consent to the assignment

Consent to Assignment: Everything You Need to Know

Consent to assignment refers to allowing a party of a contract (the assignor) to assign a contract and move the obligations to another party (the assignee). 3 min read updated on February 01, 2023

Consent to assignment refers to allowing a party of a contract to assign a contract and move the obligations to another party. The party of the existing contract, known as the assignor, will pass on the contract to another party, known as the assignee. The goal is for the assignee to take over the rights and obligations of the contract. For a contract to be assigned, the other party must be aware of what is happening.

Contract Assignments

The assignment of a contract differs depending on the type of contract and the language in the original agreement. Some contracts contain a clause that doesn't allow assignment at all, while other contracts have clauses that require the other party to consent before assignment can be finalized.

Consider the following scenario. A business owner contracts with a computer company to have a processor delivered every time a new model is released. The computer company assigns the business owner's contract to another provider. As long as the business owner is aware of the changes and still receives the processors as scheduled, his contract is now with the new computer company.

However, assigning a contract doesn't always exempt the assignor from their duties and responsibilities. Some contracts include a clause that states that even if the agreement is assigned to another party, the original parties guarantee that the terms of the contract will be fulfilled.

Unenforceable Assignments

There are a number of situations where a contract assignment won't be enforced , including:

The contract has an anti-assignment clause that can stop or invalidate any assignments.
The assignment changes the nature of the contract. An assignment that changes what is expected or impacts the performance of the contract isn't allowed. This also applies if the assignment lowers the value one party will receive or adds risk to the deal that the other party didn't originally agree to.
The assignment is against the law. In some cases, laws or public policies don't allow assignment. Many states forbid employees to assign future wages. The federal government doesn't allow the assignment of particular claims against the government. Some assignments violate public policy. For example, a personal injury claim cannot be assigned because it could lead to litigation against a party who was not responsible for the injury.

Delegation vs. Assignment

It is common for a party to sign a contract and have someone else actually fulfill his duties and do the work required by the contract. However, some contracts can't be delegated, such as when a party agrees to service done by a particular person or company. If a company contracted with Oprah Winfrey to be a keynote speaker, Oprah wouldn't be permitted to delegate her performance duties to anyone else.

If both parties agree that the work can't be delegated, they should include specific language in the original contract. This can be as simple as a clause that states, “Neither party shall delegate or assign its rights.” Both parties should agree to this clause.

How to Assign a Contract

Assigning a contract is a three-step process. First, check to see if the contract has an anti-assignment clause or if there are limitations around assignments. Sometimes clauses are straightforward with language like, “This agreement may not be assigned,” and while other times, the language is less obvious and hidden in another clause. If there is language in the contract that states it can't be assigned, the other party must consent to an assignment before you can proceed.

Second, the parties must execute an assignment . Create an agreement that transfers the rights and obligations of one party to the assignee.

Third, notify the other party of the contract. Once the contract rights have been assigned to the new party, you should notify the other party of the original contract. Providing written notice removes you from being responsible for any part of the contract unless there is language in the contract that says differently or the assignment is illegal.

Anti-Assignment Clause

As you are negotiating and writing a contract, consider whether you want the contract to be able to be assigned. If you don't want assignment to be a legally viable option, that needs to be clearly stated in the contract.

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Assignment Law
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Assignment Contract Law
Assignment of Rights and Obligations Under a Contract
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Assignability Of Contracts
Assignment of Rights Example
Assignment Legal Definition
What Is the Definition of Assigns
Assignment Of Contracts

Understanding the Consent of Assignment: A Comprehensive Guide

In the realm of contracts and legal agreements, the consent of assignment plays a pivotal role in ensuring that rights and obligations are correctly transferred from one party to another. This process requires the original parties' agreement and, in many cases, an explicit consent form. This article delves into the intricacies of consent of assignment, its legal implications, and best practices for obtaining and drafting consent. We'll reference authoritative resources from .gov, .edu, and Wikipedia to enhance the article's credibility and provide readers with avenues for further exploration.

What is Consent of Assignment?

Consent of assignment refers to the formal approval by all original parties in a contract to transfer one party's rights and obligations to a third party. This is a common practice in various sectors, including real estate, finance, and business contracts, to ensure that the contractual relationships continue seamlessly despite the change in parties. The U.S. Small Business Administration offers insights into how this affects small businesses, while legal definitions can be found on Wikipedia.

Legal Framework and Importance

The legal framework governing consent of assignment varies by jurisdiction but generally requires that all parties to the original contract agree to the transfer. This consent ensures that the assignee can legally assume the rights and responsibilities outlined in the contract. Failure to obtain proper consent may result in the assignment being deemed invalid, leaving the assignor liable for any breaches or failures. Educational resources such as those provided by Harvard Law School can offer deeper insights into the legal underpinnings.

When is Consent of Assignment Required?

Consent of assignment is necessary when:

A contract explicitly states that assignments are not allowed without consent.

The assignment would significantly change the obligations or expectations of the non-assigning party.

State or federal laws regulate the transfer of certain rights or obligations, such as in leases or intellectual property agreements.

Obtaining Consent: Best Practices

Obtaining consent for an assignment involves several best practices:

Review the Original Contract : Identify any clauses related to assignment and understand the conditions under which consent must be obtained.

Draft a Clear Consent Form : The consent form should detail the assignment's specifics, including who the new party is and how the contract's terms will remain unaffected.

Communicate Effectively : Engage with the non-assigning parties early in the process to explain the reasons for the assignment and address any concerns.

Legal Review : Have legal professionals review the consent form to ensure it complies with relevant laws and the original contract's terms.

Drafting a Consent of Assignment Form

A well-drafted consent of assignment form should include:

The names and contact information of all parties involved.

A reference to the original contract, including the date it was signed and any identifying numbers.

A clear statement of consent from all original parties.

Detailed information about the assignee and the rights and obligations being transferred.

Any conditions related to the consent or the assignment.

Signatures from all parties, indicating their agreement.

Educational resources on contract drafting, such as those found on Cornell Law School's Legal Information Institute, can provide templates and further guidance.

Consequences of Failing to Obtain Consent

Failing to obtain the necessary consent can have significant legal and financial consequences, including:

The assignment being declared void or unenforceable.

The original assignor being held liable for any breaches by the assignee.

Legal action taken by the non-assigning party against the assignor and possibly the assignee.

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Consent of assignment is a critical component in the transfer of contractual rights and obligations. By understanding the legal requirements, obtaining clear consent, and drafting thorough consent forms, parties can ensure that assignments are carried out smoothly and legally. For further information, consulting with legal professionals and exploring authoritative resources like those mentioned throughout this article is advisable.

This comprehensive guide aims to provide readers with a thorough understanding of the consent of assignment process, highlighting the importance of clear communication, legal precision, and adherence to procedural requirements to ensure a seamless and legally sound transfer of contractual obligations.

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assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

Founded in 1939, our law firm combines the ability to represent clients in domestic or international matters with the personal interaction with clients that is traditional to a long established law firm.

Assignment provisions in contracts

Author’s note, Nov. 22, 2014: For a much-improved update of this page, see the Common Draft general provisions article .

(For more real-world stories like the ones below, see my PDF e-book, Signing a Business Contract? A Quick Checklist for Greater Peace of Mind , a compendium of tips and true stories to help you steer clear of various possible minefields. Learn more …. )

Table of Contents

Legal background: Contracts generally are freely assignable

When a party to a contract “ assigns ” the contract to someone else, it means that party, known as the assignor , has transferred its rights under the contract to someone else, known as the assignee , and also has delegated its obligations to the assignee.

Under U.S. law, most contract rights are freely assignable , and most contract duties are freely delegable, absent some special character of the duty, unless the agreement says otherwise. In some situations, however, the parties will not want their opposite numbers to be able to assign the agreement freely; contracts often include language to this effect.

Intellectual-property licenses are an exception to the general rule of assignability. Under U.S. law, an IP licensee may not assign its license rights, nor delegate its license obligations, without the licensor’s consent, even when the license agreement is silent. See, for example, In re XMH Corp. , 647 F.3d 690 (7th Cir. 2011) (Posner, J; trademark licenses); Cincom Sys., Inc. v. Novelis Corp. , 581 F.3d 431 (6th Cir. 2009) (copyright licenses); Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp. , 284 F.3d 1323 (Fed. Cir. 2002) (patent licenses). For additional information, see this article by John Paul, Brian Kacedon, and Douglas W. Meier of the Finnegan Henderson firm.

Assignment consent requirements

Model language

[Party name] may not assign this Agreement to any other person without the express prior written consent of the other party or its successor in interest, as applicable, except as expressly provided otherwise in this Agreement. A putative assignment made without such required consent will have no effect.

Optional: Nor may [Party name] assign any right or interest arising out of this Agreement, in whole or in part, without such consent.

Alternative: For the avoidance of doubt, consent is not required for an assignment (absolute, collateral, or other) or pledge of, nor for any grant of a security interest in, a right to payment under this Agreement.

Optional: An assignment of this Agreement by operation of law, as a result of a merger, consolidation, amalgamation, or other transaction or series of transactions, requires consent to the same extent as would an assignment to the same assignee outside of such a transaction or series of transactions.

