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The Assignment of Commercial Contracts in Legal Practice

Contracts are a prime example of intangible property. Parties to commercial contracts, like other property owners, frequently want to transfer their property to a third party. The transfer of a contract refers to the assignment of some or all of a party’s rights or the delegation of some or all of a party’s performance, or both, to a non-party to the agreement.

Some common instances in which a contracting party in a commercial context may desire to assign contractual rights, performance responsibilities, or both are as follows:

In an asset sale, a corporation sells parts or all of its company.
A contractor who subcontracts its work under certain projects.
A business conglomerate that is going through an internal corporate reorganization.
The borrower who offers its lender a security interest in its assets.
A manufacturer who sells its receivables to a third party.

In any of these cases, the non-transferring party may object to assignment or delegation for a variety of grounds, including:

The desire to choose the party with whom it does business.
Concern that a different obligor or obligee may jeopardize the non-transferring party’s capacity to benefit from the contractual deal

To decide whether the transferring party (also known as the transferor) can execute the proposed transfer without gaining the non-transferring party’s approval, the transferring party must turn to relevant legislation and the plain text of the contract. If consent is necessary and not obtained, the transferring party faces the following risks:

Violation of the contract.
Making an ineffective and invalid transfer.

The Definitions of Assignment and Delegation

Each party to a contract is an:

Obligee in terms of its contractual rights; and
Obligor in terms of its contractual performance responsibilities.

Contract “assignability” is a term frequently used by contracting parties and practitioners. While they may expressly address the assignment of a party’s rights under the contract in some contexts, they frequently use the term “assignment” to refer to both:

The delegation of duty to perform.
The assignment of rights to obtain performance.

However, assignment and delegation are two distinct legal concepts that must be treated individually due to the fact that they might have different outcomes.

What is an Assignment?

Assignment is the transfer of some or all of an obligee’s (assignor’s) rights to receive performance under a contract, generally but not always to a non-party (assignee). A contract benefit is a right (a chose in action) that, in theory, may be delegated by the benefiting party to a non-party. For clarity purposes, this informative piece will assume that the assignee is a non-party, although the rights and responsibilities of the parties addressed apply equally to an assignee who is also a party to the agreement. When these rights are assigned, the assignor no longer has any claim to the advantages of the given rights, which are completely passed to the assignee.

Technically, a contract’s burden cannot be assigned under the law (see National Trust Co. v. Mead [i] and Irving Oil Ltd. v. Canada [ii] ). Transferring performance responsibilities under a contract requires the approval of all parties, making such a transfer a novation.

In practice, parties frequently refer to “assigning a contract” or “allowing the assignment of a contract,” which is actually an inaccurate representation of their intentions. For example, the parties may plan for some or all of the following:

The contract’s rights or benefits may be assigned.
The contract’s burdens or performance duties may be transferred.
Rights and burdens may be transferred.

The Effects of Assignment

The assignor is no longer entitled to any benefits from the assigned rights, which have all been passed to the assignee; nonetheless, even if the assignor is stripped of its contractual rights, assignment does not decrease or remove the assignor’s duties to the non-assigning party. As previously stated, a contract’s burden may only be assigned to a third party with the approval of all parties. As a result, the assignor is still obligated to fulfill its contractual commitments. The non-assigning party retains the following:

Its entitlement to get performance from the assignor; and
Its remedies against the assignor in the event of non-performance.

The ordinary rule is that a party can only assign its benefits without the consent of the other party to the contract and will remain liable to the other party for its performance obligations (see National Trust Co. v. Mead [iii] and Rodaro v. Royal Bank [iv] ). If the assignor intends to transfer its obligations and both the non-transferring party and the potential assignee agree, the parties should enter into a novation agreement, which results in a new contract between the assignee and the old contract’s remaining (non-transferring) party. In practice, the assignee often undertakes the contract’s performance responsibilities as of the date of assignment, and the assignor gets an indemnity from the assignee in the event of a breach or failure to perform.

A clear, present, purpose to transfer the assigned rights without needing any additional action by the assignee is required for an assignment to be effective, which means that a promise to assign in the future is ineffective as an actual transfer. Otherwise, no special terminology is necessary to draft an effective assignment.

What is Delegation?

Delegation is the transfer of some or all of an obligor’s (delegating party’s) performance responsibilities (or conditions demanding performance) under a contract to a non-party (delegatee). To be effective, a delegation requires the delegatee to agree to take on the delegated performance; however, unless the non-delegating party has consented to a novation, the delegating party remains accountable for the delegated performance, whether or not it has also transferred its contractual rights.

