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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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Understanding Contract Assignment (All You Need To Know)

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Wondering what is contract assignment and how it works?

You’re looking to assign your contract and need to better understand the assignment process.

Don’t go any further…

We’ve got what you need!

In this article, we will talk about everything there is to know about a contract assignment process.

We’ve divided this article into the following sections:

What is the assignment of contract

Assignment clause in a contract, types of assignment clauses in a commercial contract, is a contract assignment enforceable.

  • Who is involved in contract assignments

How does the assignment of a contract work

Type of contract that can be assigned, assignment vs delegation.

Let’s get started…

An assignment of contract is when a party to a contract hands off the contract terms and conditions to another party.

The assigning party is the “assignor” and the party receiving the contract is the “assignee”.

Once the assignor assigns the contract to the assignee, then the terms and conditions of the contract will apply to the assignee as well.

In some cases the assignor will be completely liberated from its obligations under the contract and in other cases the assignor will have varying degrees of responsibility or liability.

We will cover such details in this article.

When you are looking to assign a contract, the first thing that you should do is to look at your contract and see if you have an assignment clause.

In most commercial contracts, businesses will plan ahead and include an assignment clause.

In most instances, the assignment clause will state that the parties to the contract are not authorized to assign the contract to another unless it is approved by the other party.

The assignment clause will also state in some cases the liability applicable to the assignor.

The assignment clause may state that the assignor will remain obligated to the same extent as the assignee towards the other party to the original contract.

In such a scenario, the assignment of the contract will benefit the other party as it will now have the assignor and assignee responsible and liable towards it.

Before performing an assignment, it’s important to consult the assignment clause in the contract to ensure you respect its terms. 

There are different variations of an assignment clause in business contracts.

We’ll go over the three main contract assignment flavours.

The first type of assignment clause in a contract is when the assignment is entirely prohibited.

In this case, neither party may assign the contract without the prior consent of the other.

Another scenario is that the assignment is generally not authorized unless a party wishes to assign the contract to a subsidiary, an affiliate or an entity of its own corporate group.

If the assignor intends to assign the contract to another entity in its own group of entities the assignment will generally be authorized if the assignor owns more than fifty percent of the shares of the assignee or controls the management. 

A third scenario is when the assignment is generally authorized but subject to a prior notification of the other party.

In such clauses, the other party will still be required to give consent for the assignment but the consent must not be unreasonably withheld.

A contract assignment, to the extent the assignor has followed the terms and conditions of the contract, will be enforceable against the other party.

However, if the assignor does not follow the terms of the contract, the assignment will be unenforceable against the other original contracting party.

If the assignment is not done properly, the assignor, assignee and the other party to the original contract may all get entangled in unwanted legal risk.

To avoid creating legal risk for all parties involved, make sure that you ensure that the contract authorizes the assignment.

If the contract allows for the assignment, make sure the assignor gives the proper preliminary notifications to the other contracting party and receives any required consent or authorization before assigning the contract.

In the assignment agreement between the assignor and assignee, make sure the assignee understands the terms and conditions of the contract so it will perform its obligations as it was originally intended between the original contracting parties. 

It is also important for the assignor to ensure it understands the extent of liability or responsibility it will continue to have following the assignment should the contract require the assignor to remain responsible in some way.

If the assignor continues to have ongoing responsibilities after the assignment, the assignor must include terms and conditions in its own assignment agreement with the assignee to ensure the assignee adequately observes the contract terms to avoid triggering the responsibility of the assignor towards the other contracting party.

Provided the terms and conditions of the assignment are respected, the assignment of the contract will be enforceable.

And assignment will not be effective if it substantially changes the terms and conditions for the other contracting party.

For example, if you are a software company, you will not be able to assign the contract to a real estate company.

This goes without saying!

Who is involved in contract assignments 

There are typically at least three parties to an assignment.

You will have two original contracting parties and a third party.

Among the two original contracting parties, one party intends to assign the contract to the third party.

That party is the assignor.

The third-party agreeing to take over the contract from the assignor is referred to as the assignee.

Essentially, once the contract assignment is performed, the third party becomes a contracting party and the assignor becomes a third party.

So the assignor and assignee swap positions in relation to the other contracting party.

The assignment of a contract is fundamentally not complicated.

The process starts with one party to a contract notifies in writing of its intention to assign the contract to a third-party or assignee.

The other contracting party will either consent or not to the request.

If the consent is given, then the assignor enters into a commercial agreement with the assignee.

This agreement will typically cover the terms and conditions and the commercial considerations between the assignor and the assignee.

Every contract has a value and the assignor will probably require the assignee to pay for the right to take over the contract.

The agreement between the assignor and assignee will also clarify their obligations and responsibilities towards the other contracting party.

Once the assignor and assignee agree on the assignment terms and conditions between themselves, the assignor will prepare an assignment agreement that will be executed between the assignor, the assignee and the other contracting party. 

This assignment agreement will clarify the terms and conditions of the actual assignment and will formally result in the assignment of the contract as of that date.

In the business world, nearly all types of business contracts can be assigned.

The assignment clause will govern the assignment process from a legal point of view.

Although most types of contracts can be assigned, some types of contracts cannot be effectively assigned. 

If a business contract was signed with a person specifically for the skills and abilities of that individual, that individual may not assign the contract.

For example, you’ve asked your favorite band to sign at your wedding, the band could not assign that contract to another because you don’t care for the other signers to be at your wedding.

So a contract signed with an individual or entity based on the considerations and value brought by that specific person or entity cannot be assigned.

In some cases we talk about contract assignment and in other cases we talk about contract delegation.

What is the difference between a contract assignment and contract delegation?

The assignment of a contract is when you hand off the entire contract to another party.

The assignor will typically want to be discharged from its own obligations and the assignee inherits all the contract obligations towards the other party.

When we talk about contract delegation, this is a case when a party does not assign the entire contract but delegates part of its own responsibilities to another party.

A contract assignment is a process where a party to an existing contract transfers or gives up its contract rights and obligations for the benefit of another party.

Contract assignments are relatively frequent in cases where a company restructures and changes its corporate operations.

It can also happen between a company and its suppliers.

No matter the reason for the contract assignment, you’ll need to ensure that you follow the terms and conditions of your contract, particularly the assignment clause.

If you follow the assignment terms of the contract, your assignment will be enforceable against the other contracting party.

We hope that this article was useful to you.

Should you need any legal advice on contract assignment or contract law , we are here to support you.

In the meantime, best of luck!

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Contracts: assignment

Practical law uk practice note 7-381-7509  (approx. 44 pages), get full access to this document with practical law.

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About Practical Law

This document is from Thomson Reuters Practical Law, the legal know-how that goes beyond primary law and traditional legal research to give lawyers a better starting point. We provide standard documents, checklists, legal updates, how-to guides, and more.

