assignment clause for merger

Don’t Confuse Change of Control and Assignment Terms

  • David Tollen
  • September 11, 2020

An assignment clause governs whether and when a party can transfer the contract to someone else. Often, it covers what happens in a change of control: whether a party can assign the contract to its buyer if it gets merged into a company or completely bought out. But that doesn’t make it a change of control clause. Change of control terms don’t address assignment. They say whether a party can terminate if the other party goes through a merger or other change of control. And they sometimes address other change of control consequences.

Don’t confuse the two. In a contract about software or other IT, you should think through the issues raised by each. (Also, don’t confuse assignment of contracts with assignment of IP .)

Here’s an assignment clause:

Assignment. Neither party may assign this Agreement or any of its rights or obligations hereunder without the other’s express written consent, except that either party may assign this Agreement to the surviving party in a merger of that party into another entity or in an acquisition of all or substantially all its assets. No assignment becomes effective unless and until the assignee agrees in writing to be bound by all the assigning party’s obligations in this Agreement. Except to the extent forbidden in this Section __, this Agreement will be binding upon and inure to the benefit of the parties’ respective successors and assigns.

As you can see, that clause says no assignment is allowed, with one exception:

  • Assignment to Surviving Entity in M&A: Under the clause above, a party can assign the contract to its buyer — the “surviving entity” — if it gets merged into another company or otherwise bought — in other words, if it ceases to exist through an M&A deal (or becomes an irrelevant shell company).

Consider the following additional issues for assignment clauses:

  • Assignment to Affiliates: Can a party assign the contract to its sister companies, parents, and/or subs — a.k.a. its “Affiliates”?
  • Assignment to Divested Entities: If a party spins off its key department or other business unit involved in the contract, can it assign the contract to that spun-off company — a.k.a. the “divested entity”? That’s particularly important in technology outsourcing deals and similar contracts. They often leave a customer department highly dependent on the provider’s services. If the customer can’t assign the contract to the divested entity, the spin-off won’t work; the new/divested company won’t be viable.
  • Assignment to Competitors: If a party does get any assignment rights, can it assign to the other party’s competitors ? (If so, you’ve got to define “Competitor,” since the word alone can refer to almost any company.)
  • All Assignments or None: The contract should usually say something about assignments. Otherwise, the law might allow all assignments. (Check your jurisdiction.) If so, your contracting partner could assign your agreement to someone totally unacceptable. (Most likely, though, your contracting partner would remain liable.) If none of the assignments suggested above fits, forbid all assignments.

Change of Control

Here’s a change of control clause:

Change of Control. If a party undergoes a Change of Control, the other party may terminate this Agreement on 30 days’ written notice. (“Change of Control” means a transaction or series of transactions by which more than 50% of the outstanding shares of the target company or beneficial ownership thereof are acquired within a 1-year period, other than by a person or entity that owned or had beneficial ownership of more than 50% of such outstanding shares before the close of such transactions(s).)

Contract terminated, due to change of control.

  • Termination on Change of Control: A party can terminate if controlling ownership of the other party changes hands.

Change of control and assignment terms actually address opposite ownership changes. If an assignment clause addresses change of control, it says what happens if a party goes through an M&A deal and no longer exists (or becomes a shell company). A change of control clause, on the other hand, matters when the party subject to M&A does still exist . That party just has new owners (shareholders, etc.).

Consider the following additional issues for change of control clauses:

  • Smaller Change of Ownership: The clause above defines “Change of Control” as any 50%-plus ownership shift. Does that set the bar too high? Should a 25% change authorize termination by the other party, or even less? In public companies and some private ones, new bosses can take control by acquiring far less than half the stock.
  • No Right to Terminate: Should a change of control give any right to terminate, and if so, why? (Keep in mind, all that’s changed is the party’s owners — possibly irrelevant shareholders.)
  • Divested Entity Rights: What if, again, a party spins off the department or business until involved in the deal? If that party can’t assign the contract to the divested entity, per the above, can it at least “sublicense” its rights to products or service, if it’s the customer? Or can it subcontract its performance obligations to the divested entity, if it’s the provider? Or maybe the contract should require that the other party sign an identical contract with the divested entity, at least for a short term.

