Controls whether parties can transfer their rights and obligations under the NDA to third parties, including in M&A transactions.
⚠ Medium Risk
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Plain English Explanation
An assignment clause determines whether you can transfer your rights and obligations under the NDA to someone else. This matters particularly in business transactions like mergers, acquisitions, and corporate reorganizations.
There are two things that can be assigned:
Rights: Your ability to enforce the NDA, receive confidential information, and pursue remedies for breaches.
Obligations: Your duties to keep information confidential, return materials, and follow other requirements.
Most NDAs restrict assignment to ensure that confidential information isn't shared with unknown parties. However, restrictions that are too tight can create problems when companies undergo legitimate corporate changes like mergers, reorganizations, or acquisitions.
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Why This Clause Matters
M&A Transactions: When companies are acquired, their contracts typically transfer to the buyer. If assignment is prohibited, the NDA may terminate, leaving confidential information unprotected.
Corporate Reorganizations: Even internal restructuring (creating subsidiaries, merging business units) can trigger assignment restrictions.
Who Has Your Secrets: You signed an NDA with a specific company. Without assignment restrictions, they could transfer your information to anyone.
Successor Liability: An assignee typically "steps into the shoes" of the assignor, including all liabilities for prior breaches.
Competitor Concerns: You might share information with a startup, but assignment could allow your information to end up with a competitor who acquires them.
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Risk Factors
Blanket Prohibition: Prohibiting all assignment can interfere with legitimate business transactions and may be considered unreasonable by courts.
Change of Control Carve-outs: Does the clause allow assignment in mergers and acquisitions? This is important for business flexibility.
Affiliate Transfers: Can the company share with subsidiaries or parent companies? Affiliate sharing is common but creates more exposure points.
Consent Requirements: If consent is required, is it "not to be unreasonably withheld"? Without this, the other party could block legitimate assignments.
Competitor Carve-outs: Consider whether assignment to competitors should require consent, even if other assignments don't.
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Clause Versions
Assignment
Neither party may assign or transfer this Agreement or any of its rights or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned, or delayed.
Notwithstanding the foregoing, either party may, without the other party's consent, assign this Agreement:
(a) To an Affiliate of such party, provided that the assigning party remains liable for the performance of the Affiliate's obligations;
(b) In connection with a merger, acquisition, corporate reorganization, or sale of all or substantially all of the assigning party's assets, provided that the assignee agrees in writing to be bound by the terms of this Agreement; or
(c) To a successor entity following a change of control, provided that notice is given to the other party within thirty (30) days of such change.
For purposes of this section, "Affiliate" means any entity that directly or indirectly controls, is controlled by, or is under common control with a party.
Any attempted assignment in violation of this section shall be null and void. Subject to the foregoing, this Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns.
Note: This balanced version requires consent for general assignments but includes important carve-outs for affiliates, M&A transactions, and corporate changes. The assignor remains responsible for affiliate performance.
Assignment
This Agreement may be freely assigned by either party without the consent of the other party. Upon assignment, the assignee shall assume all rights and obligations of the assignor under this Agreement.
Either party may:
(a) Assign this Agreement to any Affiliate without notice;
(b) Assign this Agreement in connection with any merger, acquisition, reorganization, or sale of assets;
(c) Assign rights to receive Confidential Information to any third party;
(d) Delegate performance of obligations to contractors or agents, provided the party remains responsible for their compliance; and
(e) Transfer this Agreement by operation of law.
The assigning party shall be released from all obligations under this Agreement upon any assignment where the assignee expressly assumes such obligations in writing.
No assignment shall require payment of any fees or consideration to the non-assigning party.
This Agreement shall bind and inure to the benefit of the parties, their successors, and assigns.
Why this favors you: Maximum flexibility to assign without consent, includes release of liability upon assignment, allows delegation to contractors, and no notice requirement for affiliate transfers.
Assignment Restrictions
The Receiving Party may not assign, transfer, delegate, sublicense, or otherwise dispose of this Agreement or any of its rights or obligations hereunder, in whole or in part, without the prior written consent of the Disclosing Party, which may be withheld in the Disclosing Party's sole and absolute discretion.
Without limiting the foregoing:
(a) Any change of control of the Receiving Party (whether by merger, acquisition, stock sale, or otherwise) shall constitute an assignment requiring consent;
(b) Any transfer to an Affiliate of the Receiving Party shall require consent;
(c) Any reorganization, restructuring, or change in corporate form shall require consent;
(d) Any delegation of duties to contractors, agents, or other third parties (beyond what is expressly permitted elsewhere in this Agreement) shall require consent; and
(e) Any transfer by operation of law shall require consent.
The Disclosing Party may condition consent on any terms it deems appropriate, including modification of confidentiality terms, additional consideration, or termination of the Agreement.
Any attempted assignment without consent shall be void and shall constitute a material breach of this Agreement entitling the Disclosing Party to immediate termination.
The Disclosing Party may freely assign this Agreement to any party without consent from or notice to the Receiving Party.
Warning - Highly restrictive: One-sided (receiving party can't assign, disclosing party can freely assign), covers all forms of corporate change including change of control, consent in sole discretion, can condition consent on additional terms, and violation is material breach. Severely limits business flexibility.
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Negotiation Tips
1
Make It Mutual: Assignment restrictions should apply equally to both parties. Resist one-sided clauses that let them assign freely while restricting you.
2
Carve Out M&A Transactions: Ensure the clause permits assignment in connection with mergers, acquisitions, and sales. Otherwise, you may face problems when selling the company or business unit.
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Add "Not Unreasonably Withheld": If consent is required, insist on language that consent cannot be unreasonably withheld. This prevents the other party from blocking legitimate assignments.
4
Consider Competitor Restrictions: You may want to require consent for assignment to your competitors, even if other assignments are freely permitted.
5
Address Affiliate Transfers: Determine whether assignment to affiliates should be automatic or require notice. Usually automatic is fine if the assignor remains liable.
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Plan for Continuity: Ensure that the agreement survives corporate changes with confidential information protections intact. Assignment should require the assignee to assume all obligations.