  • Increase efficiency
  • Enhance productivity
  • Improve response time
  • General Contract and Boilerplate
  • Substantive Law
  • General contract and boilerplate
  • 1 Scope of this note
  • 2 What is an assignment?
  • 3 Effect of assignment
  • 4 When is assignment used?
  • 5 Types of assignment
  • 6 Assignment formalities
  • Personal contracts
  • Assignments prohibited by public policy
  • Construing non-assignment provisions
  • Requirements for consent
  • Circumventing restrictions on assignment
  • Legal restrictions on non-assignment provisions
  • "Conditional benefit" exception discredited for assigning contractual obligations
  • Creating a legal assignment
  • When are legal assignments used?
  • Who must consent?
  • Must a legal assignment be in writing?
  • Who must sign the assignment?
  • Is consideration required?
  • Notice of assignment
  • Notice must be in writing
  • Must the notice take any particular form?
  • Does the notice need to state the date of the assignment?
  • When should notice be given?
  • Who can give notice?
  • To whom can notice be given?
  • Can notice be given in advance of assignment?
  • Can the other contracting party demand sight of the assignment agreement?
  • Which methods of giving notice are valid?
  • Effect of non-assignment provision on a notice of assignment
  • What happens if notice of assignment is not given to the other contracting party?
  • Creating an equitable assignment
  • When are equitable assignments used?
  • Must an equitable assignment be in writing?
  • Is notice of assignment required?
  • Subject to equities
  • Recovery of loss by assignee
  • 14 Assignment of a third party right
  • Conditional fee agreements
  • Construction agreements
  • Consumer contracts
  • Security arrangements
  • General reading
  • Assignment of other choses in action
  • 17 Drafting assignment provisions
  • 18 Section 136 of the Law of Property Act 1925

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Assignment of contract

How it relates to the law in british columbia canada.

In British Columbia, an assignment of contract is a legal document that allows one party to transfer their rights and obligations under a contract to another party. This can be useful in situations where the original party is unable or unwilling to fulfill their obligations under the contract, or where they wish to transfer the benefits of the contract to another party. Under British Columbia law, an assignment of contract is generally valid and enforceable, provided that certain conditions are met. These conditions may include obtaining the consent of the other party to the contract, ensuring that the assignment does not violate any laws or regulations, and ensuring that the assignee is capable of fulfilling the obligations under the contract. In some cases, an assignment of contract may also be subject to specific legal requirements or restrictions, depending on the nature of the contract and the parties involved. For example, certain types of contracts may be subject to specific statutory requirements, such as the requirement for written consent or notice of assignment. Overall, an assignment of contract can be a useful tool for parties in British Columbia to transfer their rights and obligations under a contract, but it is important to ensure that all legal requirements are met in order to avoid any potential legal issues or disputes.

Impact on Business Owners in British Columbia

The impact of the assignment of contract on small businesses in British Columbia, Canada, is that it provides them with the ability to transfer their contractual rights and obligations to a third party. This can be useful for small businesses that are unable or unwilling to fulfill their obligations under a contract, or for those who wish to transfer the benefits of the contract to another party. However, small businesses must ensure that all legal requirements are met, such as obtaining the consent of the other party to the contract and ensuring that the assignee is capable of fulfilling the obligations under the contract, in order to avoid any potential legal issues or 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 associated with the assignment of contract. This refers to the transfer of rights and obligations under a contract from one party to another. One potential legal risk is that the assignment may be prohibited by the terms of the contract itself. It is important to carefully review the contract to ensure that there are no restrictions on assignment, or to obtain the consent of the other party to the assignment. Another potential legal challenge is that the assignment may not be valid if it is not properly executed. This could result in a breach of contract and potential legal action against the business. To avoid these issues, it is important to seek legal advice before entering into any contract that may be subject to assignment. This can help ensure that the contract is properly drafted and that any potential restrictions on assignment are identified and addressed. In addition, it is important to ensure that any assignment is properly executed and that all necessary steps are taken to transfer the rights and obligations under the contract to the new party. By being aware of these potential legal risks and challenges, small businesses in British Columbia can take steps to avoid or mitigate them and ensure that their contracts are properly assigned.

BC Business Practices and Consumer Protection Act (BPCPA)

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Canada: Anti-Assignment Provisions And Assignments By 'Operation Of Law': What Do I Have To Do? What Should I Do?

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Introduction

One of the key roles of legal due diligence in mergers and acquisitions (M&A) is to assist in the efficient and successful completion of any proposed M&A transaction. Due diligence is not merely a procedural formality but can serve as a proactive shield against unforeseen challenges and risks. One essential aspect of the legal due diligence process is reviewing third-party contracts to which the target entity is party, in order to better understand the scope of its commercial relationships and to anticipate any issues that may arise via the underlying contractual relationships as a result of completing the proposed M&A transaction.

A frequent reality in many M&A transactions is the requirement to obtain consents from third parties upon the "change of control" of the target entity and/or the transfer or assignment of a third-party contract to which the target is party. Notwithstanding the wording of such contracts, in many instances, the business team from the purchaser will often ask the question: "When is consent actually required?" While anti-assignment and change of control provisions are fairly ubiquitous in commercial contracts, the same cannot be said for when the requirement to obtain consent is actually triggered. The specifics of the proposed transaction's structure will often dictate the purchaser's next steps when deciding whether the sometimes-cumbersome process of obtaining consents with one or multiple third parties is actually needed.

This article examines what anti-assignment provisionsare and how to approach them, depending on the situation at hand, including in the context of transactions where a change of control event may be triggered. This article also discusses how to interpret whether consent is required when faced with an anti-assignment provision which states that an assignment, including an assignment by operation of law , requires consent from the non-assigning party.

Understanding Anti-Assignment Provisions

Generally, an anti-assignment provision prohibits the transfer or assignment of some or all of the assigning party's rights and obligations under the contract in question to another person without the non-assigning party's prior written consent. By way of example, a standard anti-assignment provision in a contract may read as follows:

Company ABC shall not assign or transfer this agreement, in whole or in part, without the prior written consent of Company XYZ.

In this case, Company ABC requires Company XYZ's prior written consent to assign the contract. Seems simple enough. However, not all anti-assignment provisions are cut from the same cloth. For example, some anti-assignment provisions expand on the prohibition against general contractual assignment by including a prohibition against assignment by operation of law or otherwise . As is discussed in greater detail below, the nuanced meaning of this phrase can capture transactions that typically would not trigger a general anti-assignment provision and can also trigger the requirement to get consent from the non-assigning party for practical business reasons.

To explore this further, it is helpful to consider anti-assignment provisions in the two main structures of M&A transactions: (i) asset purchases and (ii) share purchases.

Context of M&A Transactions: Asset Purchases and Share Purchases

There are key differences between what triggers an anti-assignment provision in an asset purchase transaction versus a share purchase transaction.

i) Asset Purchases

An anti-assignment provision in a contract that forms part of the "purchased assets" in an asset deal will normally be triggered in an asset purchase transaction pursuant to which the purchaser acquires some or all of the assets of the target entity, including some or all of its contracts. Because the target entity is no longer the contracting party once the transaction ultimately closes (since it is assigning its rights and obligations under the contract to the purchaser), consent from the non-assigning party will be required to avoid any potential liability, recourse or termination of said contract as a result of the completion of the transaction.

ii) Share Purchases

Provisions which prohibit the assignment or transfer of a contract without the prior approval of the non-assigning party will not normally, under Canadian law, be captured in a share purchase transaction pursuant to which the purchaser acquires a portion or all of the shares of the target entity. In other words, no new entity is becoming party to that same contract. General anti-assignment provisions are not typically triggered by a share purchase because the contracts are not assigned or transferred to another entity and instead there is usually a "change of control" of the target entity. In such cases, the target entity remains the contracting party under the contract and the consent analysis will be premised on whether the contract requires consent of the third party for a "direct" or "indirect" change of control of the target entity and not the assignment of the contract.

