Guarantee a straightforward transfer of rights and benefits from one contracting party to another with this letter assigning a contract. This contract assignment letter can be used to alter the parties to a contract or to transfer your rights to someone else or to another organisation. Your notice of assignment of contract will include a detailed list of what is being transferred as well as an agreement by the involved parties to assist each other in the transfer.
Overview of the Letter assigning a contract
When should I use a letter assigning a contract?
Use this letter assigning a contract
- when you want to change the parties to a contract
- when you want to transfer your rights, benefits, title and interest to someone else or to another organisation
- when there are no changes to the terms of the contract
What's included in a letter assigning a contract?
This letter assigning a contract covers
- a transfer of all the rights and benefits in the contract from one party to another identified party
- an indemnity (or guarantee) from the outgoing party that they will pay the new party if it suffers any loss from problems caused by the outgoing party
- an agreement by both parties to help each other in the transfer
What's a letter assigning a contract?
There may be situations where one party wishes to leave a contract and transfer their role to a new, incoming party. Transferring a contract from one party to another is known as assigning a contract. A letter of assignment is the letter by which a party to a contract transfers their rights under the contract to a new party.
Do I need a letter assigning a contract?
A letter assigning a contract can help ensure a straightforward transfer of rights and benefits from one contracting party to another.
Who is the assignor?
This is the party assigning the contract to another business or person and so leaving the contract.
Who is the assignee?
This is the new party to a contract, replacing the assignor.
Who is the other party to a contract?
This is the party with whom the assignor has a contract and who will be remaining in the contract.
What should be included in a letter assigning a contract?
You should include a detailed list of what is being transferred as well as an agreement by the involved parties to assist each other in the transfer.
An assignment of contract only transfers the benefits of a contract, not the obligations of the leaving party. However, in practice, the letter of assignment will usually contain a subcontracting clause, whereby the assignor subcontracts, or delegates, their obligations under the contract to the assignee.
What's the assignment date?
This is the date on which the assignment of the contract will take place. Ideally this should be a date in the future allowing for the document to be signed by both parties.
Who is liable if things go wrong?
As opposed to a novation agreement - which transfers both the benefits and the obligations of a contract to a third party - an assignment does not transfer the burden of a contract. This means the leaving party remains liable for any past liabilities incurred before the assignment.
You can include an indemnity (or guarantee) in the letter assigning a contract from the new party that they will pay the leaving party if it suffers any loss from problems caused by the new party.
What do I need to check in the original contract?
You should check to see if the contract you wish to assign:
- prevents any assignment;
- allows an assignment but only by agreement between the parties;
- allows either party to assign to any new (third) party whenever they wish.
Who should the letter be sent to?
The signed letter of assignment should be sent to all existing parties. Stakeholders, such as banks or customers, should be notified of the change.
Further advice
Ask a lawyer for specific scenarios where:
- there is no contract in place
- there are changes to the terms of the contract to be transferred and you need to begin a new contract instead
- the old parties wish to continue in the contract
This letter assigning a contract is governed by the law of England and Wales or the law of Scotland.