assignment of warranties clause

• Assignment Clause

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Assignment clause defined.

Assignment clauses are legally binding provisions in contracts that give a party the chance to engage in a transfer of ownership or assign their contractual obligations and rights to a different contracting party.

In other words, an assignment clause can reassign contracts to another party. They can commonly be seen in contracts related to business purchases.

Here’s an article about assignment clauses.

Assignment Clause Explained

Assignment contracts are helpful when you need to maintain an ongoing obligation regardless of ownership. Some agreements have limitations or prohibitions on assignments, while other parties can freely enter into them.

Here’s another article about assignment clauses.

Purpose of Assignment Clause

The purpose of assignment clauses is to establish the terms around transferring contractual obligations. The Uniform Commercial Code (UCC) permits the enforceability of assignment clauses.

Assignment Clause Examples

Examples of assignment clauses include:

• Example 1 . A business closing or a change of control occurs
• Example 2 . New services providers taking over existing customer contracts
• Example 3 . Unique real estate obligations transferring to a new property owner as a condition of sale
• Example 4 . Many mergers and acquisitions transactions, such as insurance companies taking over customer policies during a merger

Here’s an article about the different types of assignment clauses.

Assignment Clause Samples

Sample 1 – sales contract.

Assignment; Survival .  Neither party shall assign all or any portion of the Contract without the other party’s prior written consent, which consent shall not be unreasonably withheld; provided, however, that either party may, without such consent, assign this Agreement, in whole or in part, in connection with the transfer or sale of all or substantially all of the assets or business of such Party relating to the product(s) to which this Agreement relates. The Contract shall bind and inure to the benefit of the successors and permitted assigns of the respective parties. Any assignment or transfer not in accordance with this Contract shall be void. In order that the parties may fully exercise their rights and perform their obligations arising under the Contract, any provisions of the Contract that are required to ensure such exercise or performance (including any obligation accrued as of the termination date) shall survive the termination of the Contract.

Reference :

Security Exchange Commission - Edgar Database,  EX-10.29 3 dex1029.htm SALES CONTRACT , Viewed May 10, 2021, <  https://www.sec.gov/Archives/edgar/data/1492426/000119312510226984/dex1029.htm >.

Sample 2 – Purchase and Sale Agreement

Assignment . Purchaser shall not assign this Agreement or any interest therein to any Person, without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion. Notwithstanding the foregoing, upon prior written notice to Seller, Purchaser may designate any Affiliate as its nominee to receive title to the Property, or assign all of its right, title and interest in this Agreement to any Affiliate of Purchaser by providing written notice to Seller no later than five (5) Business Days prior to the Closing; provided, however, that (a) such Affiliate remains an Affiliate of Purchaser, (b) Purchaser shall not be released from any of its liabilities and obligations under this Agreement by reason of such designation or assignment, (c) such designation or assignment shall not be effective until Purchaser has provided Seller with a fully executed copy of such designation or assignment and assumption instrument, which shall (i) provide that Purchaser and such designee or assignee shall be jointly and severally liable for all liabilities and obligations of Purchaser under this Agreement, (ii) provide that Purchaser and its designee or assignee agree to pay any additional transfer tax as a result of such designation or assignment, (iii) include a representation and warranty in favor of Seller that all representations and warranties made by Purchaser in this Agreement are true and correct with respect to such designee or assignee as of the date of such designation or assignment, and will be true and correct as of the Closing, and (iv) otherwise be in form and substance satisfactory to Seller and (d) such Assignee is approved by Manager as an assignee of the Management Agreement under Article X of the Management Agreement. For purposes of this Section 16.4, “Affiliate” shall include any direct or indirect member or shareholder of the Person in question, in addition to any Person that would be deemed an Affiliate pursuant to the definition of “Affiliate” under Section 1.1 hereof and not by way of limitation of such definition.

Security Exchange Commission - Edgar Database,  EX-10.8 3 dex108.htm PURCHASE AND SALE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1490985/000119312510160407/dex108.htm >.

Sample 3 – Share Purchase Agreement

Assignment . Neither this Agreement nor any right or obligation hereunder may be assigned by any Party without the prior written consent of the other Parties, and any attempted assignment without the required consents shall be void.