This is distinct from an assignment of rights, in which the assignor relinquishes its contractual claims upon assignment. As a result, even if the delegating party can effectively delegate its actual performance to the delegatee (such that the delegatee’s actual performance discharges the delegating party’s duty), the delegating party cannot be relieved of its obligation to perform and liability for non-performance unless the non-delegating party agrees to a novation.

There is no precise wording necessary to create an effective delegation, just as there is not for the assignment of rights. When performance is effectively delegated, the delegatee assumes liability for the delegating party’s performance obligations (under an assumption agreement), even if the delegating party retains liability to the non-delegating party for the delegatee’s failure to adequately perform the delegated obligations in the absence of a novation. Under an assumed agreement, the delegating party may have recourse against the delegatee, which is frequently addressed through a contractual indemnity right.

If the delegating party wishes to entirely exclude itself from liability for non-performance, it must get the non-delegating party’s approval to the contract (novation). In the majority of novations, the delegating party, the delegatee, and the non-delegating party all agree on the following:

The delegatee replaces the delegating party as a party to the contract.
The delegating party is no longer liable for contract performance.
The delegatee is directly and solely liable for the delegating party’s contract fulfillment.

Types of Assignment – Legal (Statutory) Assignment vs. Equitable Assignment

Legal (Statutory) Assignment: An assignment that satisfies the provisions of the appropriate province or territory laws (for example, the Conveyancing and Law of Property Act [v] )
Equitable Assignment: An equitable assignment may be enforced even if it does not fulfill the statutory requirements for a legal assignment.

Requirements for a Legal (Statutory) Assignment

All of Canada’s common law provinces have enacted legislation allowing the transfer of contract rights. Notably, the legislation for Ontario is the Conveyancing and Law of Property Act .

These statutory assignments are enforceable if the parties comply with the following procedures:

The assignment is absolute.
The assignment is in writing, signed by the assignor
the non-assigning obligor is given express written notice.

A statutory assignment does not need consideration, and no precise words or form are necessary. They can be made as gifts and be valid.

Requirements for an Equitable Assignment

An assignment may be enforceable as an equitable assignment even if it does not fulfill the formality criteria of a statutory assignment. An equitable assignment does not necessitate the use of any specific terms or form. However, in order to comply with any provincial statutes of frauds regulations, the assignment must be in writing. The phrasing must clearly indicate that the assignee is to benefit from the rights being assigned. In contrast to a statutory assignment, consideration is required until there is a full transfer, such as a gift. It is not necessary to provide the non-assigning obligor with express written notification (except in the case of a transfer of land). However, notification is often given largely to assure that:

The obligor ceases to pay the assignor.
The assignee has priority over subsequent encumbrances.

Contractual Anti-Assignment & Anti-Delegation Clauses

Rather than relying on relatively uncertain legal rules, most commercial contract parties handle transferability issues in the written agreement. As a result, most commercial contracts include a negative covenant that restricts one or both parties’ rights to assign.

These clauses frequently include specific exceptions that allow one or more of the parties to assign and delegate rights and duties, often to designated non-parties such as affiliates and successors-in-interest to the transferring party’s business.

Courts frequently uphold provisions that prevent assignment because they favor the rights of parties to freely contract. However, subject to specific limitations, there is a broad assumption that contractual rights are assignable. As a result, the case law on anti-assignment provisions is a little erratic. Some courts have upheld anti-assignment clauses and declared the agreement unenforceable. Others have argued that an anti-assignment provision cannot preclude assignment.

Overall, contractual anti-assignment and anti-delegation provisions are commonly included in many types of business contracts. If not, transferability is determined by the contract’s subject matter and the nature of the rights and obligations to be transferred. It is important to stay knowledgeable the existence of such contractual terms when dealing with various commercial contracts…such as contracts for the sale of goods, personal service contracts, commercial real estate leases and various other types of contracts.

If you have any questions about your business’s contractual assignment or delegation needs, contact Cactus Law today to speak with a lawyer specializing in commercial law.

Disclaimer:

The information presented above is solely for general educational and informational purposes. It is not intended to be, and should not be taken as, legal advice. The information given above may not be applicable in all cases and may not even reflect the most recent authority after the date of its publication. As a result, please refer to all updated legislation, statutes, and amendments. Nothing in this article should be relied on or acted upon without the benefit of legal advice based on the specific facts and circumstances described, and nothing in this article should be interpreted otherwise.

About the Author:

Kanwar Gujral is entering his third year at Osgoode Hall Law School in Toronto, Ontario. He has a dedicated interest in real estate, business, and corporate law.

[i] National Trust Co. v. Mead , 1990 CarswellSask 165 (S.C.C.).

[ii] Irving Oil Ltd. v. Canada , 1984 CarswellNat 137 (Fed. C.A.).

[iii] Supra note 1.