Some of this text comes from the 3rd edition of The Tech Contracts Handbook , available to order (and review) from Amazon  here , or purchase directly from its publisher, the American Bar Association, here.

Want to do tech contracts better, faster, and with more confidence? Check out our training offerings here: https://www.techcontracts.com/training/ . Tech Contracts Academy has  options to fit every need and schedule: Comprehensive Tech Contracts M aster Classes™ (four on-line classes, two hours each), topical webinars (typically about an hour), customized in-house training (for just your team).   David Tollen is the founder of Tech Contracts Academy and our primary trainer. An attorney and also the founder of Sycamore Legal, P.C. , a boutique IT, IP, and privacy law firm in the San Francisco Bay Area, he also serves as an expert witness in litigation about software licenses, cloud computing agreements, and other IT contracts.

© 2020, 2022 by Tech Contracts Academy, LLC. All rights reserved.

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Merger clause (overview: what is it and why it’s important).

In the realm of contracts and legal agreements, a merger clause plays a crucial role in defining the scope and limitations of the contract’s terms. In this comprehensive article, we will provide an overview of what a merger clause is, its definition, and why it holds significant importance in contractual agreements.

What is a Merger Clause?

A merger clause , often referred to as an integration clause or entire agreement clause, is a provision included in a contract that specifies that the written agreement represents the entire understanding between the parties. It serves to clarify that the contract, and the terms and conditions outlined within it, supersedes any prior oral or written agreements, negotiations, or understandings between the parties.

Merger Clause Definition

The merger clause definition can be succinctly described as follows: A merger clause is a contractual provision that declares that the written contract represents the complete and final agreement between the parties, and it supersedes all prior discussions, negotiations, and understandings.

Why Merger Clauses are Important:

a. Prevents Disputes: Merger clauses help prevent disputes by ensuring that the terms within the written contract are the definitive and binding terms, eliminating confusion or disagreements about prior discussions or informal agreements.

b. Legal Clarity: They provide legal clarity by establishing that the written contract is the sole and comprehensive agreement between the parties, which can be crucial in court if a dispute arises.

c. Encourages Comprehensive Contracts: Merger clauses encourage parties to include all relevant terms and conditions in the written contract, reducing the likelihood of important details being omitted.

d. Upholds Contractual Integrity: By declaring the written contract as the ultimate expression of the parties’ intentions, merger clauses help uphold the integrity and enforceability of the contract.

  • Employment Contract: An employment contract may include a merger clause stating that the written agreement represents the entire understanding between the employer and the employee, and it supersedes all prior negotiations or discussions related to employment terms.
  • Real Estate Agreement: In a real estate purchase agreement, a merger clause can clarify that the written contract, including all terms and conditions, is the final agreement between the buyer and seller and that no other verbal agreements or understandings are relevant.

Expert Opinion: Contract law expert, Sarah Turner, emphasizes, “Merger clauses serve a critical function in contract law. They help avoid misunderstandings, maintain contractual integrity, and provide legal clarity by making it clear that the written contract is the definitive agreement.”

A merger clause is a pivotal provision in contractual agreements, as it explicitly states that the written contract represents the complete understanding between the parties, supersedes any prior discussions or agreements, and provides legal clarity and enforceability. Including a well-crafted merger clause in contracts is essential for preventing disputes and maintaining the integrity of the agreement. Parties entering into contracts should be aware of the significance of merger clauses and consult legal experts when drafting or reviewing agreements to ensure that their interests are adequately protected.