Importantly, some anti-assignment provisions include prohibitions against change of control without prior written consent. For example, the provision might state the following:

Company ABC shall not assign or transfer this agreement, in whole or in part, without the prior written approval of Company XYZ. For the purposes of this agreement, any change of control of Company ABC resulting from an amalgamation, corporate reorganization, arrangement, business sale or asset shall be deemed an assignment or transfer.

In that case, a change of control as a result of a share purchase will be deemed an assignment or transfer, and prior written consent will be required.

A step in many share purchase transactions where the target is a Canadian corporation that often occurs on or soon after closing is the amalgamation of the purchasing entity and the target entity. So, what about anti-assignment provisions containing by operation of law language – do amalgamations trigger an assignment by operation of law? The short answer: It depends on the jurisdiction in which the anti-assignment provision is being scrutinized (typically, the governing law of the contract in question).

Assignments by Operation of Law

In Canada, the assignment of a contract as part of an asset sale, or the change of control of a party to a contract pursuant to a share sale – situations not normally effected via legal statute or court-ordered proceeding in M&A transactions – will not in and of itself effect an assignment of that contract by operation of law . 1

Still, one must consider the implications of amalgamations, especially in the context of a proposed transaction when interpreting whether consent is required when an anti-assignment provision contains by operation of law language. Under Canadian law, where nuances often blur the lines within the jurisprudence, an amalgamation will not normally effect the assignment of a contract by operation of law . The same does not necessarily hold true for a Canadian amalgamation scrutinized under U.S. legal doctrines or interpreted by U.S. courts. 2

Difference Between Mergers and Amalgamations

As noted above, after the closing of a share purchase transaction, the purchasing entity will often amalgamate with the target entity ( click here to read more about amalgamations generally). When two companies "merge" in the U.S., we understand that one corporation survives the merger and one ceases to exist which is why, under U.S. law, a merger can result in an assignment by operation of law . While the "merger" concept is commonly used in the U.S., Canadian corporations combine through a process called "amalgamation," a situation where two corporations amalgamate and combine with neither corporation ceasing to exist. For all of our Canadian lawyer readers, you will remember the Supreme Court of Canada's description of an amalgamation as "a river formed by the confluence of two streams, or the creation of a single rope through the intertwining of strands." 3 Generally, each entity survives and shares the pre-existing rights and liabilities of the other, including contractual relationships, as one corporation. 4

MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V.

As a practical note and for the reasons below, particularly in cross-border M&A transactions, it would be wise to consider seeking consent where a contract prohibits assignment by operation of law without the prior consent of the other contracting party when your proposed transaction contemplates an amalgamation.

In MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V. (a Superior Court of Delaware decision), the court interpreted a Canadian (British Columbia) amalgamation as an assignment by operation of law , irrespective of the fact that the amalgamation was effected via Canadian governing legislation. In essence, the Delaware court applied U.S. merger jurisprudence to a contract involving a Canadian amalgamation because the contract in question was governed by Delaware law. This is despite the fact that, generally, an amalgamation effected under Canadian common law jurisdictions would not constitute an assignment by operation of law if considered by a Canadian court. As previously mentioned, under Canadian law, unlike in Delaware, neither of the amalgamating entities cease to exist and, technically, there is no "surviving" entity as there would be with a U.S.-style merger. That being said, we bring this to your attention to show that it is possible that a U.S. court (if the applicable third-party contract is governed by U.S. law or other foreign laws) or other U.S. counterparties could interpret a Canadian amalgamation to effect an assignment by operation of law . In this case, as prior consent was not obtained as required by the anti-assignment provision of the contract in question, the Delaware court held that the parties to that agreement were bound by the anti-assignment provision's express prohibition against all assignments without the other side's consent. 5

To avoid the same circumstances that resulted from the decision in MTA Canada Royalty Corp. , seeking consent where an anti-assignment provision includes a prohibition against assignment by operation of law without prior consent can be a practical and strategic option when considering transactions involving amalgamations. It is generally further recommended to do so in order to avoid any confusion for all contracting parties post-closing.

Practical Considerations

The consequences of violating anti-assignment provisions can vary. In some cases, the party attempting to complete the assignment is simply required to continue its obligations under the contract but, in others, assignment without prior consent constitutes default under the contract resulting in significant liability for the defaulting party, including potential termination of the contract. This is especially noteworthy for contracts with third parties that are essential to the target entity's revenue and general business functions, as the purchaser would run the risk of losing key contractual relationships that contributed to the success of the target business. As such, identifying assignment provisions and considering whether they are triggered by a change of control and require consent is an important element when reviewing the contracts of a target entity and completing legal due diligence as part of an M&A transaction.

There can be a strategic and/or legal imperative to seek consent in many situations when confronted with contractual clauses that prohibit an assignment, either by operation of law or through other means, absent the explicit approval of the non-assigning party. However, the structure of the proposed transaction will often dictate whether consent is even required in the first place. Without considering this nuanced area of M&A transactions, purchasers not only potentially expose themselves to liability but also risk losing key contractual relationships that significantly drive the value of the transaction.

1. An assignment by operation of law can be interpreted as an involuntary assignment required by legal statute or certain court-ordered proceedings. For instance, an assignment of a contract by operation of law may occur in, among other situations: (i) testamentary dispositions; (ii) court-ordered asset transfers in bankruptcy proceedings; or (iii) court-ordered asset transfers in divorce proceedings.

2. MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V ., C. A. No. N19C-11-228 AML, 2020 WL 5554161 (Del. Super. Sept. 16, 2020) [ MTA Canada Royalty Corp. ].

3. R. v. Black & Decker Manufacturing Co. , [1975] 1 S.C.R. 411.

4. Certain Canadian jurisdictions, such as the Business Corporations Act (British Columbia), explicitly state that an amalgamation does not constitute an assignment by operation of law (subsection 282(2)).

5. MTA Canada Royalty Corp .

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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  • MLA 8TH EDITION
  • Baudouin, Jean-louis. "Contract Law in Canada". The Canadian Encyclopedia , 30 October 2020, Historica Canada . www.thecanadianencyclopedia.ca/en/article/contract-law. Accessed 31 March 2024.
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Contract Law in Canada

Article by Jean-louis Baudouin

Updated by Andrew McIntosh

Published Online February 6, 2012

Last Edited October 30, 2020

A contract is a legally binding agreement between two or more persons for a particular purpose. It is an instrument for the economic exchange of goods and services. In Canada, contract law is administered both in common law and, in Quebec, civil law .

Economic Exchange

In general, contracts are always formed on the same pattern. A person offers to give another person something (for example: to deliver an item in return for a certain price); to provide a service (to work for a certain salary); or to refrain from doing something (not to compete for a period of time in return for compensation). If the offer is accepted, the contract is then valid in principle. A contract is, above all, an instrument for the economic exchange of goods and services.

