Assignment Clause in UK Contracts: What It Means & Example Wording

When to Include a Assignment Clause

• In long-term commercial contracts where one party might be acquired, merged, or restructured during the contract term
• In service agreements where the personal skill or identity of the service provider is important to the client
• In intellectual property licences where the licensor wants to control who can use the IP

Example Wording

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Assignment Clause Enforceable in the UK?

Assignment clauses are enforceable in the UK. A clause prohibiting assignment is effective under section 136 of the Law of Property Act 1925 to prevent legal assignment. However, the Supreme Court held in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] that a prohibition on assignment does not prevent an equitable assignment unless the clause clearly prohibits all forms of dealing. For absolute certainty, the clause should prohibit assignment, transfer, sub-contracting, and any other dealing with rights or obligations.

Common Mistakes

• Only prohibiting 'assignment' without also prohibiting sub-contracting and other dealings — a party might argue that sub-contracting is not an assignment
• Using an absolute prohibition without an exception for group company restructurings — this can create practical difficulties if a party undergoes a legitimate corporate reorganisation
• Failing to require the assignee to be bound by the contract terms — without this, the original party remains liable but the assignee has no direct obligations