Security Exchange Commission - Edgar Database,  EX-4.12 3 dex412.htm SHARE PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1329394/000119312507148404/dex412.htm >.

Sample 4 – Asset Purchase Agreement

Assignment . This Agreement and any of the rights, interests, or obligations incurred hereunder, in part or as a whole, at any time after the Closing, are freely assignable by Buyer. This Agreement and any of the rights, interests, or obligations incurred hereunder, in part or as a whole, are assignable by Seller only upon the prior written consent of Buyer, which consent shall not be unreasonably withheld. This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

Security Exchange Commission - Edgar Database,  EX-2.1 2 dex21.htm ASSET PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1428669/000119312510013625/dex21.htm >.

Sample 5 – Asset Purchase Agreement

Assignment; Binding Effect; Severability

This Agreement may not be assigned by any party hereto without the other party’s written consent; provided, that Buyer may transfer or assign in whole or in part to one or more Buyer Designee its right to purchase all or a portion of the Purchased Assets, but no such transfer or assignment will relieve Buyer of its obligations hereunder. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors, legal representatives and permitted assigns of each party hereto. The provisions of this Agreement are severable, and in the event that any one or more provisions are deemed illegal or unenforceable the remaining provisions shall remain in full force and effect unless the deletion of such provision shall cause this Agreement to become materially adverse to either party, in which event the parties shall use reasonable commercial efforts to arrive at an accommodation that best preserves for the parties the benefits and obligations of the offending provision.

Security Exchange Commission - Edgar Database,  EX-2.4 2 dex24.htm ASSET PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1002047/000119312511171858/dex24.htm >.

Common Contracts with Assignment Clauses

Common contracts with assignment clauses include:

• Real estate contracts
• Sales contract
• Asset purchase agreement
• Purchase and sale agreement
• Bill of sale
• Assignment and transaction financing agreement

Assignment Clause FAQs

Assignment clauses are powerful when used correctly. Check out the assignment clause FAQs below to learn more:

What is an assignment clause in real estate?

Assignment clauses in real estate transfer legal obligations from one owner to another party. They also allow house flippers to engage in a contract negotiation with a seller and then assign the real estate to the buyer while collecting a fee for their services. Real estate lawyers assist in the drafting of assignment clauses in real estate transactions.

What does no assignment clause mean?

No assignment clauses prohibit the transfer or assignment of contract obligations from one part to another.

What’s the purpose of the transfer and assignment clause in the purchase agreement?

The purpose of the transfer and assignment clause in the purchase agreement is to protect all involved parties’ rights and ensure that assignments are not to be unreasonably withheld. Contract lawyers can help you avoid legal mistakes when drafting your business contracts’ transfer and assignment clauses.

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Assignment of contractual warranties: can the assignment extend to warranties breached before assignment?

In this article we consider the recent decision in the case of Tzaneros Investments Pty Ltd v Walker Group Constructions Pty Ltd , in which the party who had been assigned the benefit of contractual warranties provided by the contractor, sued the contractor for breach of those warranties as a result of defects. The contractor accepted that the works were defective but argued that they fell outside the scope of the assignment and therefore that it had no liability to the assignee.

Assignment of contractual rights

In simple terms, contractual assignment usually involves the transfer of the benefit of one or more contractual rights from a contracting party (the assignor) to a third party (the assignee). The assignment allows the third party to enforce those rights against the other contracting party as if it were a party to the contract in the first place. The contract between the original parties otherwise remains in full force and effect. There are several reasons why contractual rights may be assigned. For example, it is common for assignment to be considered when an owner sells infrastructure that it contracted to have designed and built, and if done properly, it will enable the new owner to have the same rights as the original owner with respect to contractual rights (such as warranties as to design, construction and fitness for purpose), and to pursue those rights if they are breached. This can be particularly important in the case of (latent) defects.

Tzaneros Investments Pty Ltd v Walker Group Constructions Pty Ltd

This case concerned the construction of a container terminal on land owned by the Sydney Ports Corporation (the Land ). In 2003, P&O Trans Australia Holdings Ltd ( P&O ), who was lessee of the Land, entered into a contract with Walker Group Constructions Pty Ltd ( WGC ) for the design and construction of 5 warehouses, and associated work, which included laying pavements in between and outside of the 5 warehouses ( D&C Contract ).