[iv] Rodaro v. Royal Bank , 2002 CarswellOnt 1047 (Ont. C.A.).

[v] Conveyancing and Law of Property Act , R.S.O. 1990, c. C.34.

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Canada: Novation Or Assignment, That Is The Question

In the context of asset acquisition, and assuming that the target's contracts are assets being transferred to the purchaser, the transfer of contracts typically requires the parties to the transaction to go through either the novation process or assignment of the contract from the seller to the purchaser.

Novation is a trilateral agreement between the original parties to a contract and the purchaser seeking to replace the seller to the contract. Novation transfers not only the rights and benefits under the original contract to the purchaser, but also the obligations, thus releasing the seller from all obligations under the original contract. All parties to the original agreement need to consent to the new agreement.

Novation has been referred to as the "Hail Mary" defence for parties seeking to avoid contractual liability, however, the standard of establishing novation is quite high. The Supreme Court of Canada (the SCC ) has established a three-factor test for establishing novation. The party asserting novation must prove:

the purchaser assumes complete liability;
the creditor (one of the existing party to the original contract) must accept the purchaser as principal debtor and not merely as an agent or guarantor of the seller; and
the creditor (one of the existing party to the original contract) must accept the new contract in full satisfaction of, and as substitution for, the old contract. [1]

The SCC also stated that in the absence of an express new agreement, a court should not find novation unless the circumstances are especially compelling. [2]

Assignment and assumption, on the other hand, transfer the contractual rights and benefits held by the assignor/seller to the assignee/purchaser, but not the assignor/seller's obligations under the contract. The burden under the original contract remains with the assignor/seller, thus the assignor/seller can be held liable if the assignee/purchaser fails to perform under the contract. The assignor/seller can protect itself from potential liability by obtaining an indemnity from the assignee/purchaser.

Unlike novation, an assignment does not extinguish the original agreement and does not create a new and separate agreement. The original contract remains in force. Also, unlike novation, depending on the terms of the subject contract, an assignment of the contract may not require the consent of all parties to the agreement. Depending on the terms of the agreement, the assignor/seller usually only needs to provide a notice to the non-assigning party.

If the contract is silent as to its assignability, then the courts have held that the contract is generally assignable, except for personal services contract, where consent must be obtained. [3] The SCC has held that personal services contracts are contracts based on confidences, skills or special personal characteristics such as to implicitly limit the agreement to the original parties, [4] and the determination of whether a contract is personal services contract is often made by the courts.

Assignment and assumption may be more convenient for the seller than novation given that the seller may not need to ask for consent from a third party to assign its interest in an agreement to the purchaser, however, the seller needs to be aware of the potential liabilities if the purchaser fails to perform under the assigned contract. Although novation can protect the seller from such future liabilities, it is a more cumbersome process for all parties involved, and may not be feasible if the third party refuses to provide consent. Therefore, it is essential for parties to assess their relationship with the third party before proceeding with novation.

[1] National Trust Co. v Mead et al. [1990] 2 SCR 410 (SCC).

[3] Canadian Encyclopedic Digest, 4 th ed , ( Thomson Reuters Canada, 2016) at Title 35, Contracts, XIII 1(d)(i).

[4] Rodaro v. Royal Bank of Canada , 2002 CanLII 41834 (ONCA).

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Legal assignment

Practical law uk glossary 9-107-6754 (approx. 3 pages).

Only the benefit of an agreement may be assigned.
The assignment must be absolute.
The rights to be assigned must be wholly ascertainable and must not relate to part only of a debt.
The assignment must be in writing and signed under hand by the assignor.
Notice of the assignment must be received by the other party or parties for the assignment to take effect.
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Assignment Agreements

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What is an Assignment?

When one party transfers their right on one property to another, it is known as an assignment. There are two types of assignment, legal and equitable. Contact us for Assignment Agreements.

If we look at a contract, one party (the assignor) can transfer their right under a contract to a third party (the assignee). The assignor does not need the other party’s consent in the contract as per the express terms and conditions of the contract.

While rights under a contract can be assigned, obligations under the contract cannot be transferred to a third party. Novation is the only method to transfer obligations.

What Are the Legal Implications of An Assignment?

As per the clauses outlined in the Law of Property Act 1925, legal or debt benefits can be assigned to another person. For a legal assignment, there are few requirements:

Benefits under an agreement can be assigned
Assignment should be absolute
The rights under the debt to be assigned should be fully identifiable and whole and should not relate to any parts
The assignor needs to sign the agreement, and the assignment should be in writing
All parties to the assignment should receive notice of the assignment

What are Property Assignments?

Any legal sales transaction is an assignment where the assignor (original purchaser) of the property transfers their rights and obligations under the contract to the new assignee (purchaser). In simple terms, the new assignee pays a fee for purchasing the desired property.

