Assignment Provision

Assignment Provision-60
It so happens that I’ve been idly contemplating shortcomings in standard no-assignment language. ) But crowdsourcing is still no way to identify optimal contract language.That’s something that I’ve tackled previously (here), and Brian’s post prodded me to revisit the topic. In particular, I wouldn’t rely on contract language select by haphazard vote.

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And in drafting a contract, have we not all, particularly as younger lawyers, felt (but, it is hoped, resisted) the impulse to "copy and paste" standard language into a contract without fully considering whether those imported words are appropriate to the parties' intentions and the nature and circumstances of their agreement?

"Boilerplate"1 provisions are often viewed as time-honored (and therefore flawless), immutable (and therefore nonnegotiable), and ready-made (and therefore fungible) language that may be fluently transplanted among and between any variety of different agreements.

No Party shall assign its rights or obligations under this Agreement in whole or in part, without the prior written approval of the other Party, which approval shall not be unreasonably withheld, conditioned or delayed.

In many cases, the parties would like to make an extra carve-out for intra-group restructurings of activities or the performance under the contract by an affiliate, whether for tax or other geographical reasons.

Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.

Any purported assignment of rights or delegation of performance in violation of this section is void.

Uncertainty becomes particularly problematic when a party prepares a divestment of the business.

Obviously, when the new investor in such business is a competitor of the customer, the latter’s refusal to unconditionally approve assignment is reasonable.

Many contracts will provide for a prohibition to assign the rights and obligations under the agreement.

Normally, each party should be able to negotiate that the approval of the other party to an assignment will not be unreasonably withheld or delayed: Assignment.


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