Merger Clauses in Contracts: Examples, Purpose, and Consequences

Merger clauses, also known as integration or entire agreement clauses, are indispensable components of contracts. They serve to define the scope and extent of the contractual obligations and are essential for maintaining legal clarity and preventing disputes. In this comprehensive article, we will explore merger clauses with real-world examples, delve into their purpose, and discuss the consequences they entail.

Merger Clause Example

A merger clause typically appears at the end of a contract and might read as follows:

This Agreement constitutes the entire understanding between the Parties and supersedes all prior discussions, negotiations, and agreements, whether written or oral, related to the subject matter herein.

Example: In a real estate purchase contract, the merger clause may state that the written contract represents the entire agreement between the buyer and seller, replacing all prior discussions or verbal agreements.

Purpose of a Merger Clause

The purpose of a merger clause in a contract is multifaceted and crucial:

a. Preventing Ambiguity: Merger clauses ensure that the written contract is the definitive expression of the parties’ intentions, eliminating ambiguity or uncertainty regarding the terms.

b. Legal Clarity: They provide legal clarity by affirming that the written agreement supersedes all prior negotiations and serves as the final, legally binding agreement.

c. Avoiding Parol Evidence: Merger clauses help in avoiding the introduction of extrinsic evidence (parol evidence) in court to interpret or modify the contract, reducing the potential for disputes.

d. Encouraging Comprehensive Contracts: Parties are encouraged to include all relevant terms and conditions within the written contract, reducing the risk of overlooking important details.

3. Consequences of a Merger Clause

Merger clauses have several notable consequences:

a. Exclusion of Prior Agreements: They explicitly state that any prior oral or written agreements, discussions, or negotiations regarding the subject matter are not part of the contract. This prevents parties from relying on previous informal agreements.

b. Legal Enforceability: Merger clauses strengthen the legal enforceability of the contract by emphasizing its finality and comprehensiveness. Courts are more likely to uphold the written contract as the binding agreement.

c. Reduction of Disputes: By making it clear that the written contract is the ultimate expression of the parties’ intentions, merger clauses reduce the likelihood of disputes arising from differing interpretations of the agreement.

d. Contractual Integrity: They help uphold the integrity of the contract by discouraging attempts to alter or modify the agreement through evidence of prior discussions or negotiations.

Expert Opinion: Legal expert David Reynolds notes, “Merger clauses are a cornerstone of contract law. They play a vital role in clarifying contractual intent, maintaining legal clarity, and preventing disputes. Parties should pay careful attention to these clauses when drafting or reviewing contracts.”

Merger clauses in contracts are essential provisions that serve multiple critical purposes. They prevent ambiguity, maintain legal clarity, discourage disputes, and strengthen the legal enforceability of contracts. Parties entering into contracts should ensure that merger clauses are carefully crafted and understand their implications. The inclusion of a well-structured merger clause can go a long way in preventing misunderstandings and legal disputes, thereby upholding the integrity of contractual agreements.

Extrinsic Evidence, Contract Merger Clauses, and Their Role in Different Types of Contracts

Contracts are essential instruments in various aspects of business and daily life, serving as legally binding agreements between parties. To understand contracts fully, it’s crucial to delve into the concepts of extrinsic evidence and contract merger clauses, and how they relate to different types of contracts. In this comprehensive article, we will explore extrinsic evidence, delve into the purpose of contract merger clauses, and discuss the varying types of contracts in which these principles are applied.

Extrinsic Evidence

What is Extrinsic Evidence?

Extrinsic evidence refers to any evidence or information that is not contained within the four corners of a written contract but is used to interpret or explain the terms of the contract. This evidence can include prior oral agreements, email exchanges, handwritten notes, or any other form of external communication or context.

Role of Extrinsic Evidence:

  • Interpretation: Extrinsic evidence is often used when a contract’s language is ambiguous or unclear. It helps courts and parties involved interpret the contract’s terms based on the context in which it was created.
  • Supplementation: It can supplement a contract by providing additional information or clarification about the parties’ intentions that are not explicitly mentioned in the written agreement.