In the D&C Contract, WGC gave certain warranties as to standard of workmanship and fitness for purpose. The D&C Contract also provided that neither party could assign any right or benefit under the contract without the other's prior approval. After the works were completed, P&O's leasehold interest in the land was transferred to Tzaneros and P&O entered into a Deed with Tzaneros purporting to assign WGC's warranties under the D&C Contract. WGC consented to the assignment of the warranties to Tzaneros in the following terms:​

• … [WGC] hereby acknowledges that …the benefits of the building warranties contained in the Contract will pass to Tzaneros Investments Pty Ltd from the sale date…
• …In accordance with clause 9.1 of the Contract, Walker Group Constructions hereby consents to, and accepts the assignment of the building warranties to Tzaneros Investments from the sale date.

After the pavement was laid, cracks and spalling began to appear. By the time of the litigation, some pavements had been repaired (with Tzaneros contending that the repairs were inadequate), and some had been replaced.

Tzaneros’ claim based on the assigned warranties

Tzaneros commenced proceedings in the Supreme Court of New South Wales based on breach of the contractual warranties purportedly covered by the assignment in the Deed. Tzaneros claimed nearly AU$15 million in damages from WGC and other parties as a result of the defects. A key issue was whether assignment of the benefit of the contractual warranties allowed Tzaneros to pursue its claim against WGC.

The parties' arguments

WGC accepted that the concrete pavement was defective, and that the warranties provided under the D&C Contract had therefore been breached. However, WGC argued that the cause of action (for breach of warranty) had accrued before the assignment was effected, and that the terms of assignment were not broad enough to extend to such causes of action. Put another way, WGC argued that if a warranty had been breached before the Deed was executed, the entitlement to sue on that warranty had not been assigned to Tzaneros, and remained with P&O, the principal under the D&C Contract. Tzaneros argued that the assignment was not limited in this way, permitting it to pursue WGC for breaches of the warranties under the D&C Contract, irrespective of whether or not they accrued before the assignment was effected.

Dealing first with the terms of the assignment, Ball J observed that the Deed provided that ‘ the Assignor as beneficial owner and for valuable consideration…assigns to the Assignee absolutely all of the benefit of the Building Warranties ’ (emphasis added). His Honour found that the provisions in the Deed dealing with assignment had to be construed in the context of P&O and Tzaneros entering into the Deed when they were aware that there had been cracking in the pavements and therefore must have contemplated a claim against WGC for breach of warranty. Further, His Honour concluded that the ordinary and natural meaning of the words ‘ all of the benefits of the Building Warranties ’ included the right to sue in respect of breaches that had occurred before the date of the assignment. His Honour opined that had the parties intended to limit the assignment to breaches arising after the assignment was effected, ‘ they would have said so specifically ’. WGC argued that it did not consent to the assignment in such broad terms. Specifically, WGC relied on the fact that the letter provided that consent to the assignment was granted ‘ from the sale date ’. This argument failed for two reasons. First, His Honour opined that the consent could not impact the scope and found that ‘ either WGC consented to the assignment or it did no t’ and that the letter clearly operated as the consent required by clause 9.1 of the General Conditions of the D&C Contract. Second, his Honour held that on a proper construction of the letter, ‘ from the sale date ’ could not be ‘ interpreted as placing a limit on the consent insofar as the scope of the assignment is concerned ’. Instead, that date was interpreted as identifying the date from which the assignment would take effect. His Honour accordingly held that the assignment allowed Tzaneros to sue WGC for breaches of the contractual warranties that occurred before the date the assignment was effected. Tzaneros’ claim against WGC for breach of warranty succeeded, resulting in damages being awarded.

Concluding remarks

The Supreme Court of NSW found that neither the assignment nor the consent was limited only to causes of action that accrued after the assignment took place. The assignment was broadly construed. The result turned on the terms of the assignment and consent, along with the surrounding circumstances. Indeed, the fact that the assignment was construed in broad terms is perhaps unsurprising in light of those things. Nevertheless, this case serves as an important reminder that any limitations a party wishes to place on the scope of the assignment need to be clearly identified, and that particular care must be taken when consent is being considered and provided.

