How to review an assignment clause

An assignment clause says whether a party can transfer its rights, or hand off its obligations, to someone else. It matters most when a company is sold, restructured or financed, which is exactly when there is no time to renegotiate. This guide covers how to read an assignment clause, the US rules that override it, and how to review it in Word with LexDraft.

Last checked: 18 October 2026. The law changes; check the current position before relying on this page.

Read the clause in four parts

1. What is restricted. Assignment of rights, delegation of duties, or both. Under section 322 of the Restatement (Second) of Contracts, a ban on assigning "the contract" is read, unless the context says otherwise, as barring only the delegation of performance.
2. The consent standard. Sole discretion, or consent "not to be unreasonably withheld, conditioned or delayed".
3. Exceptions. Common carve-outs allow assignment to an affiliate or to a buyer of all or substantially all of the business.
4. The consequence. Is a prohibited assignment void, or only a breach?

Clause checklist

• Void or breach. In New York, a clause that only says a party "shall not" assign may give a damages claim without making the assignment itself invalid. Courts look for clear language, such as a statement that any attempted assignment is void (Allhusen v. Caristo Construction Corp., 303 N.Y. 446 (1952)).
• Change of control. Whether a merger or share sale counts as an assignment depends on the wording and the state. Delaware's Court of Chancery held that a reverse triangular merger generally is not an assignment by operation of law (Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 2013). If you want consent rights on a sale of the other party, say so expressly.
• Payment rights and security interests. UCC sections 9-406 and 9-408 make many restrictions on assigning accounts, payment rights and general intangibles ineffective, so lenders can usually take security over receivables despite the clause.
• IP licenses. Under federal law, a non-exclusive patent license is generally personal to the licensee and cannot be assigned without consent (In re CFLC, Inc., 89 F.3d 673 (9th Cir. 1996)). Licensees who expect to be acquired should negotiate an express right to assign.
• Bankruptcy. Section 365(f) of the Bankruptcy Code lets a trustee assign many contracts despite an anti-assignment clause, but section 365(c) keeps the restriction where applicable law excuses the other party from accepting performance from someone else.
• Notice and assumption. Require written notice of any permitted assignment and an express assumption of obligations by the assignee.
• Release of the assignor. Assignment does not by itself release the original party from its obligations. Ask for a novation if a full release is intended.

A assignment clause review workflow in Word

LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so the agreement never leaves the tool you already draft in.

1. Open the agreement in Word and open LexDraft in the side panel.
2. Pick the governing law. Select the state named in the governing law clause so LexDraft looks for state-specific red flags.
3. Run the review. Run the review on the whole agreement. For NDAs, SaaS MSAs, DPAs and services agreements, run the matching playbook on the whole agreement; for other contracts LexDraft runs a general review against the governing law you chose. LexDraft has no separate clause-only playbook.
4. Triage by severity. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
5. Run the quick checks. The defined-term and cross-reference checks are rule-based and run without AI.
6. Accept or reject each redline. Accepted changes land as native Word tracked changes.
7. Verify and sign off. You check every output before it goes to the client or the other side.

What LexDraft does not do

LexDraft does not give legal advice or decide whether a transaction triggers a consent right. Nothing changes in your document until you accept a redline.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. Spotted something out of date? Email support@lexdraft.ai and we will fix it.