The assignment is considered to take place from the original agreement of sale between the original purchaser and developer. The assignment happens before the property is completed.

The assignee assumes all the obligations and duties of the assignor. The original agreement of sale includes these duties and obligations such as included items, deposits, required disclosure statements, and completion date.

The assignee is granted title to the property once the property gets completed. All assignment fees are borne by the original purchaser and are charged by the developer.

The legal owner of the property is the developer till the transfer of title happens legally on completion of the property. For all assignment transactions, the developer needs to give written consent.

How can assignments from builders be done for Pre-Construction Condos?

Before project completion, many investors end up selling their builder agreement properties. The assignment is when the purchaser-investor’s interest in the builder agreement of purchase and sale is transferred to a new buyer or assignee.

Builder’s written consent is required before an assignment can take place by the purchaser-investor. Many builders can also withhold the assignment clause as per their agreement.

Whether you are moving into the property or purchasing a condo for investment, it is advisable to get the agreement reviewed by a real estate lawyer. You can understand your options and request an amendment to the agreement of purchase and sale to allow for future assignments.

Can an Assignment be done only for Pre-Construction Condos?

Any type of property can be assigned to a person, whether it is a resale or a pre-construction one. There should not be any restrictions against assignment in the original contract for the assignment to be possible.

How Can Consent from Builder be Received?

Builder’s requirements, process, and fees should be determined once the buyer confirms that they possess the right to assign the agreement as per the contract. If the agreement prohibits assignment and the builder refuses to allow them, the original buyer will have to wait to sell the property after closing. In many circumstances, the builder’s consent to agreement assignment can be obtained even if such consent was not present in the original contract. Many builders waive the assignment prohibiting clause from the agreement once builder specified criteria and forms with fees are followed.

The sales office can help in determining if the builder can provide consent and under what conditions. Different builders have a varying set of processes on the assignment of their properties.

What are the Salient Features of the Assignment Process?

The buyer takes over the assignment agreement and pays the adjustments to the builder at the time of closing. New and original buyers may split the adjustments if that is decided as per the agreement
Assignment fees are typically paid by the original buyer to the builder
In the original contract, the buyer has paid deposits to the builder. Once the contract gets assigned to the new buyer, they also take over the deposits. In most cases, the original buyer gets their deposits back once the builder gives their signed consent to the assignment of property to the new buyer.
The original buyer gains by the difference of funds at the time of final closing.
The closing of the transaction is dependent on the construction level of the condo unit. The buyer can occupy the unit once the occupancy closing takes place. Once the occupancy closing is done, once the builder signs the consent to an assignment, the final closing date can be set.
The new buyer is responsible for paying the occupancy fees from the date of the property being occupied.

What Are the HST Implications of The Purchase of A Newly Built Residential Property On Assignment From A Builder?

The purchase price on the Agreement of Purchase and Sale with the Builder is already inclusive of HST and an HST New Housing Rebate. However, there are some cases where the Builder will not credit the HST New Housing Rebate on closing as a result of an Assignment, despite the eligibility of the Assignee/Purchaser for the Rebate. If you are buying on Assignment and the Builder does not credit you the HST New Housing Rebate, you will need to pay the same to the Builder as an Adjustment on final closing.

To recover your HST New Housing Rebate, you will need to apply for the HST New Housing Rebate yourself after final closing with the Builder. To be eligible for the same, you will need to have acquired the property to move into the property and that you will have actually moved into the property after closing with the Builder. Please note that if the Assignor had used the property for rental purposes after taking possession on occupancy, it will affect your eligibility for the HST New Housing Rebate and it is important to ensure the Assignor has not done so.

If you are buying on Assignment for investment purposes, you will need to obtain an HST Rental Rebate by entering into a lease to a Tenant to move into the property for at least a one-year period and apply for the HST Rental Rebate within 2 years of your final closing.

You are advised to speak to a real estate lawyer about the HST Rebate applicable to your Assignment purchase.

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Our Mississauga Real Estate Lawyers are available for a consultation. Come and experience the quality legal counsel and personalized care we give to each client. We ensure prompt communication and a professional approach to achieve successful outcomes for you. Contact us for Assignment Agreements.

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6. Contract Law

Assignment, Delegation, and Third Party

Beneficiaries:.

Contracts are by law assignable and delegable. This means that the rights conveyed by the contract may be transferred to another party by assignment, unless an express restriction on assignment exists within the contract, or unless an assignment violates public policy. Likewise, the duties imposed on a party may be transferred to another party by delegation, unless the contract expressly restricts delegation, there is a substantial interest in personal performance by the original party to the contract, or if delegation would violate public policy.