Types of Contracts

The four most common types of contracts are:

  • the contract of sale, whereby a person acquires the ownership of property in return for payment;
  • the lease and hire of services, whereby a person offers his services to another in return for payment;
  • the lease and hire of things, whereby a person is temporarily granted the use of property (e.g., an apartment) in return for a price (rent);
  • and the mandate, whereby a person gives another the power to represent her.

Contracts Under Civil and Common Law

Unlike other agreements, a contract is a legally binding promise. If one of the parties fails or refuses to fulfil its promise without a valid reason recognized by law, the party suffering the consequence of this breach of promise may call upon the courts either to force the defaulting party to carry out its promise (specific performance) or to demand compensation in the form of damages.

Quebec civil law  and Canadian  common law  generally follow similar rules in this regard: a contract legally entered into represents a legal bond between the parties. Parties are free to contract whenever and for whatever reason they wish. The only limits to absolute contractual freedom are certain restrictions imposed by legislation and by accepted ethics . Contracts contrary to a statutory law such as the Canadian  Criminal Code  are null and void. (Examples of this might include a work contract for a professional killer, or for a sex trade worker ). The same is true for a contract that goes against accepted ethics; or in civil law, public order.

Civil Code  regulations governing contracts in Quebec (articles 1377, 1456 of the  Québec Civil Code  – QCC) are derived mainly from French civil law. (French civil law is sourced from Roman law.) In other provinces, regulations governing contracts are based mostly on jurisprudence (previous court decisions) and on traditional British common law.

Many provinces, however, have adopted legislation codifying the rules of certain contracts. This is particularly true of sales and consumer contracts. Although Canada’s two major legal systems differ in certain respects for contract law, the practical solutions they provide are very similar when not identical.

For a contract to be valid and therefore legally binding, five conditions must be met. First, there must be the mutual consent of both parties. No one can be held to a promise involuntarily made. When consent is given by error, either under physical or moral duress, or as a result of fraudulent practices, the contract may be declared null and void at the request of the aggrieved party. In certain types of contractual relationship, the law demands that the consent of the party be both free and informed. This is the case, for instance, with contracts involving medical treatment.

The second is contractual capacity — the mental ability to keep the promise one has made. A young child, a person suffering from a serious mental disorder, and in some cases a minor are all considered incapable of contracting.

The third condition is that the contract should have an object or a purpose. It must concern a specific and agreed-upon good or service.

The fourth condition is “lawful cause” in  civil law ; or a “valuable consideration” in  common law . In this area, important technical differences exist between the two legal systems. Briefly, according to this fourth condition, the promise made must be serious and each obligation assumed by one of the parties must find a corresponding (but not necessarily equivalent or equal) promise made by the other party. A person may thus legally sell goods at a price that does not represent their actual market value. The contract would still be a valid one.

The fifth condition, which is not required in all cases, is the compliance in certain circumstances to formalities provided by law , such as a valid written instrument. In general, this condition holds for contracts that may have serious consequences for the parties; or those for which certain measures of publicity are required.

Parties to a valid contract are always bound by law to carry out their promise. Should they fail to, the other party is free to go to court to force them to comply. At times, the court may order the defaulting party to do exactly what he had promised (specified promise). In that respect, civil law provides more readily for the forced execution of promises than common law, for which specific performance appears to be still an exception to the rule. ( See also   Torts in Canada ;  Law of Delict in Québec .)

Courts may also award financial compensation in the form of damages equal in value to the loss suffered and profits lost as a result of the breach of contract; however, this loss and profit must be directly related to the non-fulfillment of promise (article 1611 QCC). Furthermore, courts award only damages equivalent to those benefits that the parties might reasonably have expected to receive at the time the agreement was made.

The rapid increase of class actions both in contractual and delictual fields has had a significant impact on the amount of damages awarded by courts; in certain cases, the amount can reach millions of dollars.

Consumer Protection and Good Faith

Increasingly, provincial and federal legislatures are acting to protect citizens against certain abusive commercial practices. Consumer protection law , in which rules and standards are imposed to suppress fraud , to avoid forced sales and to protect the consumer against dishonest practices, is an example of this type of action. The Quebec Civil Code  has provisions concerning performance in good faith (article 1375 QCC), as well as abusive, illegible or incomprehensible clauses (article 1379 QCC). These go a long way to promote fairness in contractual relationship.

In recent years, good faith has played an increasingly important role in  Quebec  case law. In other provinces, a recent judgement of the  Supreme Court of Canada  has also set a new requirement of good faith in contractual matters, but in limited circumstances.

See also Landlord and Tenant Law ; Employment Law ; Torts in Canada ; Restitution ; Insurance .

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  • legal system
  • Criminal Code

Further Reading

John McCamus, The Law of Contracts , 2nd ed. (2013).

  • Angela Swan, Jukab Admaski and Annie Y. Na, Canadian Contract Law , 4th (2018).

Recommended

contract assignment canada

Law of Evidence

Constitutional law, family law in canada, landlord and tenant law, employment law, torts in canada, restitution (legal).

Assignment of Contract

Jump to section, what is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

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 . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

contract assignment canada

Benjamin W.

contract assignment canada

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

  • Direct mailers
  • Place newspaper ads
  • Make posts in online forums
  • Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

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Shelia A. Huggins is a 20-year North Carolina licensed attorney, focusing primarily on business, contracts, arts and entertainment, social media, and internet law. She previously served on the Board of Visitors for the North Carolina Central University School of Business and the Board of Advisors for the Alamance Community College Small Business Center. Ms. Huggins has taught Business and Entertainment Law at North Carolina Central University’s law school and lectured on topics such as business formation, partnerships, independent contractor agreements, social media law, and employment law at workshops across the state. You can learn more about me here: www.sheliahugginslaw.com www.instagram.com/mslegalista www.youtube.com/mslegalista www.facebook.com/sheliahuugginslaw

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Steven Stark has more than 35 years of experience in business and commercial law representing start-ups as well as large and small companies spanning a wide variety of industries. Steven has provided winning strategies, valuable advice, and highly effective counsel on legal issues in the areas of Business Entity Formation and Organization, Drafting Key Business Contracts, Trademark and Copyright Registration, Independent Contractor Relationships, and Website Compliance, including Terms and Privacy Policies. Steven has also served as General Counsel for companies providing software development, financial services, digital marketing, and eCommerce platforms. Steven’s tactical business and client focused approach to drafting contracts, polices and corporate documents results in favorable outcomes at a fraction of the typical legal cost to his clients. Steven received his Juris Doctor degree at New York Law School and his Bachelor of Business Administration degree at Hofstra University.

