Anti-Assignment Clauses: Restricting Contract Transfers
What Is an Anti-Assignment Clause?
An anti-assignment clause restricts one or both parties from transferring their rights or obligations under the contract to a third party without the other party's consent. These clauses ensure that each party maintains control over who they are doing business with.
Why Anti-Assignment Clauses Exist
Contracts are often based on trust, reputation, or the specific capabilities of the parties involved. If Party A contracts with Party B for specialized services, Party A may not want Party B to hand off those obligations to an unknown Company C.
How Anti-Assignment Clauses Work
A typical clause reads: "Neither party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party."
Some clauses go further and state that any attempted assignment without consent is void — meaning it has no legal effect.
Key Variations
- Consent required — Assignment needs the other party's approval, which may be at their sole discretion or not unreasonably withheld.
- Absolute prohibition — No assignment is permitted under any circumstances.
- Exception for affiliates — Assignment to a subsidiary or affiliate is permitted without consent.
- Exception for mergers — Assignment in connection with a merger, acquisition, or sale of all assets is carved out.
- Rights vs. obligations — Some clauses restrict assignment of obligations but allow assignment of rights (like the right to receive payment).
What Happens If You Assign Without Permission
Depending on the clause language and jurisdiction:
- The assignment may be void and have no legal effect
- The assignment may be valid but constitute a breach of contract
- The non-breaching party may have the right to terminate
- UCC Article 9 may override anti-assignment clauses for certain receivables
When to Consult a Lawyer
If you need to transfer a contract — whether through a sale, restructuring, or change of business — consider consulting an attorney to review the anti-assignment clause and identify your options.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.