Last updated February 12, 2024
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What is an Assignment?
An Assignment is a document that transfers ownership of a contract, property, or asset from one party to another. The Assignment moves any rights, responsibilities, pending interest, and benefits from the original owner to the recipient.
An Assignment can also be called a/an:
- Contract assignment
- Deed of assignment
- Assignment agreement
- Assignment form
What are the parties involved in an Assignment?
The parties usually involved in an Assignment are:
- The assignor is the person or organisation looking to transfer the rights and responsibilities.
- The assignee is the person or organisation on the receiving end of the Assignment.
- The third party refers to any other person or organisation who might be involved. If you’re assigning a contract, the third party would mean the other person who signed the original contract. The third party can also be called the obligor.
When should I use an Assignment?
Use an Assignment when you want to transfer rights and responsibilities to a new party.
For instance, if your business was recently purchased, Assignments can help you manage your existing contracts. An Assignment will transfer any outstanding contracts with suppliers or customers to the new owners. The new owners then receive the same rights and obligations as you previously had.
Things that can be transferred with an Assignment include:
- Contracts: Most contracts can be transferred with an Assignment. However, some contracts have clauses that set certain demands for an Assignment, or prohibit one entirely. Make sure to read the original contract and look for anything that could affect the Assignment.
- Intellectual property: Assigning intellectual property means transferring the rights and responsibilities for things like copyright, trademarks, and patents. If you’re assigning intellectual property that is registered with the Intellectual Property Office (IPO), you might need to take additional steps to register the change of ownership with the IPO.
- Income streams: An income stream is any regular supply of money. This can include wages, royalty payments, investment payouts, and more.
- Personal property: If you’re transferring personal property, consider whether a Bill of Sale will suit your needs better.
To assign a lease, consider using the Lease Assignment Agreement. If you’re transferring your stake in a business, consider using an Assignment of Partnership Interest.
Why is using an Assignment important?
When transferring ownership of contracts and valuable assets, relying on a verbal agreement is not enough.
If there are disagreements later about responsibilities and rights, having a paper trail is important. An Assignment signed by the parties involved proves that the transfer of ownership and the terms of the transfer were mutually agreed upon. Using an Assignment can help avoid future legal issues and ensure clear communication between parties.
Steps for creating an Assignment
To create an Assignment document, follow these steps:
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Understand what you are assigning
Make sure you know the details of what you’re assigning. It’s a good idea to:
- Identify any third parties who might be involved
- Figure out the estimated value of any property
- Read through any previous contracts or agreements that are relevant
If you are assigning a contract, make sure there aren’t any anti-assignment clauses or clauses that limit Assignments. For example, a contract might state that an Assignment can only take place if all parties agree. In this case, all parties of the original contract should be notified and approve any transfers.
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Include identifying information
Include information on all parties involved, such as names and addresses. You should add information for the following parties:
- The assignor
- The assignee
- The third party, if there is one
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Describe what you are assigning
Specify what you are assigning, detailing any relevant information.
- For contracts, describe the purpose of the original contract. Specify if the transfer is for the contract as a whole or specific parts. Add details about what parts are being assigned.
- For income streams, include who and where the income stream is coming from, and any limitations such as time or amount.
- For intellectual property, describe the property that is being transferred.
- For personal property, describe the property. You could also clarify the value of the property.
- For other property, describe what you are transferring and add any important details.
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Describe the consideration
If there is any payment being exchanged between parties, describe the form of consideration and any monetary value. The payment could be money, assets or property, debt or obligation forgiveness, or any other form of consideration.
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Sign
There should be an independent witness present for the signing of the Assignment. Both the assignor and the assignee should date and sign the document.
What is a Notice of Assignment?
A Notice of Assignment is a form letter that notifies the third party that an Assignment took place.
Keeping all parties informed is essential to help avoid future disputes. Notifying any parties from the original contract is both helpful and courteous, even if the original contract doesn’t demand it. Notices of Assignment are often sent when a contract is assigned, to inform the third party of the transfer.