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Bukhari N. on ContractsCounsel

Bukhari Nuriddin is the Owner of The Nuriddin Law Company, P.C., in Atlanta, Georgia and an “Of Counsel” attorney with The Baig Firm specializing in Transactional Law and Wills, Trusts and Estates. He is an attorney at law and general counsel with extensive experience providing creative, elegant and practical solutions to the legal and policy challenges faced by entrepreneurs, family offices, and municipalities. During his legal careers he has worked with entrepreneurs from a wide array of industries to help them establish and grow their businesses and effectuate their transactional goals. He has helped establish family offices with millions of dollars in assets under management structure their estate plans and philanthropic endeavors. He recently completed a large disparity study for the City of Birmingham, Alabama that was designed to determine whether minority and women-owned businesses have an equal opportunity to participate in city contracting opportunities. He is a trusted advisor with significant knowledge and technical experience for structuring and finalizing a wide variety of complex commercial transactions, estate planning matters and public policy initiatives. Raised in Providence, Rhode Island, Bukhari graduated from Classical High School and attended Morehouse College and Howard University School of Law. Bukhari has two children with his wife, Tiffany, and they live in the Vinings area of Smyrna.

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John has extensive leadership experience in various industries, including hospitality and event-based businesses, then co-founded a successful event bar company in 2016. As co-founder, John routinely negotiated agreements with venues, suppliers, and other external partners, swiftly reaching agreement while protecting the brand and strategic objectives of the company. He leverages his business experience to provide clients with strategic legal counsel and negotiates attractive terms.

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Patent attorney with master's in electrical engineering and biglaw experience.

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Benjamin Snipes (JD/MBA/LLM) has 20 years of experience advising clients and drafting contracts in business and commercial matters.

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Supreme Advocacy

Assigning Contracts without Consent

8 Dec 2020 | Blog , Fantasy Courts

contract assignment canada

Editor’s Note: This post was written as a preview of an upcoming Supreme Court of Canada decision for the  Fantasy Courts  website and newsletter.

This Week at the SCC

On Friday, December 11, 2020, the Supreme Court of Canada is releasing its decision in Resolute FP Canada v. Hydro-Québec . Both parties are familiar names at the SCC. In November, the Court released its decision in Hydro-Québec v. Matta , 2020 SCC 37, in which it sided with the power utility in a dispute over right of ways for transmission lines. Last December, the SCC released R. v. Resolute FP Canada Inc. , 2019 SCC 60, in which it found two pulp and paper companies on the hook to pay for environmental remedial work at a waste site in Northern Ontario. This time around the issue is whether a contract was properly assigned as various companies changed ownership over the years.

In November 2011, Hydro Québec sent Resolute an invoice for more than $3 million for electricity provided to its Gatineau mill. The invoice included three years of hydraulic charges that Hydro Québec had paid Quebec since 2008 pursuant to legislation. The initial power supply contract had been entered into in 1926 by Gatineau Power and Resolute’s predecessor, Canadian International Paper Company, for a term of 40 years, renewable for additional 10-year periods. In 1965, Gatineau Power continued to exist, but Hydro Québec acquired all of its shares by contract. The parties disagreed about the impact of the 1965 contract on the rights and obligations of the parties and whether the 1965 contract had assigned the 1926 contract. Resolute eventually paid the invoice under protest and filed an action in the Superior Court seeking reimbursement.

The Superior Court found that Gatineau Power and Resolute were still the parties to the 1926 contract and that Hydro Québec did not prove there had been an assignment. It concluded that the 1965 contract made Hydro Québec an agent of Gatineau Power and that it could not avail itself of a clause that permitted an increase to royalties. The Court of Appeal overturned the interpretation of the two contracts. It concluded that the royalties were taxes within the meaning of the 1926 contract and that the 1926 contract was assigned to Hydro-Québec by the 1965 contract. As a result, Hydro-Québec could claim reimbursement of the royalties from Resolute. The Court of Appeal, however, found that Hydro-Québec could not do so retroactively for invoices already paid.

This decision has been on reserve for over 320 days, but I wouldn’t read into that too much since we waited longer for Hydro-Québec v. Matta , 2020 SCC 37, which was a unanimous decision authored by Justice Côté. In Matta , Justice Côté faulted the Court of Appeal for interfering in the trial judge’s decision while failing “to precisely identify the palpable and overriding errors in respect of which it is intervening.” I could see the standard of review also causing issues in the present case. That being said, I’m leaning towards appeal dismissed, but it’s a tricky one as there are various ways the SCC could tweak the judgments below. For prediction purposes, if this one is allowed, but only in part, it will be scored as allowed.

Last Week at the SCC

On Nov. 20, the Supreme Court of Canada released its decision in Ontario (Attorney General) v. G , 2020 SCC 38 . This decision was a major victory for mental health advocates. A majority of the SCC dismissed Ontario’s appeal and agreed with the Court of Appeal’s ruling that part of Ontario’s sex-offender registry law discriminates against people with mental disabilities.

In Ontario, Christopher’s Law requires those who are either convicted or found not criminally responsible on account of mental disorder (NCRMD) of a sexual offence to have their personal information added to the province’s sex offender registry. In certain cases, those found guilty of sexual offences may have the opportunity to be removed or exempted from the registry or relieved of their reporting obligations. By contrast, no one found NCRMD of sexual offences can ever be removed from the registry or exempted from reporting, even if they have received an absolute discharge from a review board.

The majority of the SCC found that this inequality breached s. 15(1) of the Charter and was not justified under s. 1. Justice Karakatsanis wrote:

The law thus imposes a burden on people found NCRMD in a manner that violates the norm of substantive equality in two respects: the law itself invokes prejudicial and stereotypical views about persons with mental illnesses, feeding harmful stigma; and the law puts those found NCRMD in a worse position than those found guilty. Both effects perpetuate the historical and enduring disadvantage experienced by persons with mental illnesses.

The majority further agreed with the Court of Appeal’s remedy, which declared Christopher’s Law to be of no force or effect as it applies to those found NCRMD who were granted an absolute discharge, suspended the declaration of invalidity for 12 months, and exempted G from that suspension by relieving him of further compliance with the legislation and ordering that his information be deleted from the registry immediately.

Justice Rowe in concurring reasons disagreed with the proper approach to suspending a declaration of invalidity under s. 52(1) and would have reaffirmed the Court’s traditional approach in Schachter . Justices Côté and Brown agreed there was a s. 15 breach, but dissented in part with respect to the basis for the suspension of the declaration of invalidity. They would not have granted G an individual exemption.

Season News

This is likely the second last appeal of the season to predict. There are only two other appeals which we’ve been waiting for that were heard last year: Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District and C.M. Callow Inc. v. Tammy Zollinger, et al. At issue is good faith in contracts and the decisions are highly anticipated. I expect they will be released together or as a single decision and will mark the end of this season of Fantasy Courts. Good luck!

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Contract Assignment Agreement

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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 contract to that Assignee. For example, a nanny who as contracted with a family to watch their children but is no longer able to due to a move could assign their rights and responsibilities under the original service contract to a new childcare provider.

How to use this document

Prior to using this document, the original contract is consulted to be sure that an assignment is not prohibited and that any necessary permissions from the other Party to the original contract, known as the Obligor, have been obtained. Once this has been done, the document can be used. The Agreement contains important information such as the identities of all parties to the Agreement, the expiration date (if any) of the original contract, whether the original contract requires the Obligor's consent before assigning rights and, if so, the form of consent that the Assignor obtained and when, and which state's laws will govern the interpretation of the Agreement.

If the Agreement involves the transfer of land from one Party to another , the document will include information about where the property is located, as well as space for the document to be recorded in the county's official records, and a notary page customized for the land's location so that the document can be notarized.