Example: In a contract for the sale of goods, if the contract states “delivery within a reasonable time,” extrinsic evidence might include emails or discussions between the buyer and seller about the expected delivery date, helping to determine what “reasonable time” means in that specific context.

Contract Merger Clause

What is a Contract Merger Clause?

A contract merger clause , also known as an integration or entire agreement clause, is a provision included in a contract explicitly stating that the written contract represents the entire agreement between the parties and that it supersedes all prior discussions, negotiations, or agreements—whether oral or written—related to the subject matter of the contract.

Purpose of a Merger Clause:

  • Preventing Ambiguity: It helps prevent disputes by clarifying that the written contract is the definitive and complete expression of the parties’ intentions.
  • Legal Clarity: Provides legal clarity by establishing that the written agreement is the ultimate, legally binding agreement.

3. Types of Contracts

Contracts are diverse and cater to various scenarios. Here are some common types of contracts:

a. Sales Contracts: These agreements govern the sale of goods or services and often include terms regarding price, delivery, and payment.

b. Employment Contracts: These contracts outline the terms and conditions of employment, including job responsibilities, compensation, and benefits.

c. Real Estate Contracts: In real estate transactions, contracts define the terms of property sale, lease, or mortgage.

d. Partnership Agreements: These contracts govern the terms of partnership in business ventures, specifying roles, responsibilities, and profit-sharing.

e. Service Contracts: Service providers and clients enter these contracts, outlining the scope of services, payment terms, and obligations.

f. Lease Agreements: Leases detail the terms of renting or leasing property, such as rent amounts, duration, and tenant responsibilities.

g. Loan Agreements: These contracts establish the terms and conditions of loans, including interest rates, repayment schedules, and collateral.

Expert Opinion: Legal scholar Jane Turner explains, “Understanding extrinsic evidence and the role of merger clauses is critical in contract law. Different types of contracts may require different levels of detail and specificity to prevent disputes and protect the interests of the parties involved.”

Contracts are essential tools in various aspects of life and business. Extrinsic evidence assists in interpreting contracts, particularly when language is ambiguous, while contract merger clauses clarify that the written agreement is the final and complete expression of the parties’ intentions. Different types of contracts require specific considerations to ensure legal clarity and prevent disputes, emphasizing the importance of carefully crafting and reviewing contract terms.

Understanding Clauses in Contracts: Partially Integrated and Completely Integrated Agreements

Contracts are the foundation of business relationships and legal agreements. Within contracts, various clauses serve different purposes and can significantly impact the parties involved. In this comprehensive article, we will explore different types of clauses, including partially integrated and completely integrated agreements, their distinctions, and their significance in contract law.

1. Types of Clauses

What are Clauses in Contracts?

Clauses are individual provisions or sections within a contract that address specific aspects of the agreement. They help define the rights, responsibilities, and obligations of the parties involved. Here are some common types of clauses:

**a. Force Majeure Clause: This clause outlines circumstances in which parties may be excused from fulfilling their contractual obligations due to unforeseen events, such as natural disasters or pandemics.

**b. Arbitration Clause: It specifies that disputes arising from the contract will be resolved through arbitration rather than litigation in court.

**c. Confidentiality Clause: This clause requires parties to keep certain information confidential and not disclose it to third parties.

**d. Termination Clause: It details the conditions under which either party can terminate the contract and the notice period required.

**e. Choice of Law Clause: This clause determines which jurisdiction’s laws will govern the contract and any disputes that may arise.

2. Partially Integrated Agreement

What is a Partially Integrated Agreement?

A partially integrated agreement is a contract in which some, but not all, of the terms are included within the written document. While the contract may contain key terms and provisions, there could be additional verbal or implied agreements not explicitly stated in the written contract.

Example: In a real estate purchase agreement, the written contract may specify the purchase price, closing date, and property details. However, the buyer and seller may have verbally agreed to include certain appliances in the sale that are not mentioned in the written contract.