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Assignment of a collateral warranty

Published by a lexisnexis construction expert.

This Practice Note focuses on the assignment of collateral warranties (see Practice Note: What are collateral warranties?). For more detailed guidance on assignment in general, see Practice Notes: Assignment in construction contracts and Legal and equitable assignment in construction contracts. Although this Practice Note refers to collateral warranties, the principles also apply where third party rights are used as an alternative to collateral warranties, see: Contracts (Rights of Third Parties) Act 1999 in construction—overview.

Assignment provisions in collateral warranties

The general rule is that if a contract is silent on the issue of assignment, this means that the benefit of the contract can be assigned without limit or without requiring consent (as permitted by law under section 136(1) of the Law of Property Act 1925 (LPA 1925))—there is no requirement to obtain the consent of the obligor to any proposed assignment. See Practice Note: Restrictions on the assignment of rights in construction contracts.

Most construction contracts contain express assignment clauses to clarify the rights of each of the parties in respect of assignment and this is also usually the

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Key definition:

Assignment definition, what does assignment mean.

An assignment is an immediate transfer of an existing proprietary right, vested or contingent from one party to another. Assignments can occur by consent or by operation of law.

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• 194. Sovereign Immunity -- 11 U.S.C. § 106(c)
• 195. Limits Of The § 106 Waiver Of Sovereign Immunity
• 196. Sovereign Immunity -- Seminole Tribe and State Sovereign Immunity
• 197. Bankruptcy Jurisdiction And Sovereign Immunity Statutory Addendum
• 201. Jury Trials In Civil Cases
• 202. Laches
• 203. Limitations Statutes Applicable to Suits Against the Government
• 204. Offset
• 205. Recoupment And Setoff
• 206. Priority for the Payment of Claims Due the Government
• 207. Counterclaims Against The United States
• 208. Counterclaim In Suits On Notes And Mortgages
• 209. Estoppel
• 210. Choice Of Law
• 211. Interest Recoverable By The Government
• 212. Interest Recoverable From The Government
• 213. Declaratory Actions
• 214. Injunctions
• 215. Mandamus
• 216. Reformation
• 217. Replevin
• 218. Rescission
• 219. Specific Performance
• 220. Attorney's Fees
• 221. Court Costs
• 222. Costs Recoverable By The United States
• 223. Costs Recoverable From The United States
• 224. Sample Letter -- Judgments And Stipulations
• 225. Sample Letter -- Back Pay Judgments
• 226. FMS Form 194 -- Judgment Fund Payment Request
• 227. Monitoring of Payment Agreements by the Department of Veterans Affairs Debt Management Center (DMC)
• 228. Memorandum From Attorney General -- Coordination of Parallel Criminal, Civil, and Administrative Proceedings
• ENRD Resource Manual
• Civil Rights Resource Manual

A. Express Warranties

Government contracts frequently contain express warranty clauses. The warranty clause, by its terms, provides the exclusive remedies for nonlatent defects or those not involving fraud or such gross mistakes as amount to fraud, by requiring the contractor to repair or replace the defective article or part, or, if the article or part was retained, by requiring the contractor to pay an amount which is equitable under the circumstances. See United States v. Franklin Steel Products, Inc., 482 F.2d 400, 404 (9th Cir. 1973), cert. denied, 415 U.S. 918 (1974). A frequent defense asserted by contractors in such cases is that the government's right of inspection before acceptance, under another clause included in such contracts, see 48 C.F.R. § 52.246-2 et seq., relieved the contractors of liability, since the government should have inspected, or it negligently inspected, the product or part. However, the inspection clause was added to give the government further protection, not less. United States v. Aerodex, Inc., 469 F.2d 1003 (5th Cir. 1972); United States v. Franklin Steel Products, supra. Assuming, arguendo, that the government had a duty to inspect, the warranty clause specifically provides that inspection and subsequent acceptance are not conclusive as to "latent defects, fraud, or such gross mistakes as to amount to fraud." Thus, latent defects, not discoverable by visual inspection or the tests specified in the contract, would be the basis for relief in any event. See United States v. Franklin Steel Products, supra at 403.