As a general rule, a party may assign contract rights without the consent of the other party. This is common in the construction industry where a general contractor may assign rights and delegate duties to subcontractors for specific work that needs to be performed under the main contract. For example, the general contractor may delegate the duty to perform electrical work to an electrician, as well as assign the right to be paid for the work performed.

In delegation and assignment, the original contracting party is not “off the hook” if it transfers its duties or rights to another party. For instance, a subtenant assumed the rights and duties imposed on the original tenant in a lease. If the subletting tenant does not pay the rent, the original tenant is still liable. The way to excuse oneself from legal liability under a contract is through novation. Novation is essentially a new contract that transfers all rights and duties to a new party to the contract and releases the previous party from any further obligation. It is the procedure in which one party is dismissed completely from the contract because a third party is substituted. In this situation, the dismissed party no longer has any liability under the original contract. To be effective, all parties must agree to the novation.

Third Party Beneficiaries:

Assignment and delegation under a contract should not be confused with rights of third party beneficiaries. A third party beneficiary is someone who is not a party to the contract but stands to benefit from it. Life insurance policies are a classic example of contracts with third party beneficiaries. The insurance company and the insured are parties to the contract. But the person who receives payment upon the death of the insured is the third party beneficiary.

Third party beneficiaries can either be intended or incidental. An intended beneficiary is someone whom the parties intend to receive the benefit of the contract. For example, the named beneficiary of a life insurance policy. The beneficiary does not need to know about the contract to have his or her rights recognized and enforced.

An incidental beneficiary is someone who benefits from a contract but was not intended by the parties to benefit. For example, if a business pays for a professional to landscape its property, the neighbors are incidental beneficiaries to the landscaping contract. They benefit from the improved appearance and property values, but the business did not enter into the contract with an intent to benefit them. Incidental beneficiaries do not have a legally enforceable interest in the contract.

Business Law and Ethics Canadian Edition Copyright © 2023 by Craig Ervine is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Assignment of Commercial Contracts | Practical Law

Assignment of Commercial Contracts

Practical law canada practice note 3-591-8305 (approx. 24 pages).

Assignment of rights

How it relates to the law in british columbia canada.

In British Columbia, Canada, an assignment of rights is a legal document that transfers the rights and obligations of one party to another. This can include the transfer of ownership of property, the transfer of a contract, or the transfer of intellectual property rights. The assignment of rights must be in writing and signed by both parties to be legally binding. It is important to note that certain rights, such as those related to employment or tenancy, may not be assignable without the consent of all parties involved. Additionally, the assignment of certain rights may be subject to specific legal requirements or restrictions. Therefore, it is important to consult with a legal professional before entering into an assignment of rights agreement in British Columbia.

Impact on Business Owners in British Columbia

The concept of assignment of rights can impact small businesses in British Columbia, Canada, as it allows for the transfer of legal rights or interests from one party to another. This can include the transfer of ownership of property, the transfer of a contract, or the transfer of intellectual property rights. However, it is important to note that certain rights, such as those related to employment or tenancy, may not be assignable without the consent of all parties involved. Additionally, the assignment of certain rights may be subject to specific legal requirements or restrictions. Therefore, small businesses should consult with a legal professional before entering into an assignment of rights agreement in British Columbia to ensure that the transfer is legally binding and does not result in any legal disputes.

Potential Legal Risks, Legal Challenges, or Legal Pitfalls for Businesses in British Columbia

As a small business owner in British Columbia, it is important to be aware of the potential legal risks and challenges related to the assignment of rights. This refers to the transfer of ownership of a particular right or property from one party to another. One potential legal risk is the possibility of a dispute arising over the ownership of the assigned rights. This can occur if the original owner of the rights did not have the legal authority to assign them, or if there is a disagreement over the terms of the assignment. Another challenge is ensuring that all necessary legal documentation is in place to properly assign the rights. This includes drafting a clear and comprehensive assignment agreement that outlines the specific rights being transferred, the terms of the assignment, and any limitations or restrictions on the use of the assigned rights. To avoid or mitigate these issues, small business owners should seek the advice of a qualified legal professional when considering an assignment of rights. This can help ensure that all necessary legal requirements are met and that the assignment is properly documented. Additionally, it is important to conduct due diligence to ensure that the party receiving the assigned rights has the legal authority and capacity to use them as intended. This can help prevent disputes and legal challenges down the line. In summary, while the assignment of rights can be a valuable tool for small businesses in British Columbia, it is important to be aware of the potential legal risks and challenges involved. By seeking legal advice and conducting due diligence, small business owners can mitigate these risks and ensure a successful assignment of rights.

