a Party to the original contract can use this document to assign their rights under the original contract to the Assignee, as well as delegating their duties under the original ...
What to Include in an Assignment Agreement. Create a thorough assignment agreement by including the following information: Effective Date: The document must indicate when the transfer of rights and obligations occurs. Parties: Include the full name and address of the assignor, assignee, and obligor (if required). Assignment: Provide details that identify the original contract being assigned.
Below are three variations of anti-assignment clauses that can be used in a contract. EXAMPLE 1: Consent Required for Assignment. Assignment. Neither party may assign or delegate its rights or obligations pursuant to this Agreement without the prior written consent of the other. Any assignment or delegation in violation of this section shall be ...
The proper interpretation of the contract containing the assignment clause is of critical importance in determining whether consent to an assignment has been unreasonably withheld.
2. Consent to Assignment. Notwithstanding any other provision of this Agreement, each party hereto hereby consents to the assignment, grant, pledge, conveyance and transfer by the other party hereto, for the benefit of any lender, agent or other secured party under any financing arrangement to which the Partnership is a party, of a lien, security interest or other encumbrance on and continuing ...
CONTRIBUTED BY. One of the key considerations in structuring merger and acquisition (M&A) transactions is determining which contracts of the target company, if any, will remain in effect for the acquiror following closing. This post will briefly outline: (1) the general rules of contract assignment; (2) the effect of anti-assignment clauses and ...
Agreement for the benefit of Lender. ment without the consent of. red as anRegard. s of how the consent i. the other party. As a result, the engi-. agreement between the owner and the. tured, the intent is to ensure that if the. neer may be asked to sign a "Consent to. engineer, with the lender as a third-party.
WHEREAS the FPRA consented to the extension of the Contract in a Letter Agreement dated on or about September 5, 2013. Assignment. Neither party may assign or delegate its rights or obligations pursuant to this Agreement without the prior written consent of the other.Terms used but not otherwise defined herein have the meanings ascribed to them in the.
Consent to Assignment. The Lessee hereby acknowledges notice of and consents to all the terms and provisions of the Security Agreement and hereby confirms to and agrees with the Secured Parties that all representations, warranties, indemnities and agreements of the Lessee contained in this Letter Agreement and each other Basic Document to which the Lessee is a party shall inure to the benefit ...
This form is a Consent to an Assignment. The assignor has requested that a particular company consent to the sale of a business by the assignor to the assignee. The form also provides that neither the company's consent to the proposed assignment of the business by the assignor to assignee, nor the terms of any agreement entered into between ...
AGREEMENTS: 1. Definitions. "Closing" means the execution and delivery of this Consent by Assignor, Assignee and Southern, the execution and delivery of an application for transmission service and the Amended and Restated Agreement (defined below) by Assignee to Southern and satisfaction of the Release Condition.
C. Assignor and Assignee desire to obtain Landlord s consent to the Assignment and Landlord is willing to consent to the Assignment on the following terms and conditions. A G R E E M E N T : 1. Consent; Assumption and No Release. Subject to the terms and conditions of this Consent, effective as of September 1, 2008 (the Effective Date ...
81% of customers agree that Practical Law saves them time. End of Document. Resource ID 6-381-3093. A letter agreement to assign the benefit of a contract. The letter also includes optional drafting to subcontract performance of the assignor's obligations under the contract to the assignee.
At the August 7 GRU Authority meeting, the board approved a contract for CEO Ed Bielarski, heard an update about the financial condition of the utility, voted to send a letter to the Attorney ...
U.S. Air Force Lt. Gen. Michael A. Loh, right, director, Air National Guard, walks with Minnesota Governor Tim Walz, left, and other senior leaders with the 133rd Airlift Wing and the Minnesota ...