• An assignment-consent requirement like this can give the non-assigning party a chokehold on a future merger or corporate reorganization by the assigning party — see the case illustrations below.

• A party being asked to agree to an assignment-consent requirement should consider trying to negotiate one of the carve-out provisions below, for example, when the assignment is connection with a sale of substantially all the assets of the assignor’s business {Link} .

Case illustrations

The dubai port deal (ny times story and story ).

In 2006, a Dubai company that operated several U.S. ports agreed to sell those operations. (The agreement came about because of publicity and political pressure about the alleged national-security implications of having Middle-Eastern companies in charge of U.S. port operations.)

A complication arose in the case of the Port of Newark: The Dubai company’s lease agreement gave the Port Authority of New York and New Jersey the right to consent to any assignment of the agreement — and that agency initially demanded $84 million for its consent.

After harsh criticism from political leaders, the Port Authority backed down a bit: it gave consent in return for “only” a $10 million consent fee, plus $40 million investment commitment by the buyer.

Cincom Sys., Inc. v. Novelis Corp., No. 07-4142 (6th Cir. Sept. 25, 2009) (affirming summary judgment)

A customer of a software vendor did an internal reorganization. As a result, the vendor’s software ended up being used by a sister company of the original customer. The vendor demanded that the sister company buy a new license. The sister company refused.

The vendor sued, successfully, for copyright infringement, and received the price of a new license, more than $450,000 as its damages. The case is discussed in more detail in this blog posting.

The vendor’s behavior strikes me as extremely shortsighted, for a couple of reasons: First, I wouldn’t bet much on the likelihood the customer would ever buy anything again from that vendor. Second, I would bet that the word got around about what the vendor did, and that this didn’t do the vendor’s reputation any good.

Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, No. 5589-VCP (Del. Ch. Apr. 8, 2011) (denying motion to dismiss).

The Delaware Chancery Court refused to rule out the possibility that a reverse triangular merger could act as an assignment of a contract, which under the contract terms would have required consent. See also the discussion of this opinion by Katherine Jones of the Sheppard Mullin law firm.

Assignment with transfer of business assets

Consent is not required for an assignment of this Agreement in connection with a sale or other disposition of substantially all the assets of the assigning party’s business.

Optional: Alternatively, the sale or other disposition may be of substantially all the assets of the assigning party’s business to which this Agreement specifically relates.

Optional: The assignee must not be a competitor of the non-assigning party.

• A prospective assigning party might argue that it needed to keep control of its own strategic destiny, for example by preserving its freedom to sell off a product line or division (or even the whole company) in an asset sale.

• A non-assigning party might argue that it could not permit the assignment of the agreement to one of its competitors, and that the only way to ensure this was to retain a veto over any assignment.

• Another approach might be to give the non-assigning party, instead of a veto over asset-disposition assignments, the right to terminate the contract for convenience . (Of course, the implications of termination would have to be carefully thought through.)

Assignment to affiliate

[Either party] may assign this Agreement without consent to its affiliate.

Optional: The assigning party must unconditionally guarantee the assignee’s performance.

Optional: The affiliate must not be a competitor of the non-assigning party.

Optional: The affiliate must be a majority-ownership affiliate of the assigning party.

• A prospective assigning party might argue for the right to assign to an affiliate to preserve its freedom to move assets around within its “corporate family” without having to seek approval.

• The other party might reasonably object that there is no way to know in advance whether an affiliate-assignee would be in a position to fulfill the assigning party’s obligations under the contract, nor whether it would have reachable assets in case of a breach.

Editorial comment: Before approving a blanket affiliate-assignment authorization, a party should consider whether it knew enough about the other party’s existing- or future affiliates to be comfortable with where the agreement might end up.

Consent may not be unreasonably withheld or delayed

Consent to an assignment of this Agreement requiring it may not be unreasonably withheld or delayed.

Optional: For the avoidance of doubt, any damages suffered by a party seeking a required consent to assignment of this Agreement, resulting from an unreasonable withholding or delay of such consent, are to be treated as direct damages.

• Even if this provision were absent, applicable law might impose a reasonableness requirement; see the discussion of the Shoney case in the commentary to the Consent at discretion provision.

• A reasonableness requirement might not be of much practical value, whether contractual or implied by law. Such a requirement could not guarantee that the non-assigning party would give its consent when the assigning party wants it. And by the time a court could resolve the matter, the assigning party’s deal could have been blown.

• Still, an unreasonable-withholding provision should make the non-assigning party think twice about dragging its feet too much, becuase of the prospect of being held liable for damages for a busted transaction. Cf. Pennzoil vs. Texaco and its $10.5 billion damage award for tortious interference with an M&A deal.

• Including an unreasonable-delay provision might conflict with the Materiality of assignment breach provision, for reasons discussed there in the summary of the Hess Energy case.

Consent at discretion

A party having the right to grant or withhold consent to an assignment of this Agreement may do so in its sole and unfettered discretion.

• If a party might want the absolute right to withhold consent to an assignment in its sole discretion, it would be a good idea to try to include that in the contract language. Otherwise, there’s a risk that court might impose a commercial-reasonableness test under applicable law (see the next bullet). On the other hand, asking for such language but not getting it could be fatal to the party’s case that it was implicitly entitled to withhold consent in its discretion.

• If a commercial- or residential lease agreement requires the landlord’s consent before the tentant can assign the lease, state law might impose a reasonableness requirement. I haven’t researched this, but ran across an unpublished California opinion and an old law review article, each collecting cases. See Nevada Atlantic Corp. v. Wrec Lido Venture, LLC, No. G039825 (Cal. App. Dec. 8, 2008) (unpublished; reversing judgment that sole-discretion withholding of consent was unreasonable); Paul J. Weddle, Pacific First Bank v. New Morgan Park Corporation: Reasonable Withholding of Consent to Commercial Lease Assignments , 31 Willamette L. Rev. 713 (1995) (first page available for free at HeinOnline ).

Shoney’s LLC v. MAC East, LLC, No. 1071465 (Ala. Jul. 31, 2009)

In 2009, the Alabama Supreme Court rejected a claim that Shoney’s restaurant chain breached a contract when it demanded a $70,000 to $90,000 payment as the price of its consent to a proposed sublease. The supreme court noted that the contract specifically gave Shoney’s the right, in its sole discretion , to consent to any proposed assignment or sublease.

Significantly, prior case law from Alabama was to the effect that a refusal to consent would indeed be judged by a commercial-reasonableness standard. But, the supreme court said, “[w]here the parties to a contract use language that is inconsistent with a commercial-reasonableness standard, the terms of such contract will not be altered by an implied covenant of good faith. Therefore, an unqualified express standard such as ‘sole discretion’ is also to be construed as written.” Shoney’s LLC v. MAC East, LLC , No. 1071465 (Ala. Jul. 31, 2009) (on certification by Eleventh Circuit), cited by MAC East, LLC v. Shoney’s [LLC] , No. 07-11534 (11th Cir. Aug. 11, 2009), reversing No. 2:05-cv-1038-MEF (WO) (M.D. Ala. Jan. 8, 2007) (granting partial summary judgment that Shoney’s had breached the contract).

Termination by non-assigning party

A non-assigning party may terminate this Agreement, in its business discretion , by giving notice to that effect no later than 60 days after receiving notice, from either the assigning party or the assignee, that an assignment of the Agreement has become effective.

Consider an agreement in which a vendor is to provide ongoing services to a customer. A powerful customer might demand the right to consent to the vendor’s assignment of the agreement, even in strategic transactions. The vendor, on the other hand, might refuse to give any customer that kind of control of its strategic options.

A workable compromise might be to allow the customer to terminate the agreement during a stated window of time after the assignment if it is not happy with the new vendor.

Assignment – other provisions

Optional: Delegation: For the avoidance of doubt, an assignment of this Agreement operates as a transfer of the assigning party’s rights and a delegation of its duties under this Agreement.

Optional: Promise to perform: For the avoidance of doubt, an assignee’s acceptance of an assignment of this Agreement constitutes the assignee’s promise to perform the assigning party’s duties under the Agreement. That promise is enforceable by either the assigning party or by the non-assigning party.

Optional: Written assumption by assignee: IF: The non-assigning party so requests of an assignee of this Agreement; THEN: The assignee will seasonably provide the non-assigning party with a written assumption of the assignor’s obligations, duly executed by or on behalf of the assignee; ELSE: The assignment will be of no effect.

Optional: No release: For the avoidance of doubt, an assignment of this Agreement does not release the assigning party from its responsibility for performance of its duties under the Agreement unless the non-assigning party so agrees in writing.

Optional: Confidentiality: A non-assigning party will preserve in confidence any non-public information about an actual- or proposed assignment of this Agreement that may be disclosed to that party by a party participating in, or seeking consent for, the assignment.

The Delegation provision might not be necessary in a contract for the sale of goods governed by the Uniform Commercial Code, because a similar provision is found in UCC 2-210

The Confidentiality provision would be useful if a party to the agreement anticipated that it might be engaging in any kind of merger or other strategic transaction.