B. Implied Warranties

Unless specifically forbidden from doing so by regulation or by the contract in question, the government may claim the benefits of implied warranties found in the Uniform Commercial Code (UCC). Although federal law applies to determine the rights and liabilities of parties to a government contract, the Uniform Commercial Code may serve as a guide for federal law in this area, at least to the extent that the question is not governed by the contract or by federal regulations. See United States v. Hext, supra; Everett Plywood & Door Corp. v. United States, 419 F.2d 425 (Ct. Cl. 1969); United States v. Wegematic Corp., 360 F.2d 674 (2d Cir. 1966). The implied warranty of merchantability is found at section 2-314 of the UCC. The implied warranty of fitness for a particular purpose is found at section 2-315. In a proper case, the government may also recover incidental and consequential damages, pursuant to section 2-715 of the UCC. It should be noted that the implied warranties found in sections 2-314 and 2-315 will not apply if, prior to entering into the contract, there was an examination of inspection of the goods by the buyer, unless the defects could not have been reasonably discovered at the time of the examination. U.C.C. § 2-316.

A contractor may not defend or recover on an implied warranty theory where the government expressly disclaims such warranties. Webco Lumber, Inc. v. United States, 677 F.2d 860 (Ct. Cl. 1982). This issue arises most often in contracts which contain an estimate of quantities. Where such estimates are clearly defined as estimates only and any implied warranty is expressly disclaimed, the disclaimer will be given effect. Id.; Caffall Brothers Forest Products, Inc. v. United States, 678 F.2d 1071 (Ct. Cl.), cert. denied, 459 U.S. 908 (1982). In order to prevail on a claim of breach of warranty, the plaintiff must establish that:

[cited in JM 4-4.530 ]

Warranty of title

Warranty of title clause samples

(b) Special Warranty of Title. The Assignment and Bill of Sale delivered at the Closing will contain a special warranty of title by Seller and its Affiliates by, through or under Seller (and its Affiliates), but not otherwise, subject, however, to the Permitted Encumbrances and to any matters of record in any of the applicable federal, state and county records. Said special warranty of title contained in the Assignment and Bill of Sale shall be subject to the further limitations and provisions of this Article V.

09/10/2018 (Enduro Royalty Trust)

1.2No Warranty of Title. Lessor claims title to the mineral estate covered by this Lease. Lessor does not warrant title nor represent that no one will dispute the title asserted by Lessor. It is expressly agreed that Lessor shall not be liable to Lessee for any alleged deficiency in title to the mineral estate, nor shall Lessee become entitled to any refund for any rentals, bonuses, or royalties paid under this Lease in the event of title failure.

05/22/2019 (PETROTEQ ENERGY INC.)

a. Limitations on Warranty of Title. The Acquired Assets are being assigned and conveyed hereunder to Assignee without any warranty of title , except that Assignor warrants that the Lease, to the extent of the rights and interests assigned and transferred to Assignee hereunder, are free and clear of all adverse claims, liens and other encumbrances.

2. Warranty of Title. Roth hereby warrants to Golden Royal that the execution of this Assignment Agreement will transfer to Golden Royal the full beneficial interest in the Interests, free of liens or adverse claims.

03/04/2019 (Golden Royal Development Inc.)

representations and warranties of the Parties contained in this Agreement or in any certificate delivered in connection with this Agreement will survive the Execution Date for a period of twelve (12) months and shall thereafter be of no further force or effect (as to each of (a), (b) and (c) above, the “Expiration Date”); provided, however, any representation, warranty or covenant as to which a claim shall have been asserted prior to the Expiration Date shall survive until such claim and the indemnity claim with respect thereto are resolved.Notwithstanding the foregoing, the Indemnities in Sections ‎5.2.2, ‎10.2.3, 10.2.4 and ‎10.3.2 shall survive the Closing without time limit.The special warranty of title set forth in the Assignment will survive the Closing Date for a period of two (2) years and shall thereafter be of no further force or effect except that any claim under such special warranty of title which has been asserted prior to the end of such two (2) years period shall survive until such claim with respect thereto is resolved.The intended effect of termination of (a) representations, warranties and covenants (and the indemnification rights with respect thereto) and (b) the special warranty of title is to bar, from and after the date of termination, any claim or cause of action based on the alleged inaccuracy of such representation or breach of such warranty, or with regard to claims for indemnity with respect thereto or with respect to such special warranty of title .Subject to the limitations set forth in this Section, the provisions of this Agreement shall survive the delivery of the Assignment at Closing, unless otherwise indicated.

