Can a contract be transferred to another company without the other party's consent?

As a rule, assigning a whole contract requires the other party's consent, which can be given in advance in the contract. Without consent, the other party can usually ignore the assignment and continue to deal with the original party.

What happens to my contracts if my company is sold?

In a share sale, the company remains the contracting party, but a change of control clause may allow the other party to terminate. In a sale of assets or business, each contract must be assigned in accordance with its assignment clause.

Does the assignor remain liable after the assignment?

It depends on the contract and local law. A well-drafted clause states whether the assignor is released or remains jointly liable with the assignee, and for how long.

Clause templatesGeneral

Assignment and transfer clause

The assignment clause determines whether a party can hand over its contract to another company, for example after a sale of business, merger or group reorganisation. It protects each party against finding itself bound to a counterparty it did not choose, while allowing necessary transactions.

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Clause template

1. Neither party may assign or transfer all or part of its rights and obligations under this contract to a third party without the prior written consent of the other party, which shall not be unreasonably withheld. 2. By way of exception, either party may assign the contract without consent to a company it controls, that controls it or that is under common control, or to the acquirer of all or substantially all of its business, provided that it notifies the other party in writing within [NUMBER] days. 3. The assignee shall be bound by all the terms of the contract from the date of assignment. 4. Unless the other party expressly releases it in writing, the assignor remains jointly liable with the assignee for the performance of the contract for [DURATION]. 5. Any assignment made in breach of this clause shall not be enforceable against the other party.

Replace the bracketed items before use.

Variants

Change of control

Any change of control of a party, within the meaning of [DEFINITION OR REFERENCE], shall be notified to the other party within [NUMBER] days. If the new controlling entity is a direct competitor of the other party, the latter may terminate the contract by written notice within [NUMBER] days of that notification, without compensation.

When to use it

Long-term service, licence or distribution contracts
Contracts entered into by a start-up likely to be acquired
Commercial leases and contracts linked to a business
Contracts with a counterparty belonging to a group that reorganises often

Mistakes to avoid

Forgetting group transfers, which then block a reorganisation or an acquisition
Not addressing change of control, which allows a competitor to take over the contract indirectly
Leaving unclear whether the assignor remains liable after the assignment
Confusing assignment of the entire contract with assignment of a receivable only

Country-specific notes

France
Assignment of a contract requires the consent of the other party, which may be given in advance in the contract. Without it, the assignment is not void but cannot be enforced against the other party.
Source: CMS Francis Lefebvre, Cession de contrat : quelle efficacité en l'absence d'accord du cédé

Contracts that use this clause

Frequently asked questions

As a rule, assigning a whole contract requires the other party's consent, which can be given in advance in the contract. Without consent, the other party can usually ignore the assignment and continue to deal with the original party.

Other General clauses

Sources

CMS Francis Lefebvre, assignment of contract without consent

Indicative template, to adapt to your situation. It does not replace legal advice.

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Assignment and transfer clause

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Variants

Change of control

Mistakes to avoid

Forgetting group transfers, which then block a reorganisation or an acquisition

Not addressing change of control, which allows a competitor to take over the contract indirectly

Leaving unclear whether the assignor remains liable after the assignment

Confusing assignment of the entire contract with assignment of a receivable only

Country-specific notes

France

Assignment of a contract requires the consent of the other party, which may be given in advance in the contract. Without it, the assignment is not void but cannot be enforced against the other party.

CMS Francis Lefebvre, Cession de contrat : quelle efficacité en l'absence d'accord du cédé