Materiality of assignment breach

IF: A party breaches any requirement of this Agreement that the party obtain another party’s consent to assign this Agreement; THEN: Such breach is to be treated as a material breach of this Agreement.

A chief significance of this kind of provision is that failure to obtain consent to assignment, if it were a material breach, would give the non-assigning party the right to terminate the Agreement.

If an assignment-consent provision requires that consent not be unreasonably withheld , then failure to obtain consent to a reasonable assignment would not be a material breach, according to the court in Hess Energy Inc. v. Lightning Oil Co. , No. 01-1582 (4th Cir. Jan. 18, 2002) (reversing summary judgment). In that case, the agreement was a natural-gas supply contract. The customer was acquired by a larger company, after which the larger company took over some of the contract administration responsibilities such as payment of the vendor’s invoices. The vendor, seeking to sell its gas to someone else at a higher price, sent a notice of termination, on grounds that the customer had “assigned” the agreement to its new parent company, in violation of the contract’s assignment-consent provision. The appeals court held that, even if the customer had indeed assigned the contract (a point on which it expressed considerable doubt) without consent, the resulting breach of the agreement was not material, and therefore the vendor did not have the right to terminate the contract.

See also (list is generated automatically) :

Notebook update: Reverse triangular merger might be an assignment of a contract, requiring consent Just updated the Notebook with a citation to a case in which the Delaware Chancery Court refused to rule out the possibility that a reverse...
Assignment-consent requirements can cause serious problems in future M&A transactions A lot of contracts provide that Party A must obtain the prior written consent of Party B if it wishes to assign the agreement to a...
SCOTX rejects implied obligation not to unreasonably withhold consent to assignment of contract In a recent Texas case, two sophisticated parties in the oil and gas business — let’s call them Alpha and Bravo — were negotiating a contract....
Ken Adams and the marketplace of ideas I (used to) comment occasionally at Ken Adams’s blog. Recent examples: Here, here, here, here, and here. Ken and I disagree on a number of issues; some...

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Consent to assignment

Consent to assignment clause samples

3. FieldPoint’s Consent to Assignment. FieldPoint hereby consents to this assignment by Assignor to Assignee as provided in this Agreement. Such consent is expressly conditioned upon Assignee’s acknowledgment and agreement that neither this consent nor anything contained in this Agreement shall be deemed to modify, alter, amend, or waive any provisions of the Agreement.

04/11/2017 (FIELDPOINT PETROLEUM CORP)

2. Consent to Assignment. Notwithstanding any other provision of this Agreement, each party hereto hereby consents to the assignment, grant, pledge, conveyance and transfer by the other party hereto, for the benefit of any lender, agent or other secured party under any financing arrangement to which the Partnership is a party, of a lien, security interest or other encumbrance on and continuing security interest in all of such other party’s estate, title and interest in its Interest and the exercise by each such secured party of its rights and remedies in connection therewith, including, without limitation, the right to exercise the voting and consensual rights and other powers with respect to such Interest and the right to foreclose upon, or exercise a power of sale with respect to, such Interest and to cause such secured party or any third party designee or purchaser of such Interest to become an additional or substitute partner in the Partnership.

06/15/2018 (Cheniere Energy Partners, L.P.)

1. Consent to Assignment. The undersigned hereby acknowledges and consents to the assignment of the Power Plant Equipment Lease to Buyer and the assumption of the Power Plant Equipment Lease by Buyer in conjunction with Buyer’s acquisition of the Hotel. The undersigned waives any and all rights of notice relating to such assignment and any right to terminate the Power Plant Equipment Lease as a result of such assignment and any default, event of default or defense to enforceability that may otherwise arise as a result of such assignment.

09/27/2016 (Playa Hotels & Resorts B.V.)

3. Consent to Assignment. Assignor hereby consents to the admittance of Assignee as a substitute member of the Company. Assignor hereby waives all provisions, if any, in the Limited Liability Company Agreement of the Company or provided in the Delaware Limited Liability Company Act or any other applicable law, that would prohibit, delay, require notice of, grant rights in connection with, or require compliance with any other requirements in connection with, such assignment and admission.

06/29/2018 (Berry Petroleum Corp)

3.Consent to Assignment. Citi consents to the assignment and assumption of the Agreement from Polaris India to Virtusa India , and with respect to Polaris India, the assignment and assumption of any Transactional Document executed by Polaris India to Virtusa India, and Citi acknowledges the rights, responsibilities, and authority of Virtusa India as though Virtusa India were the original party under the Agreement and Transactional Documents to which Polaris India was a party. Other than as set forth above, for the other Transactional Documents to which an Affiliate of Polaris India was a party, such Transactional Documents are not assigned but rather shall now reflect the changed name of such Affiliate per the table above.

07/31/2020 (VIRTUSA CORP)

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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.

Benjamin W.

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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This consent to assignment is between , an individual a(n) (the " Landlord ") and , an individual a(n) (the " Tenant ").

The Landlord is the owner and landlord of the certain residential real estate located at , , , (the " Property ").

The Landlord, as lessor, and the Tenant, as lessee, entered into a lease agreement covering the Property, a copy of which is attached as Exhibit A (the " Lease ").

The Tenant wishes to assign all of its rights and obligations as lessee under the Lease to (the " New Tenant "), and the New Tenant wishes to accept the assignment of the Lease and assume these obligations on the terms set forth in this consent.

1. CONSENT TO ASSIGNMENT.

The Landlord hereby consents to the Tenant's assignment of the Lease to the New Tenant on the terms of the assignment of the Lease, a copy of which is attached as Exhibit B (the " Assignment "). The Landlord's consent to the assignment does not constitute consent to any additional or subsequent assignments of the Premises. The Tenant shall provide the Landlord with a fully-executed copy of the Assignment promptly after it is signed.

2. ASSUMPTION OF RIGHTS AND DUTIES.

From and after the effective date of the assignment, all rights and obligations under the Lease will be assumed by the New Tenant and the Tenant will have no further obligations under that Lease. The Tenant will continue to be responsible for obligations accruing before the date of assignment unless the Tenant, the Landlord, and the New Tenant otherwise expressly provide through a separate agreement.

3. CONTINUING EFFECTIVENESS OF LEASE.

All other terms of the Lease remain in full force and effect, including the prohibition against further assignments and subleases without the Landlord's express written consent.

4. ASSSIGNMENT SUBORDINATE TO LEASE; CONSENT.

The Assignment is subject and subordinate to the Lease and this consent. Neither the Tenant nor the New Tenant may do or permit anything to be done in connection with the Assignment or the New Tenant's occupancy of the Property that would violate the Lease or this consent.

5. CHOICE OF LAW.

(a) Choice of Law. The laws of the state of govern this agreement (without giving effect to its conflicts of law principles).
(b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in County, .

6. COUNTERPARTS; ELECTRONIC SIGNATURES.

(a) Counterparts. The parties may execute this consent in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
(b) Electronic Signatures. This consent, agreements ancillary to this consent, and related documents entered into in connection with this consent are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.

[SIGNATURE PAGE FOLLOWS]

Each party is signing this agreement on the date stated opposite that party's signature.

[PAGE BREAK HERE]

EXHIBIT A Attach copy of Lease

EXHIBIT B Attach copy of Assignment

Free Landlord Consent to Assignment Template

Facilitate lease transfers with a landlord consent to assignment form. provide tenant and landlord information, along with the rental property address, and grant permission for the lease transfer easily..

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As the name suggests, a consent-to-assignment clause is one way of preventing an obligor from subsequently transferring its contractual rights and obligations to a third party assignee without the prior consent of the original obligee. The original intent behind including these clauses in contracts, such as leases, was to ensure that the assignee would be bound to the same terms and conditions as the original obligee or lessee. However, it has become more common for lessors to rely on such consent-to-assignment clauses as a mechanism to require lessees and/or their assigns to agree to more onerous terms and conditions than otherwise contemplated, such as requiring the lessee to remain liable to the lessor should the assignee default or requiring that the assignor compensate the lessor for consenting to the assignment. The express language of the consent-to-assignment clause, as well as the venue in which the issue is litigated, typically will determine the extent to which the lessor can lawfully condition its consent to a proposed assignment.

Consent-to-assignment clauses typically are categorized as either “qualified” or “unqualified.” Qualified consent-to-assignment clauses contain a caveat limiting the lessor’s right to withhold its consent, such as: “and such consent will not be unreasonably withheld.” The phrase “unreasonably withheld” has been interpreted to mean that “there are no sufficient grounds for a reasonably prudent business person to deny consent.” Louisiana courts have found that “sufficient grounds” existed for the lessor to withhold its consent where the proposed sublessee or assignee is financially inferior compared to the present lessee; where the sublessee’s proposed use does not fall within the permitted uses in the lease or would inhibit the lessor’s ability to lease other spaces in the leased property; and where the sublease or assignment would cause the lessor to lose a lessee on the same property. However, a lessor’s refusal to consent to a sublease or assignment likely will be found unreasonable if the reasons for the refusal are pretextual, or if the proposed sublessee is identical to the lessee in financial status and proposed use of the property.