11/04/2016 (Jones Energy, Inc.)

1. Warranty of Title. Pledgor warrants and represents to Lender that, upon information and belief, it is the owner of all of its personal property including, without limitation, all personal property wherever located, whether now existing or owned or hereafter arising or acquired, whether or not subject to the Uniform Commercial Code, as the same may be in effect in the State of New York, as amended from time to time, and whether or not affixed to any realty including, without limitation: (i) all accounts, chattel paper, investment property, deposit accounts, documents, equipment, farm products, general intangibles (including trademarks, service marks, trade names, patents, copyrights, licenses and franchises), instruments, inventory, money, letter of credit rights, causes of action (including tort claims) and other personal property (including agreements and instruments not constituting chattel paper or a document, general intangible or instrument); (ii) all additions, accessions to, substitutions for, or replacements of the foregoing; (iii) all proceeds and products of the foregoing including insurance proceeds; and (iv) all business records and information relating to any of the foregoing and any software or other programs for accessing and manipulating such information (collectively referred to herein as the “Collateral”) and Pledgor holds the Collateral free and clear of any and all liens or claims or encumbrances of any nature whatsoever.

08/29/2018 (TAYLOR DEVICES INC)

(b)Special Warranty of Title. The Assignment delivered at Closing will contain a special warranty of title whereby Seller warrants and agrees to defend Defensible Title effective as of Closing and until the end of the Survival Period, without duplication, to (i)each Well set forth on ExhibitB-1 (limited to any currently producing formations), and (ii)each Well Location set forth on ExhibitB-2 (limited to the applicable Target Formation(s) set forth on ExhibitB-2 for such Well Location), unto Buyer against every Person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Seller or its Affiliates, but not otherwise, subject, however, to the Permitted Encumbrances; provided, however, that, except with respect to any liability of Seller for any claim asserted in writing by Buyer to Seller in accordance with Section11.1(c) on or before the expiration of the Survival Period for breach of such special warranty, such special warranty shall cease and terminate at the end of such Survival Period.

11/07/2018 (Vantage Energy Acquisition Corp.)

5.6Right to Cure. Seller shall have the option, but not the obligation, to attempt to cure, on or before 5:00 p.m. Central Time, two (2) Business Days prior to the Initial Closing (“Cure Period”), any Title Defect affecting the Assets that is timely identified under Section 5.5. If a Title Defect is a reduction in NRI below the Designated NRI for any Lease, the Parties agree that Seller may cure such Title Defect by delivering, or causing to be delivered, assignments of existing overriding royalties assigned by Seller under Article 8 of this Agreement in amounts sufficient to increase the NRI to the Designated NRI, which assignments shall be delivered at the Initial Closing or Subsequent Closing, as the case may be, and shall contain a special warranty of title . If Seller is unable to cure a Title Defect that is a reduction in NRI below the Designated NRI for any Lease in the manner set forth above, then Buyer shall have the right, but not the obligation, to elect to exclude the affected Lease from the Initial Closing, and the Purchase Price will be reduced by the Allocated Value of such Lease. Prior to the end of the Cure Period, Seller shall provide evidence that a Title Defect has been cured. Prior to the execution of the Settlement Statement pursuant to Section 3.2, Buyer shall notify Seller whether such Title Defect has been cured to the reasonable satisfaction of Buyer. Without limitation of Section 5.8 below, if there are any Title Defects described under sub-clause (iv) in the definition of Defensible Title in Section 5.1, and (i) Seller elects, or is deemed to have elected, to not cure such Title Defect, or (ii) Seller elects to cure such Title Defect in accordance with this Section 5.6 but is unable to cure such Title Defect by the end of the Cure Period (or, if such Lease has already been excluded from the Initial Closing due to its being subject to an Outstanding Title Defect, by the by the end of the Post-Closing Cure Period), then Seller may elect to retain the Lease or Leases affected by such Title Defect and the Purchase Price shall be reduced by the Allocated Value of such Lease or Leases.