Once the document has been completed, it is signed, dated, and copies are given to all concerned parties , including the Assignor, the Assignee, and the Obligor. If the Agreement concerns the transfer of land, the Agreement is then notarized and taken to be recorded so that there is an official record that the property was transferred.

Applicable law

The assignment of contracts that involve the provision of services is governed by common law in the " Second Restatement of Contracts " (the "Restatement"). The Restatement is a non-binding authority in all of U.S common law in the area of contracts and commercial transactions. Though the Restatement is non-binding, it is frequently cited by courts in explaining their reasoning in interpreting contractual disputes.

The assignment of contracts for sale of goods is governed by the Uniform Commercial Code (the "UCC") in § 2-209 Modification, Rescission and Waiver .

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

Other names for the document:

Assignment Agreement, Assignment of Contract Agreement, Contract Assignment, Assignment of Contract Contract, Contract Transfer Agreement

Country: United States

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Assignment agreement

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About this deed of assignment

Use this deed of assignment to transfer one or more contracts between two parties where the agreement of the other original party is not needed.

Commonly, this assignment agreement would be used to transfer customer service contracts between businesses when one business buys the other, but it can be as easily applied to other uses. This is a simple yet comprehensive agreement that ensures a quick “handover” of a contract.

Also included with the deed of assignment is a letter template to send to customers informing them of the change.

Why a deed of assignment rather than an assignment contract

Our assignment agreement has been drawn as a deed rather than a contract. At law, a contract requires consideration (something in return for the assignment). A deed does not require consideration, so it is a more flexible way of achieving the same end.

When to use this deed of assignment

Assignment is an easy way of transferring a contract because it only requires the agreement of the original party to the contract and party taking on the rights and responsibilities. However, assignment is not always possible (some contracts have non-assignment clauses requiring all parties to the contract to agree).

You should use a novation agreement rather than a deed of assignment if all parties to the contract need to agree to the change and sign the deed. If in doubt, we recommend that you novate using: Novation agreement: transfer of service contract .

Agreement features and contents

  • Suitable when either party is resident outside the Canada
  • Ensures a legal transfer as it is drawn as an agreement between all parties
  • Comprehensive provisions provide ideas for you to mould
  • Letter to customers included so that you can ensure a successful future relationship with your new clients
  • Suitable for all Provinces of Canada

The deed of assignment contains the following sections:

  • Details of the parties
  • The assignment
  • Existing claims: sets out how outstanding claims will be dealt with
  • Other usual legal provisions in plain English

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[Free Assignment Agreement Documents]

Canadian Assignment Agreement

This document is accurate and up to date! It was last reviewed by a lawyer in March 2024 .

This agreement is used when one party (the assignor) agrees to assign a contract, or the rights in a contract, or another income/object to a second party (the assignee). In exchange for the assignment, the assignee may give the assignor money or personal property, or forgive a debt or obligation.

Simply answer the questions below to personalize your Assignment Agreement

This legal document is also known as:

This form also known as: contract assignment agreement, transfer contract rights form, assignment of cntractural rights

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The sample documents below are provided for informational purposes only.

  • They are NOT up to date;
  • They have NOT been reviewed by a Lawyer;
  • They may NOT be legally valid or enforceable.

We strongly recommend obtaining an attorney reviewed Assignment Agreement directly from us .

Below are some random samples we have created with Documatica. Please note that these documents reflect a certain set of answers, and it is very likely that the document you require is different. Do not rely on the templates below - create your own customized Assignment Agreement with our webpage.

Assignment Agreement (Canadian) Sample 27MvmS1.pdf

For maximum legal protection, obtain a lawyer reviewed Assignment Agreement directly from us .

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Assignment Agreement Template

Use our assignment agreement to transfer contractual obligations.

Assignment Agreement Template

Updated February 1, 2024 Reviewed by Brooke Davis

An assignment agreement is a legal document that transfers rights, responsibilities, and benefits from one party (the “assignor”) to another (the “assignee”). You can use it to reassign debt, real estate, intellectual property, leases, insurance policies, and government contracts.

What Is an Assignment Agreement?

What to include in an assignment agreement, how to assign a contract, how to write an assignment agreement, assignment agreement sample.

trademark assignment agreement template

Partnership Interest

An assignment agreement effectively transfers the rights and obligations of a person or entity under an initial contract to another. The original party is the assignor, and the assignee takes on the contract’s duties and benefits.

It’s often a requirement to let the other party in the original deal know the contract is being transferred. It’s essential to create this form thoughtfully, as a poorly written assignment agreement may leave the assignor obligated to certain aspects of the deal.

The most common use of an assignment agreement occurs when the assignor no longer can or wants to continue with a contract. Instead of leaving the initial party or breaking the agreement, the assignor can transfer the contract to another individual or entity.

For example, imagine a small residential trash collection service plans to close its operations. Before it closes, the business brokers a deal to send its accounts to a curbside pickup company providing similar services. After notifying account holders, the latter company continues the service while receiving payment.

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.
  • Third-Party Approval: If the initial contract requires the approval of the obligor, note the date the approval was received.
  • Signatures:  Both parties must sign and date the printed assignment contract template once completed. If a notary is required, wait until you are in the presence of the official and present identification before signing. Failure to do so may result in having to redo the assignment contract.

Review the Contract Terms

Carefully review the terms of the existing contract. Some contracts may have specific provisions regarding assignment. Check for any restrictions or requirements related to assigning the contract.

Check for Anti-Assignment Clauses

Some contracts include anti-assignment clauses that prohibit or restrict the ability to assign the contract without the consent of the other party. If there’s such a clause, you may need the consent of the original parties to proceed.

Determine Assignability

Ensure that the contract is assignable. Some contracts, especially those involving personal services or unique skills, may not be assignable without the other party’s agreement.

Get Consent from the Other Party (if Required)

If the contract includes an anti-assignment clause or requires consent for assignment, seek written consent from the other party. This can often be done through a formal amendment to the contract.

Prepare an Assignment Agreement

Draft an assignment agreement that clearly outlines the transfer of rights and obligations from the assignor (the party assigning the contract) to the assignee (the party receiving the assignment). Include details such as the names of the parties, the effective date of the assignment, and the specific rights and obligations being transferred.

Include Original Contract Information

Attach a copy of the original contract or reference its key terms in the assignment agreement. This helps in clearly identifying the contract being assigned.

Execution of the Assignment Agreement

Both the assignor and assignee should sign the assignment agreement. Signatures should be notarized if required by the contract or local laws.

Notice to the Other Party

Provide notice of the assignment to the non-assigning party. This can be done formally through a letter or as specified in the contract.

File the Assignment

File the assignment agreement with the appropriate parties or entities as required. This may include filing with the original contracting party or relevant government authorities.

Communicate with Third Parties

Inform any relevant third parties, such as suppliers, customers, or service providers, about the assignment to ensure a smooth transition.

Keep Copies for Records

Keep copies of the assignment agreement, original contract, and any related communications for your records.