Alternatively, unqualified consent-to-assignment clauses (also referred to as “silent” consent-to-assignment clauses) do not expressly prohibit the lessor from withholding consent for unjustifiable reasons or for no reason at all. When litigating such silent consent-to-assignment clauses, lessees and potential sublessees have argued that courts should inject a reasonableness standard or that an implied standard of reasonableness exists based upon general contract principles. The majority of courts, including those in Texas, adhere to the traditional view that silent consent provisions allow a lessor arbitrarily to refuse to approve a proposed assignment or sublease, no matter how suitable the assignee or sublessee appears to be and no matter how unreasonable the lessor’s objection. These jurisdictions typically have found that there is no implied covenant of good faith requiring a lessor to be “reasonable” in refusing to consent. Other courts following the traditional view may simply refuse to rewrite what they consider to be unambiguous contractual language, especially in cases where there is evidence that the silent consent was included as a result of negotiation.

Louisiana, on the other hand, was the first jurisdiction in the nation to adopt the modern view of implying a standard of “reasonableness” when interpreting silent consent-to-assignment clauses. Louisiana courts historically implied an abuse of rights standard to restrain the lessor’s arbitrary refusal to consent to an assignment. In their view, allowing a lessor to arbitrarily refuse consent to an assignment or sublease virtually nullifies any right to assign or sublease. However, in 1987 the Louisiana Supreme Court limited the applicability of the abuse of rights doctrine, articulating that it applies only when one of the following conditions is met:

(1) if the predominant motive was to cause harm; (2) if there was no serious or legitimate motive for refusing; (3) if the exercise of the right to refuse is against moral rules, good faith, or elementary fairness; (4) if the right to refuse is exercised for a purpose other than that for which it is granted.

See Truschinger v. Pak , 513 So.2d 1151, 1154 (La.1987).

In Truschinger , the lessor conditionally consented to a proposed sublease in exchange for a cash payment of $40,000.00. The court held that because the lessor’s predominate motive was economic, serious, and legitimate, and was not a wish to harm, the lessor’s refusal was not an abuse of rights. It is questionable whether the historical authority for implying a standard of reasonableness has survived in the wake of Truschinger , considering that the court appeared tacitly to approve of lessors withholding or conditioning consent based on purely economic motives.

Even so, it is important to note that Truschinger and the cases cited therein relied upon La. Civ. Code. art. 2725 (1870) and the French interpretations of its ancillary provision in Code Napoléon as support for construing silent consent-to-assignment clauses against lessees. However, in 2004 La. Civ. Code. art. 2725 (1870) was revised and renumbered as La. Civ. Code art. 2713 and now expressly provides that a “provision that prohibits subleasing, assigning, or encumbering is to be strictly construed against the lessor .” The 2004 Revision Comment explains:

[This] sentence restates the principle of the second paragraph of Civil Code Article 2725 (1870) properly understood . . . . In derogation of general principles of interpretation, some cases have erroneously construed such interdiction against the lessee . The third sentence of Civil Code Article 2713 (Rev. 2004) corrects this error.

Although Article 2713 has been in effect for more than twelve years, no court has applied this article in the context of interpreting a silent consent-to-assignment clause. Consequently, while Louisiana courts traditionally have been less favorable toward lessors when interpreting such clauses, a lessor’s conditioned consent or refusal to consent may nonetheless be lawful, absent a showing that such refusal equates to an abuse of rights as set forth in Truschinger .

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A Further Look at Consent to Assignment Agreements

Consent to Assignment for engineers, also referred to as an Acknowledgement and Consent or a “will-serve letter,” is usually drafted by the bank providing construction financing for a project. A typical consent requires the engineer to agree that the bank can exercise the rights it has acquired through an assignment from the owner; among these rights will be the right to assume the design agreement if the owner defaults on the construction loan. Prior articles (June and July 2017, STRUCTURE magazine) looked at key concerns with respect to consent agreements, specifically whether the lender is required to pay outstanding amounts due to the engineer, whether the lender has the right to use the plans and specifications if it does not assume the design agreement, and what information or certifications the lender is entitled to. This article looks at some of the other provisions commonly found in these agreements.

The Assignment

When the owner is a public or quasi-public entity such as a city or a water district, the document that the engineer is asked to sign may include the actual assignment. In such cases, the form may start with an introductory paragraph such as:

THIS ASSIGNMENT OF ENGINEER’S CONTRACT AND ENGINEER’S AGREEMENT AND CONSENT TO ASSIGNMENT (this “Assignment”) is made as of _____ by and between _____ (“Borrower”) and _____ (“Engineer”) for the benefit of _____ (“Lender”).

In such cases, the document creates obligations for both the owner (the borrower) and the engineer, so both parties must sign it. Typically, however, if the owner is a private entity, the engineer will not be provided with the assignment; it is simply asked to acknowledge that the assignment must occur before the loan is closed. In most cases, the lender will require that the contractor, the architect, and other key consultants also agree that their contracts can be assigned and may list all of the contracts to be assigned in a single document. The consent may then include wording such as:

The undersigned, as Engineer under the agreement dated _____ (the “Agreement”) between _____ (“Borrower”) and the undersigned, which is one of the contracts referred to in the Assignment of Agreements, Licenses, Permits and Contracts (the “Assignment”) between Borrower and _____ (“Lender”), hereby acknowledges and consents to the terms of the Assignment.

If, as is usual, the engineer does not know the terms of the Assignment, it is not reasonable to expect the engineer to sign a document stating that it agrees to the terms. The engineer is agreeing to the assignment of the design agreement; the above provision should be edited as follows:

hereby acknowledges and consents to assignment of the design agreement.

Collateral Assignment

Often, the consent will state that the design agreement is being used as collateral for the loan. There may, for example, be a provision stating:

As a condition to Lender making the Loan to Borrower, Lender has required that Borrower collaterally assign the Contract to Lender pursuant to the Assignment of Contracts made by Borrower for the benefit of Lender (the “Assignment”).

The assignment may, in fact, be called a “Collateral Assignment.” This does not create an obligation on the engineer or affect the engineer’s rights, however. Even when the assignment is not specifically referred to as a Collateral Assignment, it is likely that the lender is considering the design agreement as collateral. Lenders generally want a security interest in all of the project assets as collateral for the financing; this includes not just the physical assets of the project but also the design agreements, construction contracts, supply agreements, and easements. The Assignment itself will generally contain wording such as:

FOR VALUE RECEIVED, and as additional security for the Loan, Borrower hereby transfers, assigns and grants a security interest in favor of Lender, in all of the rights of Borrower in its contract with _____ (Engineer) dated _____.

Design Agreement

Since each lender has its own form, an engineer is typically not asked to sign a Consent to Assignment until the owner is arranging the construction loan; this may be weeks or even months after the design agreement was signed. However, some design agreements contain a simple, one-paragraph statement of consent, using language such as:

Engineer agrees that if Developer defaults under the provisions of this Agreement, Engineer shall, if requested, continue to perform its obligations under this Agreement for Lender. Lender shall agree in writing to perform all obligations of Developer after the date Lender succeeds to Developer’s rights and obligations.

As written, the above provision only requires the lender to pay the engineer for services provided after the lender assumes the agreement; the lender has no obligation to pay any outstanding amounts owed to the engineer. At a minimum, the above provision should be edited as follows:

…Lender shall agree in writing to perform all obligations of Developer including payment of all outstanding amounts due to Engineer.

The language in AIA B101 can also be used as a guide. Before 1987, the AIA owner-architect agreements prohibited assignment of the agreement without the consent of the other party. However, the 1987 and subsequent versions of these agreements have included an exception for assignments to the lender, in recognition of the fact that such assignments are common.

Section 10.3 of AIA B101-2017 states:

…Neither the Owner nor the Architect shall assign this Agreement without the written consent of the other, except that the Owner may assign this Agreement to a lender providing financing for the Project if the lender agrees to assume the Owner’s rights and obligations under this Agreement, including any payments due to the Architect by the Owner prior to the assignment.

Thus, the owner can assign the agreement to its lender without obtaining the A/E’s consent, provided the lender assumes all of the owner’s obligations, including outstanding payments. If the lender requires the A/E to execute (sign) a consent agreement, §10.4 of B101 includes the further provision:

If the Owner requests the Architect to execute consents reasonably required to facilitate assignment to a lender, the Architect shall execute all such consents that are consistent with this Agreement, provided the proposed consent is submitted to the Architect for review at least 14 days prior to execution.

Section 10.4 makes it clear that the A/E is not required to execute a consent that would require the A/E to do more than what is required under the design agreement.

A Consent to Assignment will often state that the engineer’s consent is a condition to the loan. The typical wording is:

Engineer acknowledges that Lender is relying on this Consent as a condition of extending the Loan.

If the owner defaults on the loan, this statement could theoretically allow the lender to argue that it has relied on the consent to its detriment, thus giving it rights against the engineer that it would not otherwise have. However, the language is standard in consent agreements and is generally considered to be just an acknowledgment that the engineer’s consent is a condition of the loan. In contrast, the engineer should not agree to provisions that suggest the consent is being signed as an inducement to the lender, as the word “induce” provides the lender a much stronger basis to argue that it has relied on the consent to its detriment. Provisions such as the following should be deleted:

Engineer is executing this Consent of Engineer to induce Lender to advance funds under the Loan Agreement.