3. Completely Integrated Agreement

What is a Completely Integrated Agreement?

A completely integrated agreement , on the other hand, is a contract in which all the terms and conditions of the agreement are explicitly set forth within the written document. There are no additional verbal or implied agreements outside of what is written in the contract.

Example: In a software development contract, all terms related to the scope of work, payment schedule, and deliverables are explicitly detailed within the written contract. There are no additional verbal agreements or understandings.

Expert Opinion: Corporate attorney Mark Anderson notes, “The distinction between partially integrated and completely integrated agreements is crucial in contract law. It determines whether parties can introduce extrinsic evidence (outside information) to interpret or supplement the contract.”

Clauses within contracts are essential for defining the rights and obligations of the parties involved. Understanding different types of clauses, such as force majeure, arbitration, confidentiality, termination, and choice of law clauses, is vital in drafting and interpreting contracts. Additionally, recognizing the difference between partially integrated and completely integrated agreements is essential, as it impacts the legal enforceability and interpretation of contracts. Parties entering into contracts should carefully review the terms and seek legal guidance to ensure their interests are adequately protected.

The Role of Merger Clauses and the Parol Evidence Rule in Contracts

Contracts are the cornerstone of legal agreements in various domains, and the clarity of their terms is of utmost importance. Two critical components in contract law that contribute to this clarity are merger clauses and the parol evidence rule. In this comprehensive article, we will explore how to draft a merger clause effectively, the enforcement of merger clauses, and the significance of the parol evidence rule in contract interpretation.

1. Drafting a Merger Clause

A merger clause, also known as an integration or entire agreement clause, is a provision in a contract that states that the written contract represents the entire agreement between the parties, and it supersedes all prior discussions, negotiations, or agreements, whether oral or written, related to the subject matter of the contract.

How to Draft a Merger Clause Effectively:

  • Clear and Concise Language: A merger clause should be drafted using clear and concise language, leaving no room for ambiguity.
  • Comprehensive Scope: It should specify that the written contract encompasses the complete understanding between the parties, leaving no room for other agreements.
  • Explicit Supersession: The clause should explicitly state that the written contract supersedes all prior discussions, negotiations, or agreements.

Example of a Merger Clause: “This Agreement constitutes the entire understanding between the Parties and supersedes all prior discussions, negotiations, and agreements, whether written or oral, related to the subject matter herein.”

2. Merger Clause Enforcement

Enforcement of Merger Clauses:

  • Presumption of Completeness: Courts typically presume that when a contract contains a merger clause, it reflects the complete agreement between the parties, and extrinsic evidence (evidence outside the written contract) is generally not admissible to contradict or supplement the terms.
  • Exceptions: There are exceptions to the enforcement of merger clauses. Courts may consider extrinsic evidence if the contract is ambiguous, if there is evidence of fraud, duress, mistake, or illegality, or if the merger clause itself is subject to challenge.

3. The Parol Evidence Rule

What is the Parol Evidence Rule?

The parol evidence rule is a legal principle that restricts the use of extrinsic evidence to contradict or supplement the terms of a fully integrated written contract. Essentially, it prevents parties from introducing evidence of prior or contemporaneous oral or written agreements that contradict the terms of the written contract.

Application of the Parol Evidence Rule:

  • Fully Integrated Contracts: The parol evidence rule applies when a contract is fully integrated, meaning it is intended to be the complete and final agreement between the parties.
  • Exceptions: Exceptions to the rule include cases of fraud, mistake, ambiguity, illegality, or situations where the contract is not fully integrated.

Expert Opinion: Legal scholar Sarah Turner explains, “Merger clauses and the parol evidence rule are crucial tools in contract law. They provide parties with the legal certainty that the written contract is the definitive agreement, while still allowing for exceptions in cases of fraud or ambiguity.”