BC Business Practices and Consumer Protection Act (BPCPA)

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Assignment of Contracts

1 ASSIGNMENTOFCONTRACTS

Marie-ÈveCôté* LEGERROBICRICHARD ,L.L.P. Lawyers,PatentandTrademarkAgents CentreCDPCapital 1001Square-Victoria–BlocE–8thFloor Montreal,Quebec,CanadaH2Z2B7 Tel.(514)9876242–Fax(514)8457874 www.robic.ca–[email protected]

Fromabusinessperspective,varioussituationsmayarisewherebyitbecomes necessarytotransferacontracttoathirdparty.Forexample,itmaybe necessarytoassignimportantcontractswithinthecontextofthesaleof certainassetsortechnologytransfers. Itconsequentlybecomesparamountforalegalrepresentativetodetermine themannerinwhichandunderwhatconditionsacontractmaybeassigned, aswellastheconsequencesofsuchanassignment. Inanefforttoestablishifacontractmayindeedbeassigned,thefirststep consistsofverifyingtheclausespertainingtoassignment.Generallyspeaking, underQuebeclaw,contractsareconsideredtoreflecttheintentionsofthe contractingpartiesandassuchgoverntheircontractualrelationship.Theonly conditionisthatthepartiesrespectrulesofpublicorder.Assuch,itispossible tostipulateinthecontractitselfwhetherornotitmaybeassigned,towhom (sometimescontractsmayonlybeassignedtoaffiliatedpersonsorentities, othertimessuchcontractsmayalsobeassignedtothepurchaserof substantiallyallassetsorofthebusiness),andunderwhatconditions (remittanceofanotice,approvalbytheotherparty,etc.). Intheabsenceofanyindicationregardingeitherparty’srighttoassignthe contractoraprohibitionfromdoingso,wemustrelyonthecaselaw.Priorto thedecisioninN.C.HuttonLtd.c.CanadianPacificForestProductsLtd.,REJB 1999-15643(C.A.)renderedbytheCourtofAppealin1999,thereexistedfew casesinQuebecregardingtheassignmentofcontracts.Suchcircumstances infactpromptedJusticeBaudouintorefertoFrenchauthorities.Withregards tothemannerinwhichcontractsmayindeedbeassigned,JusticeBaudouin explainedthetwodifferentexistingschoolsofthoughtinFrance.Thefirst

©CIPS,2005.*OfLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmoflawyers,andpatentand trademarkagents.PublishedintheWinter2005issue(Vol.9,No.1)issueofourNewsletter. Publication068.066E.

2 arguesthatacontractshouldberegardedasaneconomicoperationby whicheitherpartymayassignthecontractwithoutfirstobtainingtheconsent oftheother,insofarastheinitialeconomicoperationispreservedinits entirety.Asforthesecond,itconsidersthatobligingapartytoacontract,be itintuitupersonaeorotherwise,toacceptanewcontractingpartyisboth difficultandlikelytoprovokeconflictsandaccordingly,theapprovalofthe otherpartymustbesought.Inrenderinghisdecision,JusticeBaudouin indicatedthatin1997,theFrenchCourdecassationhadrendereda judgementfavouringthelatterapproach(Cass.Com.,6mai1997,D-97- Jur.588).ThisapproachwasalsoadoptedbyJusticeBaudouinwho concludedthatitwasnecessaryfortheassignortoobtaintheconsentofthe assignedandthatsuchconsentcouldbeobtainedinadvance,forexample, whenexecutingthecontract. RelyingonFrenchlaw,JusticeBaudouinwentontodiscussthelegal implicationsinvolvedinassigningacontract,particularlyindetermining whethersuchassignmentprovokesthereleaseoftheassignorvis-à-visthe assigned.Assigningacontractisregardedbymanyauthorsashavinga translativeeffect,wherebytheassigneereplacestheassignor,thusreleasing thelatter.Otherauthorsarguethatinassigningacontract,anewcontract, identicaltothefirst,isformedinwhichcasetheassignorisnotreleasedfrom itsobligationsvis-à-vistheassigned.Suchaninterpretationseemstohave beenfavoredbytheSuperiorCourtinGeneralAccidentInsuranceCo.c. Cie.DeChauffageGazNaturel[1978]C.S.1160.AccordingtoJustice Baudouin,theassignmentofacontractcannotbeequatedtonovationora delegationofpayment(whichinanyeventcannotbepresumed),wherethe assignorwouldbereleased.Anassignmentwouldconsequentlyleadtothe additionandnotthereplacementofthedebtor. In2000,inmakingreferencetotheHuttoncase,theQuebecSuperiorCourt decidedinSteamaticCanadainc.c.GestionA.D.R.inc.(SteamaticCentre duQuébec),C.S.Drummond(Drummondville)405-05-001137-009,2000-10-19, AZ-50081131,J.E.2001-47(Jean-PierreSénécalJ.)thatanassignmentmay onlybeenforceableandbindingagainsttheassignediftheassignorhas obtainedtheformer’sconsentpriortoassigningthecontracttotheassignee. TheCourtdidhowevermentionthattheCivilCodeofQuebecdoesnot provideforthemannerinwhichsuchapprovalistobegiven.Asa consequence,theCourt,referringtoSection1641oftheCode,decidedthat itwasnotimperativethattheassignorobtainaformalconsentofthe assignedpriortotheassignmentofthecontract.AccordingtosuchSection, theassignmentmaybesetupagainstthedebtorandathirdpersonassoon asthedebtorhasacquiescedtoitorreceivedacopyorarelevantextractof thedeedofassignmentoranyotherevidenceoftheassignmentwhichmay besetupagainsttheassignor.Infact,theCourtindicatedthatsuchconsent