The consent is being signed as a courtesy to the engineer’s client, not as an inducement to the lender.▪

Disclaimer: The information in this article is for educational purposes only and is not legal advice. Readers should not act or refrain from acting based on this article without seeking appropriate legal or other professional advice as to their particular circumstances.

About the author ⁄ Gail S. Kelley, P.E., Esq.

Gail S. Kelley is licensed attorney in Massachusetts, Maryland and D.C. She is the author of “Construction Law: An Introduction for Engineers, Architects, and Contractors” ([email protected]).

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What is an Assignment Clause?

Jennifer Tsai • January 12, 2023 • 8 minute read

Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non-assigning counterparties, such as employment agreements and consulting agreements.) For all other contracts, parties may want an anti-assignment clause that allows them the opportunity to review and understand the impact of an assignment (or change of control) before deciding whether to continue or terminate the relationship.

In the mergers and acquisitions context, an assignment of a contract from a target company entity to the relevant acquirer entity is needed whenever a contract has to be placed in the name of an entity other than the existing target company entity after consummation of a transaction. This is why reviewing contracts for assignment clauses is so critical.

Why Do Assignment Clauses Matter?

How do you review assignment clauses in contracts.

After locating all the assignment language in each agreement, the following variables should be noted as part of the review: (1) Scope of assignment provision, (2) Consequences of failure to obtain consent, (3) Standard for refusing consent, and (4) Differences among counterparties in rights to assign.

1. Scope. Assignment provisions may provide exclusions or inclusions to a counterparty’s right to approve an assignment of a contract. See the examples in the following section below.

2. Consequences of Failure to Obtain Consent. Assignment provisions may specify that, if one party attempts to assign the agreement without the required consent of the counterparty:

The purported assignment is null and void; and/or
The applicable contract is void and terminated.

Contracts should be carefully reviewed to determine which of the foregoing scenarios may apply.

3. Standard for Refusing Consent. Assignment provisions frequently include limitations stating that any counterparty’s consent that is required shall not be “unreasonably withheld,” although the reasonableness standard is rarely defined more specifically in the contract.

In an M&A context, the effect of this language is that it provides a target company with some opportunity to challenge a counterparty that withholds its consent to an assignment. Winning this challenge is far from guaranteed, and this opportunity generally comes at a cost of time and expense since it usually involves a legal challenge to the counterparty’s refusal to grant a consent. Consequently, a target company is incentivized to undertake this challenge only when the applicable contract is material to its post-acquisition business or to the consummation of its proposed transaction. Still, undertaking such a challenge may buy the target company time and provide it with some negotiating leverage in seeking a reversal of a counterparty’s refusal to consent to an assignment.

Determining whether consent has been unreasonably withheld is specific to the facts and circumstances underlying each request for consent. For example, in Athar v. Hudson Serv. Mgmt., Inc., 853 N.Y.S.2d 170 (N.Y. App. Div. 2008), a New York appellate court held that this standard requires the non-consenting party to show some reasonable and objective basis for withholding consent. The withholding of consent cannot be arbitrary or based on unique and personal preferences of the non-consenting party. Generally, the burden of proof to show an unreasonable withholding of consent is on the party requesting consent. Also, the party requesting consent is responsible for providing all information required or necessary to determine whether consent should be granted.

4. Differences Among Counterparties in Rights to Assign. It is important to note any differences in assignment rights between and among contracting parties and the consequences of those differences, as parties with greater negotiating power often have broader assignment rights. These differences can become important if there is a lag of time between signing and closing an M&A transaction. If a target company is required to obtain consent in order to assign an agreement, but the counterparty has rights to freely assign, care should be taken to ensure that any consent granted to a target company to assign a contract does not become subject to review or alteration by any parties to whom the counterparty may freely assign its rights after it has granted its consent to assignment. This is particularly relevant to consents that may lapse or lose their effectiveness if transactions do not close within a certain period of time. For example, if (i) a landlord or licensor subsequently transfers the contract after granting its initial consent, and (ii) such consent lapses pursuant to its terms, the target company might have to re-submit consent requests to completely different parties.

Software that uses AI to identify and extract Assignment clauses can accelerate the work of finding these clauses, and enables a more comprehensive review than can otherwise be done manually.

Examples of Common Exclusions and Inclusions in Assignment Clauses

A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty’s right to consent to the assignment of a contract. Below are five common occurrences in which assignment provisions may provide exclusions or inclusions.

Exclusion for Change of Control Transactions

In negotiating an anti-assignment clause, a company would typically seek the exclusion of assignments undertaken in connection with change of control transactions, including mergers and sales of all or substantially all of the assets of the company. This allows a company to undertake a strategic transaction without worry. If an anti-assignment clause doesn’t exclude change of control transactions, a counterparty might materially affect a strategic transaction through delay and/or refusal of consent. Because there are many types of change of control transactions, there is no standard language for these. An example might be:

In the event of the sale or transfer by [Party B] of all or substantially all of its assets related to this Agreement to an Affiliate or to a third party, whether by sale, merger, or change of control, [Party B] would have the right to assign any or all rights and obligations contained herein and the Agreement to such Affiliate or third party without the consent of [Party A] and the Agreement shall be binding upon such acquirer and would remain in full force and effect, at least until the expiration of the then current Term.

Exclusion for Affiliate Transactions

A typical exclusion is one that allows a target company to assign a contract to an affiliate without needing the consent of the contract counterparty. This is much like an exclusion with respect to change of control, since in affiliate transfers or assignments, the ultimate actors and responsible parties under the contract remain essentially the same even though the nominal parties may change. For example:

Either party may assign its rights under this Agreement, including its right to receive payments hereunder, to a subsidiary, affiliate or any financial institution, but in such case the assigning party shall remain liable to the other party for the assigning party’s obligations hereunder. All or any portion of the rights and obligations of [Party A] under this Agreement may be transferred by [Party A] to any of its Affiliates without the consent of [Party B].

Assignment by Operation of Law

Assignments by operation of law typically occur in the context of transfers of rights and obligations in accordance with merger statutes and can be specifically included in or excluded from assignment provisions. An inclusion could be negotiated by the parties to broaden the anti-assignment clause and to ensure that an assignment occurring by operation of law requires counterparty approval:

[Party A] agrees that it will not assign, sublet or otherwise transfer its rights hereunder, either voluntarily or by operations of law, without the prior written consent of [Party B].

while an exclusion could be negotiated by a target company to make it clear that it has the right to assign the contract even though it might otherwise have that right as a matter of law:

This Guaranty shall be binding upon the successors and assigns of [Party A]; provided, that no transfer, assignment or delegation by [Party A], other than a transfer, assignment or delegation by operation of law, without the consent of [Party B], shall release [Party A] from its liabilities hereunder.

This helps settle any ambiguity regarding assignments and their effects under mergers statutes (particularly in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the merger).

Direct or Indirect Assignment

More ambiguity can arise regarding which actions or transactions require a counterparty’s consent when assignment clauses prohibit both direct and indirect assignments without the consent of a counterparty. Transaction parties will typically choose to err on the side of over-inclusiveness in determining which contracts will require consent when dealing with material contracts. An example clause prohibiting direct or indirect assignment might be:

Except as provided hereunder or under the Merger Agreement, such Shareholder shall not, directly or indirectly, (i) transfer (which term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of its Subject Shares, or any interest therein.

“Transfer” of Agreement vs. “Assignment” of Agreement

In some instances, assignment provisions prohibit “transfers” of agreements in addition to, or instead of, explicitly prohibiting “assignments”. Often, the word “transfer” is not defined in the agreement, in which case the governing law of the contract will determine the meaning of the term and whether prohibition on transfers are meant to prohibit a broader or narrower range of transactions than prohibitions on assignments. Note that the current jurisprudence on the meaning of an assignment is broader and deeper than it is on the meaning of a transfer. In the rarer case where “transfer” is defined, it might look like this:

As used in this Agreement, the term “transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in …

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CPAP maker Phillips enters consent decree that stops company from selling machines

The fda’s website says that ingesting the sound-dampening foam comes with the risks of headache, asthma, allergic reactions among more serious problems, like cancer.

Medical device maker Phillips formally entered into a consent decree that stops the company from selling sleep apnea machines in the United States over health concerns that include cancer.

The decree − entered in federal court in Pennsylvania on Tuesday − requires the company to hire an independent safety firm, undergo facility testing for five years and face a review of the testing of machines sent to replace recalled machines.

The company must offer a payment option as a part of a remediation plan, a first for a device recalled under a consent decree , according to U.S. Food and Drug Administration officials.

Phillips could be fined up to $20 million annually if they fail to uphold any part of the decree.

Where does Phillips go from here?

The company, which did not admit wrongdoing, first revealed that it had agreed to a consent decree in a January earnings update.