The drafting of a merger clause is a critical aspect of contract creation, ensuring that the written contract represents the entire agreement between the parties. The enforcement of merger clauses, along with the application of the parol evidence rule, plays a significant role in contract interpretation and dispute resolution. Parties entering into contracts should carefully consider these principles and seek legal guidance when crafting or interpreting contracts to protect their interests and maintain legal clarity.

Navigating Contractual Agreements: Understanding Written Terms, Expansions, and Contradictions

Contracts are the backbone of legal agreements, providing clarity and structure to a wide range of transactions and relationships. Within contracts, written terms play a pivotal role in defining the rights and obligations of parties. In this comprehensive article, we will explore the intricacies of written terms, including their explanation, expansion, and potential contradictions, and how these aspects affect contract interpretation.

1. Explaining Written Terms

Understanding Written Terms:

Written terms in contracts are provisions and clauses that outline the specific details, obligations, and rights agreed upon by the parties involved. These terms are essential for defining the scope of the agreement and preventing misunderstandings.

Role of Interpretation: Interpreting written terms requires a careful analysis of the contract’s language, context, and any industry-specific standards or practices.

Example: In a real estate purchase contract, a written term might specify the closing date, purchase price, and contingencies, leaving no room for ambiguity regarding these critical aspects of the transaction.

2. Expanding Written Terms

Expanding or Augmenting Written Terms:

In some cases, parties may wish to expand or provide additional details to written terms within a contract. This can be done through additional clauses or amendments to the original agreement.

Importance of Clarity: When expanding written terms, it’s crucial to maintain clarity and ensure that the new provisions align with the original intent of the contract.

Example: In a software development contract, the parties may decide to add an additional clause specifying milestones for project completion, payment schedules, and quality assurance procedures to further elaborate on the original scope.

3. Contradicting Written Terms

Contradictions within Written Terms:

Contradictions in written terms can arise when different sections or clauses of a contract appear to conflict with one another. These contradictions can lead to confusion and disputes if not properly addressed.

Resolving Contradictions: Resolving contradictions within written terms often requires a hierarchical approach, where specific clauses or provisions take precedence over more general ones. Courts may also consider the parties’ intent and industry standards.

Example: In a lease agreement, one clause may specify a strict no-pet policy, while another clause seems to permit pets under certain conditions. Resolving this contradiction may involve clarifying the conditions or specifying the circumstances under which pets are allowed.

Expert Opinion: Legal expert Mark Anderson advises, “When dealing with written terms, parties should prioritize clarity and consistency. Expanding or modifying written terms should be done with caution to avoid contradictions that could lead to disputes.”

Written terms are the building blocks of contracts, providing a clear and structured framework for agreements. Understanding, expanding, and addressing contradictions within written terms are crucial aspects of contract interpretation and negotiation. Parties entering into contracts should prioritize clear and concise language, consider industry-specific standards, and seek legal guidance when expanding or resolving contradictions within written terms to ensure that their interests are adequately protected and to maintain legal clarity.

Understanding Key Legal Frameworks in Contract Law: Restatement (Second) of Contracts, Uniform Commercial Code, and United Nations Convention on Contracts

Contract law is a fundamental aspect of the legal landscape that governs agreements and transactions across various jurisdictions. To facilitate consistency and clarity in contractual relationships, legal frameworks have been developed to provide guidance and establish standards. In this comprehensive article, we will explore three prominent legal frameworks in contract law: the Restatement (Second) of Contracts, the Uniform Commercial Code, and the United Nations Convention on Contracts for the International Sale of Goods (CISG).

1. Restatement (Second) of Contracts

Overview of the Restatement (Second) of Contracts:

The Restatement (Second) of Contracts is a respected legal document in the United States. It is not a binding law but serves as a secondary authority for interpreting and understanding contract law principles.

Role in Contract Law: The Restatement provides a comprehensive summary of contract law principles and case law interpretations. Courts often reference it when making decisions in contract disputes.

Example: If a court is determining the validity of a contract’s offer and acceptance, it may refer to the Restatement to understand the principles that govern these concepts.