3 maybeinferredfromtheactionsoftheassigned.Forexample,iftheassigned continuestoremitroyaltiestotheassigneewithoutobjection,consentofthe assignedmaybeinferred.Incircumstanceswheretheassignedhasneither beeninformedoftheassignmentintheprescribedmanner,norexplicitly consentedtosuchanassignment,onecanacknowledge,especiallyin commercialmatters,aswasthecaseinHutton,thatconsentoftheassigned maybeimplicit. Consequently,onemustrememberthatintheabsenceofanystipulation regardingtheassignmentofacontract,itiscrucialthattheassignorfirst obtaintheapprovaloftheassignedforanassignmentofacontracttobe enforceableandbindingand,dependingontheintentionsoftheparties, thatsuchassignmentresultinthereleaseoftheassignorvis-à-vistheassigned. Donothesitatetocontactalawyerfromthecommercial/corporatesectorof ourGroupifadditionalinformationregardingthissubjectisrequired.

4 ROBIC,ungroupedavocatsetdagentsdebrevetsetdemarquesde commercevouédepuis1892àlaprotectionetàlavalorisationdela propriétéintellectuelledanstouslesdomaines:brevets,dessinsindustrielset modèlesutilitaires;marquesdecommerce,marquesdecertificationet appellationsdorigine;droitsdauteur,propriétélittéraireetartistique,droits voisinsetdelartisteinterprète;informatique,logicielsetcircuitsintégrés; biotechnologies,pharmaceutiquesetobtentionsvégétales;secretsde commerce,know-howetconcurrence;licences,franchisesettransfertsde technologies;commerceélectronique,distributionetdroitdesaffaires; marquage,publicitéetétiquetage;poursuite,litigeetarbitrage;vérification diligenteetaudit;etce,tantauCanadaquailleursdanslemonde.La maîtrisedesintangibles.ROBIC,agroupoflawyersandofpatentand trademarkagentsdedicatedsince1892totheprotectionandthe valorizationofallfieldsofintellectualproperty:patents,industrialdesignsand utilitypatents;trademarks,certificationmarksandindicationsoforigin; copyrightandentertainmentlaw,artistsandperformers,neighbouringrights; computer,softwareandintegratedcircuits;biotechnologies, pharmaceuticalsandplantbreeders;tradesecrets,know-how,competition andanti-trust;licensing,franchisingandtechnologytransfers;e-commerce, distributionandbusinesslaw;marketing,publicityandlabelling;prosecution litigationandarbitration;duediligence;inCanadaandthroughouttheworld. Ideaslivehere. COPYRIGHTER IDEASLIVEHERE ILATOUTDEMÊMEFALLULINVENTER! LAMAÎTRISEDESINTANGIBLES LEGERROBICRICHARD NOSFENÊTRESGRANDESOUVERTESSURLEMONDEDESAFFAIRES PATENTER R ROBIC ROBIC+DROIT+AFFAIRES+SCIENCES+ARTS ROBIC++++ ROBIC+LAW+BUSINESS+SCIENCE+ART THETRADEMARKERGROUP TRADEMARKER VOSIDÉESÀLAPORTÉEDUMONDE,DESAFFAIRESÀLAGRANDEURDELA PLANÈTE YOURBUSINESSISTHEWORLDOFIDEAS;OURBUSINESSBRINGSYOURIDEASTO THEWORLD

Assignment COMMENT An assignment is the 'stepping into the shoes' of another, typically in the course of a contract or a chattel sale. Perhaps the most common form of assignments are the wholesale trade in contract debts, emanating from credit card defaults. CASES Assignment - General Assignment - Equitable Assignment - Legal (CLPA) Assignment - Mortgage ONTARIO STATUTES Conveyancing and Law of Property Act, s.53 [last edited 30 Oct 2022]

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Your Assignment of Trade Name

THIS ASSIGNMENT OF TRADE NAME (the "Assignment") dated this ________ day of ________________, ________.