"Throughout this recall, we have provided patients with important health information by issuing numerous safety communications and have taken actions rarely used by the agency to help protect those impacted by this recall," Jeff Shuren, director of the FDA's Center for Devices and Radiological Health, said in a statement announcing the decree's entry. "Today’s action is a culmination of those efforts and includes novel provisions aimed at helping ensure that patients receive the relief they have long deserved."

The company is allowed to manufacture and distribute machines and parts that the FDA determine are "medically necessary."

USA TODAY reached out to representatives for Phillips and did not receive a response.

2021 recall leads to consent decree

Philips announced a recall for millions of their Bi-Level Positive Airway Pressure (Bi-Level PAP), Continuous Positive Airway Pressure (CPAP), and mechanical ventilator devices in 2021.

The defect was related to a foam inside the devices that could degrade and cause users to breathe in particles and fumes as they sleep.

The company has said that there have been no reports of deaths but acknowledged that the risks of particulate exposure could possibly cause "headache, irritation, inflammation, respiratory issues and possible toxic and carcinogenic effects."

The FDA’s website says that ingesting the sound-dampening foam comes with the risks of headache, asthma, allergic reactions among more serious problems, like cancer. The agency also warned in November that the machines can overheat and in rare cases cause fires.

The FDA said in February that the recalled machines may be linked to over 500 deaths . A Phillips spokesperson denied the link between the deaths and the machines in a statement to USA TODAY at the time.

A 2023 investigation into the recall by Pro Publica and the Pittsburg Post Gazette found that Phillips had withheld complaints about the foam for over a decade before warning customers.

Phillips required to public aware of recall

In 2022, the FDA ordered the company to improve its outreach to customers about the recall and to be more transparent about the health risks of the products. The agency estimated that only about half the Americans impacted by the recall were aware it had even happened.

Philips agreed to pay at least $445 million in compensation to users of the devices under a proposed class-action settlement for people who purchased a recalled Philips Respironics CPAP, BiPAP, or Ventilator sold in the U.S. between 2008 and 2021.

In a filing with the Securities and Exchange Commission earlier this year, Royal Philips CEO Roy Jakobs promised that the company prioritizes patient safety and quality.

"Resolving the consequences of the ... recall for our patients and customers is a key focus area and I acknowledge and apologize for the distress and concern caused," he said. "We are fully committed to complying with the consent decree, which is an important step and provides a clear path forward."

Contributing: Mary Walrath-Holdridge and Adrianna Rodriguez

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Federal Court Enters Consent Decree Against Philips Respironics Following Recall of Certain Sleep Therapy Machines

FDA News Release

Decree Includes Key Provisions Aimed to Prioritize Patient Relief and Ensure Company’s Regulatory Compliance

Today, the U.S. District Court for the Western District of Pennsylvania entered a consent decree of permanent injunction against Philips RS North America LLC (“Philips Respironics”), Respironics California LLC, and Philips Holding USA Inc., and Roy Jakobs, CEO of Royal Philips, along with several other individual defendants named in the decree. The consent decree , with limited exceptions, restricts the production and sale of new continuous positive airway pressure (CPAP) machines, bi-level positive airway pressure (BiPAP) machines and other devices at several Philips Respironics facilities in the United States until certain requirements are met. CPAP and BiPAP machines are sleep therapy devices used for the treatment of obstructive sleep apnea. The decree also requires implementation of a Recall Remediation Plan, agreed to by the FDA and Philips Respironics, to help ensure relief is provided to patients impacted by Philips Respironics’ June 2021 recall of certain ventilators, CPAP and BiPAP machines, by way of receiving a new or reworked/remediated device or, for certain devices, providing the option for a partial refund.

“The finalization of this decree is a significant milestone. Throughout this recall, we have provided patients with important health information by issuing numerous safety communications and have taken actions rarely used by the agency to help protect those impacted by this recall,” said Jeff Shuren, M.D., J.D., director of the FDA's Center for Devices and Radiological Health. “Today’s action is a culmination of those efforts and includes novel provisions aimed at helping ensure that patients receive the relief they have long deserved. This also marks the first time a device company is providing a remediation payment option for a recalled device under a consent decree.”

The consent decree comes after Philips Respironics recalled certain ventilators, CPAP and BiPAP machines in June 2021 because of potential health risks—impacting 15 million devices worldwide. The polyester-based polyurethane (PE-PUR) foam used in these devices to reduce sound and vibration can break down. If the foam breaks down, black pieces of foam, or certain chemicals that are not visible, could be breathed in or swallowed by the person using the device. Immediately following Philips’ recall, the FDA issued an alert notifying device users that problems reportedly associated with the PE-PUR foam breakdown could potentially result in serious injury and may require medical intervention to prevent permanent injury.

The complaint, filed by the Department of Justice on behalf of the FDA, alleged that Philips Respironics violated the Federal Food, Drug, and Cosmetic Act (FD&C Act) by introducing devices into interstate commerce that are adulterated because the devices were not manufactured in accordance with current good manufacturing practice requirements. In addition, the complaint alleged that the company introduced devices into interstate commerce that are misbranded because it failed to provide the FDA with information about specific corrections (or removals) the company made to devices, as required by FDA regulations. Both of these violations were noted in the FDA’s 2021 inspection of the company’s Murrysville, Pennsylvania, facility. The complaint further alleged that additional violations of current good manufacturing practice requirements were observed at Philips Respironics’ Mt. Pleasant, Pennsylvania, facility in 2023, and during several inspections of its subsidiary’s facility in Carlsbad, California, which has ceased manufacturing operations.

With certain exceptions, the consent decree restricts the Defendants from manufacturing and distributing devices at or from the Philips Respironics facilities in Pennsylvania and California, until the Defendants have completed the repair/rework, replacement and refund activities set forth in the Recall Remediation Plan, and are in compliance with requirements applicable to current good manufacturing practice, reporting corrections and removals and medical device reporting. The company must receive written notice from the FDA that they are in compliance with these requirements before resuming operations. The company can continue to manufacture and distribute certain devices that the FDA has determined to be “medically necessary,” which are specified in the decree, as well as replacement parts and accessories to support the use of devices in customers’ possession.

“Medical device manufacturers have a responsibility to comply with requirements designed to ensure the safety and effectiveness of their products,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “Today’s action reflects our commitment to vigorously enforce federal law and prevent manufacturers from marketing adulterated and misbranded devices to vulnerable patients who need them.”

Recall Remediation Plan

The Recall Remediation Plan outlines required remediation options based on device type, as well as timeframes for the company to complete certain remediation activities for patients impacted by this recall. More specifically, remediation options include a remediated device (either a new or reworked unit of the same model type, or a new unit of a functionally equivalent model type) with a renewed warranty or, for certain device models, issuance of a refund (factoring in depreciation of the device). As part of this plan, Philips Respironics is also required to make several attempts to contact a patient and/or Durable medical equipment provider within a certain timeframe regarding actions they must take (e.g., register the device serial number, elect a remediation option, provide prescription information, etc.) to help ensure patients receive remediation in a timely manner.

The FDA’s Center for Devices and Radiological Health (CDRH) previously issued a notice proposing that an order be issued, under section 518(b) of the FD&C Act, requiring Philips Respironics to submit a plan for the repair, replacement or refund of the purchase price (less a reasonable allowance for use) of recalled devices manufactured after November 2015. The provisions outlined in the Recall Remediation Plan agreed to by the FDA and Philips Respironics are intended to provide the relief for patients that CDRH sought through the 518(b) process.

Key Consent Decree Provisions

In addition to the requirements noted above, the decree contains other provisions aimed at helping to ensure patients receive relief, and that the company completes necessary testing and follows current good manufacturing practice requirements. Examples include:

Export Restriction for Commercial Distribution

With respect to CPAP and BiPAP devices that are being used to remediate patients impacted by the recall, the decree generally prohibits the Defendants from exporting those devices for commercial distribution unless:

All U.S. patients who registered by a certain date and who could be remediated with the device to be exported have been remediated;
The Defendants are meeting the timeframes for steps in the remediation process set forth in the Recall Remediation Plan; and
The Defendants have enough devices in stock to address U.S. demand for that particular recall remediation device model for the next twelve months.

Overall, this provision is intended to help ensure remediation of U.S. patients is prioritized over export for commercial distribution and patients receive the recall remediation devices that they are seeking from Philips Respironics in a timely manner.

Testing Requirements

The decree also requires the Defendants to contract with an independent testing expert within 10 days of entry of the decree to review and evaluate their testing, including biocompatibility data, on the new, silicone-based foam the company is using to replace and rework some machines impacted by the June 2021 recall. This independent expert will assess, among other things, Philips’ plan for testing the silicone-based foam, including testing that has been completed, is ongoing, or is planned, to ascertain whether that testing will enable a determination that the silicone-based foam does not degrade during the labeled service life of the device and does not introduce any new or similar potential health concerns to the PE-PUR sound abatement foam. The testing expert will submit findings of this evaluation to the FDA for review. The company will be required to submit a plan to the FDA to address any gaps in testing, analysis or other information that may be identified by the expert.