11/14/2017 (LILIS ENERGY, INC.)

9. Grant in Trust and Warranty of Title. In consideration of the foregoing and other good and valuable consideration, Grantor hereby reaffirms the grant and conveyance to Trustee, in trust for the benefit of Lender and the successors, successors-in-title and assigns of Lender, with power of sale, as set forth in the Deed of Trust, of all of the estate, right, title, and interest that Grantor now has or may later acquire in and to the Property as defined and described in the Deed of Trust, including, but not limited to, the Real Property as more particularly described in Exhibit A attached to and made a part of this Modification, which Property is not used principally or primarily for agricultural or farming purposes.

06/11/2018 (OPTICAL CABLE CORP)

12.1Warranty of Title.Producer warrants that it will at the time of delivery of Crude Oil to Carrier under this Agreement have good title to or contractual right to deliver such Crude Oil and that such Crude Oil will be free and clear of all liens, encumbrances, and adverse claims of any kind that have been asserted prior to the time of delivery.If any claim is made on the title of the Committed Crude Oil, Carrier has the right to suspend receipt or deliveries of Committed Crude Oil but only to the extent to which title is in issue and only until such issue is finally resolved to the reasonable satisfaction of Carrier.

08/07/2017 (Resolute Energy Corp)

5. Warranty of Title. Initial Owner warrants that on Closing, Initial Owner shall have clear title to Horse and Horse is free from any liens, claims or encumbrances of any nature whatsoever including without limitation spousal claims under any applicable community property laws. In the event any claims or demands are made against Initial Owner's or Investor's title to the Horse, Initial Owner shall indemnify, defend and hold Investor harmless against such claim or demand at its sole cost and expense from any and all claims or expenses, including reasonable attorney's fees which may arise by reason thereof.

11/03/2020 (My Racehorse CA LLC)

F. Warranty of Title. Seller is the lawful owner of the Assets, and has the full right, power, and authority to sell, transfer and convey the Assets to Buyer and that the Assets are not subject to any liens, claims, security interests, encumbrances, taxes, or assessments, however described or denominated.

11/14/2019 (Surge Holdings, Inc.)

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What is an assignment clause.

Scott Whitaker

One of the key clauses to consider when you are contracting for your SaaS company is the assignment clause. An assignment clause is a provision in a contract that outlines whether and how one party can transfer its rights and obligations under the contract to another party.

In the context of a software as a service (SaaS) contract, an assignment clause is particularly important because SaaS contracts involve the provision of intangible software services that cannot be physically transferred. It takes on an important role also in the industry because there is so much M&A activity. Instead of transferring physical property, the contract outlines the rights and obligations of the parties related to the use and provision of the software service.

In general, there are two types of assignment clauses: unrestricted and restricted. An unrestricted assignment clause allows one party to assign its rights and obligations under the contract to any other party without obtaining consent or approval from the other party. On the other hand, a restricted assignment clause requires one party to obtain the consent or approval of the other party before assigning its rights and obligations. Let’s look at an example of an unrestricted standard assignment clause:

“Neither party will assign or transfer any rights or obligations under this Agreement without the prior written consent of the other party.”

In SaaS contracts, it is common for the assignment clause to be restricted. This is because SaaS contracts typically involve the provision of sensitive and confidential data, and the parties want to ensure that the other party is capable of providing the same level of data protection and security as the original party.

When drafting an assignment clause in a SaaS contract, it is important to consider the following key elements:

Scope of assignment: The assignment clause should clearly specify the scope of the assignment, including which rights and obligations can be assigned and to whom.

Notice requirements: The clause should outline the notice requirements that the assigning party must comply with, including the timing and method of providing notice to the other party.

Consent or approval requirements: If the assignment clause is restricted, it should specify the conditions under which the other party’s consent or approval is required, including any restrictions or limitations on the ability to withhold consent.