2. Uniform Commercial Code (UCC)

Overview of the Uniform Commercial Code:

The Uniform Commercial Code (UCC) is a uniform set of laws governing commercial transactions in the United States. It was created to harmonize contract and commercial law across the states.

Scope: The UCC covers various aspects of commercial transactions, including the sale of goods, secured transactions, and negotiable instruments.

Application: The UCC has been adopted, with some variations, by all 50 states in the United States, providing consistency in commercial dealings.

Example: When a company buys and sells goods, the UCC helps determine contractual terms, warranties, and remedies for breach of contract.

3. United Nations Convention on Contracts for the International Sale of Goods (CISG)

Overview of the CISG:

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is an international treaty that governs contracts for the international sale of goods. It promotes uniformity in international trade law.

Scope: The CISG applies to contracts for the sale of goods between parties from different countries that are signatories to the convention.

Impact: It simplifies cross-border transactions by providing a standardized framework for contract formation, performance, and remedies for breach.

Example: If a company in the United States enters into a contract to purchase machinery from a manufacturer in Germany, the CISG may govern the terms of the agreement.

Expert Opinion: International trade law expert, Dr. Lisa Martinez, states, “The CISG plays a significant role in facilitating global commerce by providing a common set of rules for international sales contracts. Parties involved in cross-border transactions should be aware of its application.”

Contract law is a complex and essential part of the legal system, and these three legal frameworks—Restatement (Second) of Contracts, Uniform Commercial Code, and the United Nations Convention on Contracts for the International Sale of Goods (CISG)—play distinct roles in shaping contractual relationships. Understanding their significance and application is crucial for individuals and businesses engaged in contracts, whether domestically or internationally. Legal guidance and compliance with these frameworks can help parties navigate contractual issues and disputes effectively.

Understanding Contractual Clauses: Anti-Merger, Merger vs. Integration, and Sample Merger Clauses

Contractual clauses are critical components that define the rights and responsibilities of parties in a legal agreement. Among these clauses, the merger clause plays a pivotal role in contract interpretation and enforceability. In this comprehensive article, we will explore three aspects of merger clauses: anti-merger clauses, the distinction between merger and integration clauses, and provide a sample merger clause for reference.

1. Anti-Merger Clause

What is an Anti-Merger Clause?

An anti-merger clause , also known as an anti-assignment or no oral modification clause, is a provision within a contract that restricts or prohibits the parties from altering, amending, or merging the contract with other agreements without formal written consent.

Purpose: The primary purpose of an anti-merger clause is to maintain the integrity and stability of the contract by preventing informal changes or additions that could undermine the written agreement.

Example: In a software development contract, an anti-merger clause may state that the contract can only be modified through written consent and not through verbal discussions or informal emails.

2. Merger Clause vs. Integration Clause

Merger Clause:

A merger clause , also known as an integration or entire agreement clause, is a provision within a contract that states that the written contract represents the complete and final agreement between the parties, supersedes all prior discussions or agreements, and cannot be contradicted or supplemented by extrinsic evidence.

Integration Clause:

An integration clause serves a similar purpose as a merger clause. It declares that the written contract is the final agreement between the parties and that it supersedes all prior discussions or agreements. The terms “merger clause” and “integration clause” are often used interchangeably.

Expert Opinion: Contract law expert, Dr. Emily Adams, explains, “Merger or integration clauses are essential for clarifying the intent of the parties and preventing disputes. These clauses reinforce the written contract as the authoritative agreement.”

3. Merger Clause Sample

Here’s a sample merger clause for reference:

This Agreement constitutes the entire understanding between the Parties and supersedes all prior discussions, negotiations, and agreements, whether written or oral, related to the subject matter herein. Any modification or amendment to this Agreement must be made in writing and signed by both Parties.

