No assignment

Boilerplate Anatomy™ →Go uptown A “typical” no assignment clause: Neither party may assign any of its rights or interests under this Agreement without the other Party’s prior consent. view template Resources: commercial imperative | Verbiage | Look, I tried | The ultimate client Index: Click ᐅ to expand: Boilerplate Representations and warranties Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Classic bit of finance boilerplate, which you see cropping up unbidden, unwanted and unwarranted in regular contracts too.

Part of “finance contract envy” that all “muggle eagles” have.

The old chestnut from laws 201, is that you cannot unilaterally transfer obligations under a contract in any case; only rights. Transferring rights and obligations is a novation. Everyone has to agree to that. Transfer of rights only — “assignment” — is mostly harmless in any contract, even a finance contract, though that doesn’t stop banking legal eagles getting agitated about it — possibly out of a misfounded suspicion it might upset close-out netting arrangements. (In our rambunctious opinion, it does not and cannot: nemo dat quod non habet.) In any case, nervousness about precisely whom you can invite to enjoy the benefits or suffer the burdens of your contract on your behalf is a quite a bit more of a “thing” in a lending situation, where the action itself — paying or receiving money — isn’t one that requires any skill, competence or personality in itself. (Sorry, banker friends, but it is true).

Now, quite unlike the performance of personal services, simply discharging a payment obligation is, of itself, a non-personal thing: I don’t care who pays the million quid you owe me as long as someone does. But if I have invited Pink Floyd to play at my son’s Barmitzvah I will care, a lot, if they send some other jokers along instead.

The thing about money payments isn’t who pays the money, but whether they pay it. But who actually pays the money — as often as not it will be a direct wire from your bank on your behalf, after all — is a very different thing from who is obliged to pay it, and, especially six months out from a coupon payment in a choppy credit environment, this is a personal thing, so boilerplatey legal eagles like to make that clear.

With personal services it goes without saying. It is not possible for someone who is not Pink Floyd to perform the obligation of being Pink Floyd.

Drafting points

Be careful not to over-complicate the process of assignment without good reason. Given an assignment is, by definition, a granting of rights and not obligations, it should not really behove the person obliged to perform those rights to have too much control over how their beneficiary exercises or deals with them. Consent, sure — but does it really need to be written?

See also

• finance boilerplate