Representations and warranties: The clause should include representations and warranties by the assigning party that the assignee will be able to comply with the terms of the contract and that the assignee will be subject to the same obligations as the original party.

Termination rights: The clause should also address the termination rights of the parties in the event of an assignment, including the right of the non-assigning party to terminate the contract in certain circumstances.

In addition to these key elements, it is important to consider the specific needs and requirements of the parties when drafting an assignment clause in a SaaS contract. For example, if the SaaS provider is a start-up that is seeking funding or acquisition, it may need to assign its rights and obligations under the contract as part of the transaction. In this case, the clause should be drafted to allow for such assignments.

On the other hand, if the SaaS provider is a large corporation that has strict data protection policies, it may require a more restricted assignment clause that includes detailed due diligence requirements for the assignee.

The clause is a crucial provision in a SaaS contract that outlines the parties’ rights and obligations related to the transfer of the contract. It is important to carefully consider the scope of the assignment, notice and consent requirements, representations and warranties, termination rights, and other specific needs and requirements of the parties when drafting an assignment clause in a SaaS contract. A well-drafted assignment clause can provide clarity and certainty for both parties and help to avoid disputes and legal challenges down the line.

When is an assignment clause invoked in SaaS contracts ?

An assignment clause in a SaaS contract can be invoked when one party wants to transfer its rights and obligations under the contract to another party. This is generally the seller (startup company) that is looking to assign the rights and obligations to another provider. The circumstances under which the clause can be invoked depend on the terms of the contract and the specific needs and requirements of the parties.

Usually an assignment clause can be invoked in one of the following situations:

Mergers and Acquisitions: If a party to the SaaS contract is acquired or merged with another entity, the acquiring or merging entity may want to assume the rights and obligations under the contract. In this case, the assigning party may invoke the assignment clause to transfer its rights and obligations to the acquiring or merging entity.

Asset Sales: If a party to the SaaS contract sells all or part of its business or assets to another entity, the assigning party may want to assign its rights and obligations under the contract to the buyer. In this case, the assigning party may invoke the assignment clause to transfer its rights and obligations to the buyer.

Outsourcing: If a party to the SaaS contract outsources its services to a third-party provider, the outsourcing party may want to assign its rights and obligations under the contract to the third-party provider. In this case, the outsourcing party may invoke the assignment clause to transfer its rights and obligations to the third-party provider.

Change in Control : If there is a change in control of one of the parties to the SaaS contract, the party may want to assign its rights and obligations under the contract to a new owner or controlling entity. In this case, the party may invoke the assignment clause to transfer its rights and obligations to the new owner or controlling entity.

It is important to note that the circumstances under which an assignment clause can be invoked may be restricted by the terms of the contract. For example, the clause may require the other party’s consent or approval before an assignment can take place. Additionally, the assigning party may be required to provide notice to the other party before assigning its rights and obligations under the contract.

In some cases, the clause may be restricted to specific types of assignments, such as assignments to affiliates or subsidiaries of the assigning party. The clause may also include representations and warranties by the assigning party that the assignee will be able to comply with the terms of the contract and that the assignee will be subject to the same obligations as the original party.

An assignment clause in a SaaS contract can be invoked when one party wants to transfer its rights and obligations under the contract to another party. The circumstances under which the clause can be invoked depend on the terms of the contract and the specific needs and requirements of the parties. It is important to carefully consider the scope of the assignment, notice and consent requirements, representations and warranties, termination rights , and other specific needs and requirements of the parties when drafting an assignment clause in a SaaS contract.

ABOUT THE AUTHOR

Scott is the founder and CEO of Contract Sent. He has a decade of experience in building and scaling software as a service companies, legal, operations and finance teams.

Contract Sent

A contract management system built for startups to manage, negotiate and report on their SaaS contracts.

Contract Sent is not a law firm, this post and subsequent pages on this website do not constitute or contain legal advice. To understand whether or not the ideas and guidance on the Contract Sent website is applicable to your business, you should consult with a licensed attorney. The use and accessing of any resources contained within the Contract Sent site do not create an attorney-client relationship between the user and Contract Sent.

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