Assuring Regulatory Compliance of other Respironics’ Facilities

The consent decree also requires the Defendants to retain an independent expert to inspect their other Sleep and Respiratory Care facilities (other than the facilities in Pennsylvania and California) to evaluate whether those facilities are operating in compliance with the FD&C Act and to correct any deficiencies that are identified. In addition, the consent decree allows the FDA to subject other facilities owned by the corporate defendants to certain provisions of the decree if the FDA determines, based on a future inspection, that those facilities are not operating in compliance with the FD&C Act and its implementing regulations.

Patients impacted by the June 2021 Philips Respironics recall remain a top priority for the agency as the FDA continues to take steps to protect the health and safety of individuals using these devices. The agency continues to encourage individuals with a device affected by this recall who have not yet registered their device to do so, and those who have already registered to ensure their contact information is up to date.

The FDA has a dedicated response team that will continue to meet regularly with the company to ensure the effective and efficient implementation of the Recall Remediation Plan and other related recall activities, as outlined in the consent decree. The agency also continues to assess the supply chain for this product area and believes there is adequate supply and that alternative manufacturers are able to handle patient demand for CPAP and BiPAP machines.

Related Information

Court Enjoins Philips Respironics from Manufacturing and Distributing Adulterated and Misbranded Sleep and Respiratory Devices at or from Three Pennsylvania Facilities
Consent Decree
CDRH Provides Update on Philips June 2021 Recall and Maintains Recommendations Related to Potential Health Risks of PE-PUR Foam
Recalled Philips Ventilators, BiPAP Machines, and CPAP Machines
FDA Activities Related to Recalled Philips Ventilators, BiPAP Machines, and CPAP Machines
Recommendations for Recalled Philips Ventilators, BiPAP Machines, and CPAP Machines

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, radiation-emitting electronic products, and for regulating tobacco products.

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Hospitals Must Get Written Patient Consent for Pelvic Exams, H.H.S. Says

In a letter to teaching hospitals, the federal health agency said that institutions could lose Medicare funding if they didn’t comply.

By Emma Goldberg

The Department of Health and Human Services said on Monday that hospitals must obtain written informed consent from patients before they undergo sensitive examinations — like pelvis and prostate exams — especially if the patients will be under anesthesia.

A New York Times investigation in 2020 found that hospitals, doctors and doctors in training sometimes conducted pelvic exams on women who were under anesthesia, even when those exams were not medically necessary and when the patient had not authorized them. Sometimes these exams were done only for the educational benefit of medical trainees.

On Monday, the secretary of Health and Human Services, along with top officials from the department’s Centers for Medicare and Medicaid Services and Office for Civil Rights, sent a letter to the country’s teaching hospitals and medical schools denouncing the practice of doctors and students conducting the exams without explicit consent.

“The Department is aware of media reports as well as medical and scientific literature highlighting instances where, as part of medical students’ courses of study and training, patients have been subjected to sensitive and intimate examinations,” the letter said. “It is critically important that hospitals set clear guidelines to ensure providers and trainees performing these examinations first obtain and document informed consent.”

The department issued a set of guidelines clarifying a longstanding requirement that hospitals must obtain written informed consent as a condition for participating in Medicare and Medicaid programs.

“Patients who are participating in future clinicians’ education should be aware, should have the opportunity to consent, should be given the same opportunity to participate in that education that they would be given if they were awake and fully clothed,” said Ashley Weitz, who underwent an unauthorized pelvic exam while she was under sedation in an emergency room. “We can only expect to have better trust in medicine when both patients and providers can expect a standard of care that prioritizes patient consent.”

Emma Goldberg is a business reporter covering workplace culture and the ways work is evolving in a time of social and technological change. More about Emma Goldberg

Pelvic exam guidelines have changed. Here’s what to expect.

Patients will now need to sign consent forms at hospitals before sensitive procedures such as pelvic, prostate and rectal exams.

Q: I saw the news about patient consent forms now being required for pelvic exams. What should I know before my next appointment?

A: Exams of any sensitive area — which include pelvic exams in women, prostate exams in men and rectal exams in everyone — are the part of a doctor’s visit that no one looks forward to. Many dread them.

Federal guidelines have always required your doctor to explain these exams, the risks versus the benefits, and why they’re recommending doing them. This conversation is part of the informed consent process, which previously could have been done verbally.

Now, new guidelines from the Department of Health and Human Services state that hospitals have to get written consent. The guidelines , issued April 1, were effective immediately.

They apply to any hospital that receives reimbursement from the Centers for Medicaid and Medicare Services — meaning most medical institutions. While exams under sedation are especially important, the guidelines also apply to situations in which you’re fully awake and seeing a provider in an outpatient setting, provided that location is within a hospital, a spokesperson for HHS confirmed.

Consent for sensitive exams done at physician offices outside a hospital setting can be verbal. If you’re unsure whether your provider’s location falls under the new guidelines, call their office and ask.

Mandating written informed consent for those exams done under sedation is a much-needed step in rebuilding broken trust and restoring patients’ control over their bodies and health-care decisions.

Here’s what to know about your next pelvic exam — and what to do before, during and after your appointment.

Why were the new guidelines issued?

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At teaching hospitals, medical students sometimes perform pelvic exams on anesthetized patients for educational purposes. One study noted that 90 percent of medical students who completed an obstetrics and gynecology rotation performed a pelvic exam on an anesthetized patient as instructed by attending surgeons. The patient may have agreed to the medical student participating in the surgery, but it was not always clear whether the patient explicitly consented to a pelvic exam by that student.

Medical students themselves began to raise a public rallying cry to protect their patients and prevent their own moral injury — eventually helping lead to several states passing consent requirements before the recent federal guidelines.

It’s a standard that has been endorsed by medical societies for over a decade, but in practice, it was not always enforced .

What should I expect my medical team to do?

There are many scenarios in which a sensitive exam may be an important part of making a diagnosis or medical decision — such as cervical cancer screening with a Pap smear or evaluating for hemorrhoids with rectal bleeding. These exams may occur when you’re sedated if they’re done at the same time as other procedures, such as colonoscopies.

My colleagues and I have been studying rectal exams and colonoscopies among patients with post-traumatic stress disorder and how to earn and maintain trust at a time when patients feel at their most vulnerable. Like many doctors, I routinely practice trauma-informed care — that is, treating every patient I see in a manner that ensures they feel empowered and safe during our visit.

This means:

Performing sensitive exams only when necessary
Explaining why we recommend doing the exam and what we’ll be looking for
Obtaining consent for all exams, including consent to allow any possible learners, such as medical students, to participate
Having a chaperone, such as a nurse, present
Talking the patient through every step of the exam so that there are no surprises

I’d argue that these should be practiced by any physician regardless of their training in trauma-informed care, but knowing these principles as a patient can help you ask for these extra guardrails up front.

What should I do before pelvic exams?

Ask your doctor why they’re recommending the exam. In one study of 262 patients at outpatient women’s clinics, only about half understood why a pelvic exam would be done. Medical guidelines about pelvic exams have changed significantly over the past 15 to 20 years, and a 2020 study published in JAMA Internal Medicine found that about 1.4 million young women receive potentially unnecessary pelvic exams each year. You have every right to know what the alternatives or risks of forgoing it would be.

Don’t fret about prepping. So many patients get waxed or do a quick trim down there before an exam, fearing they might get judged if not. No one is judging. Enough said.

If you have a history of trauma or any other personal or cultural reason to be wary of an exam, tell your provider. You don’t have to go into any details, but I appreciate learning what is most concerning to my patients so I can work with them to help avoid anything that they identify as triggering.

Bring in a chaperone. At many hospitals and clinics, it’s standard policy to have a medical chaperone during a sensitive exam. A medical chaperone is a trained worker, such as a medical assistant or nurse, who will be present during the exam and can provide reassurance. Depending on the context, you may also be able to have a family member or friend in the room. (This typically wouldn’t be possible in a procedural room where anesthesia is given but is feasible in many outpatient clinic settings.) Discuss these options outright.

What should I do during and after pelvic exams?

Remember, you’re in total control. If this is an exam where you’re not sedated, you can say “stop” at any time. That word will cause everyone to freeze, but to help you internalize that control, have your doctor verbally confirm they’ll stop anytime you say so before getting started.

Do a breathing exercise to help stay calm. I like to practice box breathing , which activates the parasympathetic nervous system and can reduce stress. Breathe in through your nose as you count to four, then hold your breath for four counts. Exhale through your nose for another four counts and then hold your breath for a final four counts. With each count of four, imagine drawing one line of a box until you complete a closed square.

If the exam is taking longer than you expected or you’re not sure what’s happening, say something. If it’s hard to make eye contact with or see the doctor because of how you’re positioned, engage the chaperone if needed. Everyone’s anatomy is a little different, and some exams might last longer than either party anticipated — that can be okay as long as you’re in the loop about what’s going on.

Don’t forget to take care of you. Sensitive exams tend to involve some kind of lubricant like petroleum jelly. This means you’ll need something — I’m talking wet wipes and not dry, scratchy tissues — after it’s over (and possibly also a light pad). If everyone’s heading out so you can get dressed again and it’s not been made clear how you’re going to dab yourself dry, be sure to ask, or you’ll find yourself alone in your gown rummaging hastily through the medical cabinets.