Here’s a list of steps on how to write an assignment agreement:

Step 1 – List the Assignor’s and Assignee’s Details

List all of the pertinent information regarding the parties involved in the transfer. This information includes their full names, addresses, phone numbers, and other relevant contact information.

This step clarifies who’s transferring the initial contract and who will take on its responsibilities.

Step 2 – Provide Original Contract Information

Describing and identifying the contract that is effectively being reassigned is essential. This step avoids any confusion after the transfer has been completed.

Step 3 – State the Consideration

Provide accurate information regarding the amount the assignee pays to assume the contract. This figure should include taxes and any relevant peripheral expenses. If the assignee will pay the consideration over a period, indicate the method and installments.

Step 4 – Provide Any Terms and Conditions

The terms and conditions of any agreement are crucial to a smooth transaction. You must cover issues such as dispute resolution, governing law, obligor approval, and any relevant clauses.

Step 5 – Obtain Signatures

Both parties must sign the agreement to ensure it is legally binding and that they have read and understood the contract. If a notary is required, wait to sign off in their presence.

Assignment Agreement Template

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China's March factory activity expands for first time in six months

China's manufacturing activity expanded for the first time in six months in March, an official factory survey showed on Sunday, offering relief to policymakers even as a crisis in the property sector remains a drag on the economy and confidence.

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Federal government signs agreement with Germany to sell Canadian hydrogen

Trade deal comes despite lack of approval for world energy gh2's proposed wind-to-hydrogen project.

contract assignment canada

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A close-up shot of the blades of a wind turbine.

Canada and Germany have signed a memorandum of understanding to establish a trade program to sell hydrogen produced in Canada, including proposed projects in Newfoundland and Labrador, and Nova Scotia.

Federal Energy and Natural Resources Minister Jonathan Wilkinson said the agreement is "historic."

"It is a huge step forward and it is something that I think people in Newfoundland and Labrador can be enormously optimistic about in terms of the creation of jobs and prosperity," Wilkinson told CBC News on Sunday.

According to a press release from Natural Resources Canada, the memorandum, signed Monday, accelerates the hydrogen trade between Germany and Canada, with exports beginning as early as next year.

Canada has seen only two projects — Everwind and Bear Head Energy's respective Point Tupper plants in Nova Scotia — pass environmental assessment so far, although those projects still have to clear assessments for the wind farms that will power it. 

The next closest is the World Energy GH2's proposed wind-to-hydrogen project on the Port au Port Peninsula in Newfoundland, which is still awaiting approval under the province's environmental assessment process. 

That process will be respected, said Wilkinson, despite the memorandum. He said these types of deals need to be struck ahead of time so companies can safely invest in new industries, such as the hydrogen trade. 

"Of course, World Energy and other proponents in Newfoundland and Labrador will have to go through the environmental assessment process," Wilkinson said. "They will have to ensure that they address concerns around impacts on the environment and on community concerns. But certainly we are creating a frame where we believe that projects once they proceed through that, assuming they do, can actually be commercially viable."

A man in a suit and glasses.

Under the memorandum, Germany's H2Global Foundation will support commercial transactions between Canada's hydrogen producers and Germany's industrial manufacturing and energy distribution sectors. It is being signed by both Wilkinson and the German Vice-Chancellor Robert Habeck in Hamburg at the Canada-Germany Hydrogen and Ammonia Producer-Offtaker Conference.

Indigenous representatives are also said to be present for the signing, including former Miawpukek First Nation chief Mi'sel Joe and Qalipu First Nation Chief Jenny Brake. Joe, who recently retired as administrative chief in his community, is a strategic adviser for World Energy GH2.

Feds tout potential economic impact

The statement, from Energy and Natural Resources spokesperson Carolyn Svonkin, says Atlantic Canada's hydrogen proponents are internationally competitive and "well positioned to move forward on export opportunities."

"They will use Atlantic Canada's abundant and untapped wind resources and immediate proximity to Atlantic shipping routes to become reliable suppliers of new clean energy exports globally."

According to the statement the government of Newfoundland and Labrador estimates that the four projects selected to move forward in the Crown land bidding process will have an overall economic impact on gross domestic product of $206 billion, create $11.7 billion in provincial revenue to the province of $11.7 billion, and employ 11,694 full-time equivalents at peak construction.

Wilkinson said the work on the memorandum began in 2022, when German Chancellor Olaf Scholz and Prime Minister Justin Trudeau signed a hydrogen agreement in Stephenville. 

"We have been working very actively over the course of the past year and a half," Wilkinson said. "We have come to an understanding as to how we're going to structure a window that will match companies that actually want to purchase green hydrogen in Germany with people who are going to produce the hydrogen in Nova Scotia and Newfoundland and Labrador."

Two men wearing suits stand near a microphone in the rain. Canadian flags are in the background.

Wilkinson said the deal also holds important global implications beyond just trade, including fighting climate change and curbing Russia's economic advantages over European countries. 

"They can actually rely either on themselves or on their friends and allies to supply the kinds of fuels that they are going to need going forward, so they're not dependent on dictators like Vladimir Putin," Wilkinson said.

"This kind of approach is something that addresses climate.… It addresses energy security. It addresses economic prosperity for Newfoundland and Labrador. And yes, we are making sure that we are doing this in a thoughtful way that addresses transportation, not just production."

Wilkinson said work is underway to ensure there are ports and infrastructure in Canada and Germany to facilitate the transport of hydrogen products.

A series of booklets sits on a table.

Wilkinson reiterated that Monday's announcement does not guarantee that the World Energy project will move forward. 

"We're not quite there yet," he said. "There's still some work to do."

However, he is optimistic that the project will move forward. 

"I look forward to pushing this over the line and to being there when the ribbons are being cut."

Download our  free CBC News app  to sign up for push alerts for CBC Newfoundland and Labrador.  Click here to visit our landing page .

ABOUT THE AUTHOR

contract assignment canada

William Ping is a newsreader and journalist with CBC at its bureau in St. John's.

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Government of Canada invests in laboratories to support science in Canada

From: Public Services and Procurement Canada

News release

Through Laboratories Canada, the Government of Canada is providing federal scientists and researchers with world-class, innovative and collaborative facilities to ensure they can not only keep pace with, but lead in the transformative changes facing science today and into the future.

Investing in world-class research to protect Canada’s people, animals and plants

March 26, 2024 -  Ottawa, Ontario - Public Services and Procurement Canada

Through Laboratories Canada , the Government of Canada is providing federal scientists and researchers with world-class, innovative and collaborative facilities to ensure they can not only keep pace with, but lead in the transformative changes facing science today and into the future.

Today, the Honourable Jean-Yves Duclos, Minister of Public Services and Procurement announced 2 contracts, with a combined value of $63.2 million (including taxes), to construct new laboratory facilities for the Regulatory and Security Science Main (RSS Main) Project. This project will provide federal scientists across several departments and agencies with a leading-edge, multi-purpose, sustainable and collaborative facility to complement existing government science laboratories and capabilities.

The new RSS Main facility will focus on distinct areas of scientific research, including:

  • the protection of human, plant and animal health
  • food safety with a specialization in food chemistry
  • strengthened emergency preparedness
  • enhanced border security

The new facility will be located at the existing Canadian Food Inspection Agency’s Ottawa Laboratory (Fallowfield), and will relocate scientific operations from existing infrastructure in critical or poor condition to this state-of-the-art modern facility.

