This template is for the transfer or assignment of contracts between two parties. It can be used to transfer a wide range of contracts, but is most commonly used to assign customer contracts to the buyer of a business, either where novation is impractical, or where the original contracts allow assignment. Also included with the agreement is a letter template to customers informing them of the transfer.
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In legal terminology, assigning means transferring contractual rights and obligations to a someone not a party to the original agreement, without the consent of the other original party.
Contracts are assigned when the agreement of one of the parties to the original contract cannot easily be obtained, or where the original agreement allows transfer without the consent.
Assignment is most commonly used when a large number of contracts are transferred from one business to another, for example when a telephone service provider sells its UK contracts or a white goods retailer sells its maintenance contracts.
The basic law is that A cannot transfer to C the obligations he has under a contract with B, without B agreeing. So what happens is that all three enter into another type of agreement - one of “novation” whereby the proposed transfer is made with B’s permission.
Most businesses that need to set up multiple contracts make sure the terms of the contract allow them to assign the contract without permission of B. In those cases, an agreement like this one can be used.
If your multiple agreements do not include this provision, you may still wish to use this agreement and take the small risk that some subscribers or users may walk away. If they do not, but instead carry on as before and make their next payment to the new owner, they are, in law, affirming the contract with the new owner, and all is well.
So a novation should be used where practicable and assignment is the fallback where there is a large number of contracts or where novation is unnecessary because all the contracts permit assignment anyway.
Whether or not the customers stay or go after the assignment is very important. The exact tone to use in a letter or message is important. So we include with this agreement a letter template to send to customers informing them of the change.
You should novate rather than assign if all three parties are available and agree. Use this agreement to novate a service contract.
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