If you have concerns, talk to the patient advocacy office. Many hospitals have an office dedicated to patient advocacy or patient relations that serves as a neutral party to address and investigate any concerns about your care, in a confidential manner if you prefer.

What I want my patients to know

Before your exam, tell your provider what would make you more comfortable. Want to have a pair of cozy socks and warm sweater over your hospital gown? Sure! Want to hold your friend’s (or one of our staff member’s) hands during the exam? Definitely! Want me to get through some aspect of it as quickly as possible — or perhaps slow down so I can explain the movement you’re feeling as it happens? Absolutely! I’ve even streamed “meditative spa music” in the clinic room at the request of a patient. In my outpatient clinic, there’s rarely a request I’d say no to if it made you feel more at ease.

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IMAGES

Assignment Consent Notice
Landlords Consent to Assignment
Consent Agreement
Fillable Online CONSENT TO ASSIGNMENT AGREEMENT Fax Email Print
Consent to Participate in Research Short Form
Fillable Online CONSENT TO ASSIGNMENT THIS CONSENT TO ASSIGNMENT Fax

VIDEO

June 22, 2023
Informed Consent Video Assignment
Informed Consent Class Assignment
MFT 630 Informed Consent Case Assignment
Informed Consent Video Assignment
Informed Consent & Confidentiality

COMMENTS

Consent to Assignment: Everything You Need to Know
If there is language in the contract that states it can't be assigned, the other party must consent to an assignment before you can proceed. Second, the parties must execute an assignment. Create an agreement that transfers the rights and obligations of one party to the assignee. Third, notify the other party of the contract.
Understanding an assignment and assumption agreement
An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting the assignment is known as the assignee.
Assignment Clause: Meaning & Samples (2022)
Assignment Clause Examples. Examples of assignment clauses include: Example 1. A business closing or a change of control occurs. Example 2. New services providers taking over existing customer contracts. Example 3. Unique real estate obligations transferring to a new property owner as a condition of sale. Example 4.
Assignment Agreement: What You Need to Know
An assignment agreement is a contract that authorizes a person to transfer their rights, obligations, or interests in a contract or property to another person. ... Obtaining Consent from Relevant Parties: In some cases, obtaining consent from third parties directly affected by the transfer of rights and obligations may be necessary. Also, it is ...
Understanding the Consent of Assignment: A Comprehensive Guide
Consent of assignment refers to the formal approval by all original parties in a contract to transfer one party's rights and obligations to a third party. This is a common practice in various sectors, including real estate, finance, and business contracts, to ensure that the contractual relationships continue seamlessly despite the change in ...
Assignments: The Basic Law
Assignments: The Basic Law. The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States. As with many terms commonly used, people are familiar with the ...
What Is an Assignment of Contract?
An assignment of contract occurs when one party to an existing contract (the "assignor") hands off the contract's obligations and benefits to another party (the "assignee"). Ideally, the assignor wants the assignee to step into his shoes and assume all of his contractual obligations and rights. In order to do that, the other party to the ...
Assignment provisions in contracts
If an assignment-consent provision requires that consent not be unreasonably withheld, then failure to obtain consent to a reasonable assignment would not be a material breach, according to the court in Hess Energy Inc. v. Lightning Oil Co., No. 01-1582 (4th Cir. Jan. 18, 2002) (reversing summary judgment). In that case, the agreement was a ...
How Is a Contract Assigned?
Below are three variations of anti-assignment clauses that can be used in a contract. EXAMPLE 1: Consent Required for Assignment. Assignment. Neither party may assign or delegate its rights or obligations pursuant to this Agreement without the prior written consent of the other. Any assignment or delegation in violation of this section shall be ...
PDF An Overview of Consent to Assignment Agreements D
ment without the consent of the other party. As a result, the engi-neer may be asked to sign a "Consent to Assignment" (sometimes referred to as an "Acknowledgement and Consent") from the bank providing the construction loan. A typical consent form requires the engineer to agree that the design agreement can be assigned to the lender.
Examples of consent to assignment clauses in contracts
2. Consent to Assignment. Notwithstanding any other provision of this Agreement, each party hereto hereby consents to the assignment, grant, pledge, conveyance and transfer by the other party hereto, for the benefit of any lender, agent or other secured party under any financing arrangement to which the Partnership is a party, of a lien, security interest or other encumbrance on and continuing ...
5 steps to obtaining consent to an assignment
The assignment clause is often drafted in terms requiring the assigning party (Assignor) to first obtain the non-assigning party's written consent to the assignment but that the consent cannot ...
Due diligence, assignment clauses
The law on consent to assignment. The judgment helpfully summarises the law at paragraph [145] in the following terms: 145. The applicable principles may be summarised as follows:
Assignment of Contract: What Is It? How It Works
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.
PDF A Further Look at Consent to Assignment Agreements
A Consent to Assignment will often state that the engineer's consent is a condition to the loan. The typical wording is: Engineer acknowledges that Lender is relying on this Consent as a condition of extending the Loan. If the owner defaults on the loan, this state -
Consenting to assign a commercial lease: what commercial landlords need
Most commercial leases have a clause requiring consent to any assignment, which is qualified so that the tenant can assign but only with the landlord's consent. If the tenant's lease agreement is silent regarding assignments, the tenant is free to assign without the landlord's consent.
Free Landlord Consent to Assignment Template
This consent to assignment is between , an individual a(n) (the "Landlord") and , an individual a(n) (the "Tenant"). The Landlord is the owner and landlord of the certain residential real estate located at , , , (the "Property").. The Landlord, as lessor, and the Tenant, as lessee, entered into a lease agreement covering the Property, a copy of which is attached as Exhibit A (the "Lease").
Consent to Assignment Sample Clauses: 1k Samples
Consent to Assignment. The Lessee hereby acknowledges notice of and consents to all the terms and provisions of the Security Agreement and hereby confirms to and agrees with the Secured Parties that all representations, warranties, indemnities and agreements of the Lessee contained in this Letter Agreement and each other Basic Document to which the Lessee is a party shall inure to the benefit ...
A Primer on Consent-To-Assignment Clauses Under Louisiana Law
Consent-to-assignment clauses typically are categorized as either "qualified" or "unqualified.". Qualified consent-to-assignment clauses contain a caveat limiting the lessor's right to withhold its consent, such as: "and such consent will not be unreasonably withheld.". The phrase "unreasonably withheld" has been interpreted ...
Contract Tip: What is an Assignment Clause?
Assignment of contract is when one party, the assignor, wants to transfer its rights or obligations under the contract to a third party, the assignee. Whether that assignment can happen will depend on whether there is an assignment clause within the contract in question. The Cambridge Dictionary defines an assignment clause as the " part of a ...
Assignment and novation
Assignment. Assignment involves the transfer of an interest or benefit from one person to another. However the 'burden', or obligations, under a contract cannot be transferred. ... a restriction on assignment without the consent of the other party, whether or not such consent is not to be unreasonably withheld or delayed;
A Further Look at Consent to Assignment Agreements
Conclusion. A Consent to Assignment will often state that the engineer's consent is a condition to the loan. The typical wording is: Engineer acknowledges that Lender is relying on this Consent as a condition of extending the Loan. If the owner defaults on the loan, this statement could theoretically allow the lender to argue that it has ...
What is an Assignment Clause?
What is an Assignment Clause? Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non ...
FORM OF CONSENT TO ASSIGNMENT Sample Clauses
FORM OF CONSENT TO ASSIGNMENT. The undersigned (the "Counterparty") acknowledges that [ ], a [ ] ("Debtor"), for the purpose of securing obligations of the Debtor incurred pursuant to the Credit Agreement hereinafter referenced, has collaterally assigned or may in the future collaterally assign to Wachovia Bank, National Association, as administrative agent (together with its ...
CPAP maker Phillips enters consent decree that stops company from
Medical device maker Phillips formally entered into a consent decree that stops the company from selling sleep apnea machines in the United States over health concerns that include cancer.. The ...
Learning Activity Informed Consent Assignment Instructions
Each of the items on the template is an important part of a complete informed consent and must be completed. Please refer to the Learning Activity: Informed Consent Example to examine what an informed consent should look like. Submit your entirely completed template as your assignment. You do not need to cite sources for this assignment.
Federal Court Enters Consent Decree Against Philips Respironics
The consent decree comes after Philips Respironics recalled certain ventilators, CPAP and BiPAP machines in June 2021 because of potential health risks—impacting 15 million devices worldwide.
Hospitals Must Get Written Patient Consent for Pelvic Exams, H.H.S
Ashley Weitz, who received an unauthorized pelvic exam in 2007, on the grounds of the Utah State Capitol. She testified before the Utah Senate in favor of a bill requiring express consent for the ...
Here are some other laws Arizona had on the books in 1864
To put a fine point on it, the "consent" at issue there is purportedly coming from a 9-year-old. Many of the punishments identified for criminal actions result in execution. There's even a ...
Pelvic exam guidelines have changed. Here's what to expect
Ask your doctor why they're recommending the exam. In one study of 262 patients at outpatient women's clinics, only about half understood why a pelvic exam would be done. Medical guidelines ...