__________ of __________

(the "Assignor")

(the "Assignee")

Trade Name:
Trade Name: __________
Registration Details:
In consideration of _______________ (the "Price"), the receipt and sufficiency of which is hereby acknowledged, the Assignor does sell, assign and transfer to the Assignee the Trade Name, together with that portion of the good will of the business with which the Trade Name is associated, and all right, title and interest in the Trade Name, including, but not limited to, the right to use the Trade Name, register the Trade Name and to renew registration of the Trade Name.
The Price is payable in Canadian dollars and is payable on the signing of this Agreement.
Governing Law
The Assignor and the Assignee submit to the jurisdiction of the courts of the Province of Alberta for the enforcement of this Assignment or any arbitration award or decision arising from this Assignment. This Assignment will be enforced or construed according to the laws of the Province of Alberta.
Miscellaneous
Time is of the essence in this Assignment.
This Assignment may be executed in counterparts. Facsimile signatures are binding and are considered to be original signatures.
Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Assignment. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.
This Assignment and the terms and conditions contained in this Assignment apply to and are binding upon the Assignor, the Assignee and their respective successors, assigns, executors, administrators, beneficiaries, and representatives.

Acknowledged before me on this ________ day of ________________, ________.

NOTARY ACKNOWLEDGMENT - ASSIGNOR

NOTARY ACKNOWLEDGMENT - ASSIGNEE

Last updated November 8, 2023

What is an Assignment of Trade Name?

An Assignment of Trade Name legally transfers the ownership and rights of a trade name from one business entity to another .

This transfer may occur for various reasons, such as the sale of a business , a change in business structure, or the rebranding of a company.

Reminder : A trade name is the public-facing name under which a business operates and interacts with customers while the legal name is the official one that appears on government and legal forms.

A trade name is a type of intellectual property and is also known as a DBA (doing business as) name.

Suppose a wedding photographer named Alex operates her business as a sole proprietorship. She registers her business under her legal name, Alex Smith. However, when marketing her business to clients, she uses a trade name (e.g., Eternal Moments Photography).

Parties to an Assignment of Trade Name

There are two parties involved in an Assignment of Trade Name: the assignor and the assignee. Here’s what each role means:

The assignor is the party transferring ownership of a trade name.
The assignee is the party receiving ownership of a trade name.

Assignors and assignees can be individuals, organizations, or corporations. Also, there can be multiple assignors or assignees.

The purpose of an Assignment of Trade Name

An Assignment of Trade Name serves several important purposes, including the following:

Records the legal transfer of ownership : The primary purpose of an assignment form is to facilitate and record a trade name’s ownership transfer to a new owner.
Ensures compliance with regulations : Some jurisdictions require the formal assignment of a trade name to be recorded by the appropriate government agency.
Protects both parties’ rights and interests : An assignment form ensures the assignor is no longer responsible for the trade name and the assignee has the legal right to use it.
Provides clarity about the transaction : The document outlines the terms and conditions of the transfer, including any financial considerations.
Helps enforce trademark rights : If a trade name is also registered as a trademark, the Assignment of Trade Name can help the assignee enforce the trademark rights.
Helps the assignee complete due diligence : In cases where a business is being bought , the Assignment of Trade Name is a crucial component of due diligence because it ensures the buyer obtains all the rights connected to the trade name.

How to write an Assignment of Trade Name

To create an Assignment of Trade Name, complete the following steps:

1. Provide assignor and assignee information

List the names and addresses of both the assignor and assignee . Generally, you should use a party’s legal name. If you’re assigning a trade name to a business, use a business address, if possible.

2. Provide details about the trade name

Next, state the trade name that’s being transferred and specify whether it’s registered .

If the trade name is registered, specify the place of registration and a registration number.

3. State the price of the assignment

Besides stating the price of the assignment, specify when it’s payable . A price could be payable upon execution of the assignment document, a specified date, or another event.

4. Add additional clauses (if necessary)

It’s likely not necessary, but you may add additional clauses to your Assignment of Trade Name. For example, if you want to make the assignment conditional, you may add a clause that outlines the conditions.

5. Sign the assignment

To make an Assignment of Trade Name binding, both the assignor and assignee must sign it . The parties may also get the Assignment of Trade Name notarized by signing it in front of a notary public.

Once signed, you may also have to register the assignment with the appropriate government office.

Do I need to register an Assignment of Trade Name?

In Canada, trade names must be registered in all provinces and territories except Newfoundland and Labrador. So, after using an Assignment of Trade Name, the new owner (i.e., the assignee) may need to re-register the trade name with the appropriate office.