The detailed design phase is set to take place in 2024, with construction targeted to start in 2025.

The Laboratories Canada strategy aims to provide federal scientists with leading-edge, green, collaborative facilities to position Canada to be at the forefront of new discoveries and delivering on research priorities, while supporting Canadian jobs. As work proceeds, the construction management contract is expected to create a minimum of 250 jobs that will support the local and surrounding economy.

“Today’s announcement is one of many steps the Government of Canada is taking towards building state-of-the-art science and research facilities across the country. The RSS Main Project will provide cutting-edge resources for federal scientists to continue their important work to protect human health, food safety and animal health. Providing our scientists with modern, sustainable and collaborative facilities is essential to address critical challenges now and in the future.” The Honourable Jean-Yves Duclos Minister of Public Services and Procurement
“I'm thrilled about this significant investment that will support federal science initiatives right here in Nepean. This commitment brings not just economic opportunities but also improves the Government of Canada’s ability to do research on topics related to food safety, emergency preparedness, and enhanced border security, benefitting all Canadians.” Chandra Arya Member of Parliament for Nepean
“Federal scientists play a vitally important role in protecting the health of our plants and animals, which supports our thriving agriculture and agri-food industry and helps us reach new export markets. This investment will build a cutting-edge facility that promotes research and development will benefit the Canadian agriculture sector now, and into the future.” The Honourable Lawrence MacAulay Minister of Agriculture and Agri-Food
“As our government undertakes transformational changes to our healthcare system, we need to support federal scientists and researchers to address the challenges of our time. This new, modern facility will advance science priorities and promote collaboration on solutions to One Health issues that will enhance health outcomes for everyone in Canada.” The Honourable Mark Holland Minister of Health

Quick facts

Laboratories Canada is a long-term strategy that will deliver on the vision to strengthen federal science in Canada. Budget 2018 launched this strategy with an investment of $2.8 billion to support federal scientists to deliver the important work they do for Canada.

The Laboratories Canada strategy includes the development of 5 science hubs that will support science program synergies across the country and the RSS hub, which includes the RSS Main Project, is one of these key science hubs.

The total budget for the RSS Main Project is expected to be approximately $1.05 billion (including taxes).

The successful bidders have contractually committed to 10% of the total value of the contract to be completed by businesses owned or led by Indigenous peoples.

Both contracts were awarded following an open, fair and transparent procurement process.  

  • The first contract was awarded to Provencher Roy Associés Architectes Inc. , and Perkins&Will Canada Inc., in a joint venture, for architectural and engineering services for $56.9 million (including taxes).
  • The second contract for construction management advisory services was awarded to PCL Construction Canada Inc., valued at $6.3 million (including taxes), as a base contract, with an option that can be exercised for construction services.

Associated links

  • Laboratories Canada
  • Canada’s Long Term Vision and Plan for federal science infrastructure
  • Regulatory and Security Science

Olivier Pilon Press Secretary Office of the Honourable Jean-Yves Duclos 613-323-6621 [email protected]

Media Relations Public Services and Procurement Canada 819-420-5501 [email protected]

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    Last Week at the SCC. On Nov. 20, the Supreme Court of Canada released its decision in Ontario (Attorney General) v. G, 2020 SCC 38. This decision was a major victory for mental health advocates. A majority of the SCC dismissed Ontario's appeal and agreed with the Court of Appeal's ruling that part of Ontario's sex-offender registry law ...

  18. Contract Assignment Agreement

    Last revision 11/30/2023. Formats Word and PDF. Size 2 to 3 pages. 4.8 - 105 votes. Fill out the template. 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 ...

  19. Secondments and assignments

    The assignment or secondment agreement is the instrument of acceptance. It must clearly state that the employee returns to his/her substantive position on completion of the assignment/secondment. ... Interchange Canada is the mechanism through which persons employed in separate agencies and Crown corporations may be "seconded" to work in a ...

  20. Assignment agreement

    This template allows an assignment of contracts between two parties. It can be used to transfer a wide range of contracts, but is particularly suitable for assigning customer contracts to the buyer of a business. Also included with the agreement is a letter template to customers informing them of the assignment.

  21. Assignment Agreement (Canada)

    Canadian Assignment Agreement. This agreement is used when one party (the assignor) agrees to assign a contract, or the rights in a contract, or another income/object to a second party (the assignee). In exchange for the assignment, the assignee may give the assignor money or personal property, or forgive a debt or obligation. Simply answer the ...

  22. General Conditions of a Service Contract

    Any assignment made without that consent is void and will have no effect. The assignment will be effective upon execution of an assignment agreement signed by the Parties and the assignee. 40.2 Assignment of the Contract does not relieve the Contractor from any obligation under the Contract and it does not impose any liability upon Canada.

  23. Free Assignment Agreement Template

    Assignment Agreement Template. Use our assignment agreement to transfer contractual obligations. An assignment agreement is a legal document that transfers rights, responsibilities, and benefits from one party (the "assignor") to another (the "assignee"). You can use it to reassign debt, real estate, intellectual property, leases ...

  24. Government of Canada awards initial contract for Program Icebreakers to

    Today, the Honourable Jean-Yves Duclos, Minister of Public Services and Procurement, announced that the Government of Canada has awarded a first NSS contract to Chantier Davie Canada Inc. of Lévis, Quebec, for initial work related to the construction of new Program Icebreakers. Under this $19.6-million contract including taxes, Chantier Davie ...

  25. Productivity at Airbus plant in Canada slips as workers mull new

    The Airbus talks in Canada are being watched by IAM leaders in Washington state, where Boeing's , opens new tab production workers want wage increases exceeding 40% over three to four years, a ...

  26. Government of Canada and Germany Land Arrangement Securing Early Market

    The MOU commits Canada and Germany to finalizing the terms and conditions of the Bilateral Window no later than June 30, 2024. Subject to the final terms and conditions and other relevant approvals, the MOU commits Canada and Germany to launching aligned supply and demand auctions in the coming months, through which Hydrogen Purchase Agreements will be secured.

  27. UK-Canada Trade Barriers to Increase Amid Failure to Reach Deal

    Provisions allowing the UK to sell products containing European Union parts to Canada tariff-free will expire on Monday, after the two countries failed to reach an agreement on extensions.

  28. Federal government signs agreement with Germany to sell Canadian

    Canada and Germany have come to an agreement on the sale of Atlantic Canadian hydrogen exports. However, World Energy GH2's proposed hydrogen-ammonia project in Newfoundland and Labrador is still ...

  29. Visa, Mastercard Reach $30 Billion Deal With US Retailers

    Visa Inc. and Mastercard Inc. agreed to cap credit-card swipe fees — a deal that US merchants say will save them at least $30 billion over five years — in one of the most significant antitrust ...

  30. Government of Canada invests in laboratories to support science in

    The second contract for construction management advisory services was awarded to PCL Construction Canada Inc., valued at $6.3 million (including taxes), as a base contract, with an option that can be exercised for construction services. Associated links. Laboratories Canada; Canada's Long Term Vision and Plan for federal science infrastructure