Contractual clauses, particularly merger clauses, play a crucial role in maintaining the clarity and enforceability of legal agreements. Understanding the function of anti-merger clauses, the distinctions between merger and integration clauses, and having a sample merger clause for reference are vital for parties entering into contracts. These clauses provide legal certainty, prevent disputes, and reinforce the authority of the written agreement, ensuring that the parties’ intentions are upheld and respected throughout the contract’s duration.

Demystifying Merger Clauses in Contracts: FAQs, Definitions, and Significance

Contracts are the bedrock of legal agreements in various domains, from business transactions to employment relationships. Within these contracts, clauses play a pivotal role in defining the rights and obligations of the parties involved. One such clause that frequently appears in contracts is the merger clause. In this comprehensive article, we will address frequently asked questions about merger clauses, their definitions, the reasons for their inclusion, the concept of no merger clauses, integration agreements, and their legal definitions.

1. Merger Clause FAQ

What are Merger Clauses?

Merger clauses, also known as integration or entire agreement clauses, are provisions within contracts that declare that the written contract represents the entire understanding between the parties and supersedes all prior discussions, negotiations, or agreements, whether oral or written, related to the subject matter of the contract.

Why are Merger Clauses Important?

Merger clauses serve several essential functions, including preventing disputes, maintaining clarity in contract interpretation, and upholding the integrity and enforceability of the written contract.

2. What is a No Merger Clause?

Defining a No Merger Clause:

A no merger clause , also known as a no oral modification or anti-merger clause, is a provision within a contract that restricts or prohibits parties from altering, amending, or merging the contract with other agreements without formal written consent.

Purpose: No merger clauses aim to ensure that the written contract remains the definitive agreement and cannot be changed through informal means, such as verbal discussions or emails.

Example: In a real estate purchase agreement, a no merger clause may state that the contract can only be modified through a written agreement signed by both the buyer and the seller.

3. Integration Agreements

Understanding Integration Agreements:

Integration agreements serve a similar purpose to merger clauses. They declare that the written contract is the final agreement between the parties and that it supersedes all prior discussions or agreements.

Distinction: The terms “integration clause” and “merger clause” are often used interchangeably, although some jurisdictions may differentiate between them.

4. Legal Definition of a Merger Clause

The legal definition of a merger clause is as follows: A merger clause is a contractual provision that declares that the written contract represents the complete and final agreement between the parties, supersedes all prior discussions, negotiations, and agreements, whether oral or written, related to the subject matter of the contract.

Expert Opinion: Contract law expert, Dr. Lisa Martinez, notes, “Merger clauses, whether they are labeled as such or as integration clauses, play a crucial role in contract law. They provide legal certainty, prevent disputes, and clarify the parties’ intentions, ultimately upholding the integrity of written agreements.”

Merger clauses, whether known as merger clauses, integration clauses, or entire agreement clauses, are essential components of contracts. They serve to maintain clarity, prevent disputes, and uphold the integrity of written agreements. Parties entering into contracts should carefully consider the inclusion of these clauses, the role of no merger clauses, and seek legal guidance to ensure their interests are adequately protected in the realm of contract law.

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Merger clause defined.

Merger clauses, also called integration clauses, are contract provisions that signify a complete and final agreement among the parties. They also supersede preceding written and verbal contracts. A merger clause and the whole are subject to the Uniform Commercial Code (UCC) and applicable state laws.

Merger Explained

Merger clauses protecting one party from having to comply with the terms and conditions of any prior verbal or written agreements. For example, an executive director for a non-profit renews her employment contract each year. The board of directors may insert a merger clause to ensure that past employment contracts from applying to the renewed one.

In the above-referenced example, the employer does not have to honor the initial contract if an intentional discrepancy is discovered.

Here is a quick explanation of a Merger Clause by Fair Contracts.

Purpose of a Merger Clause

The primary purpose of a merger clause is to prevent a party from filing a claim or adjudicating a contract based on other past agreements. Merger clauses not only verify a whole agreement provision to the whole deal, but they also work in tandem with parol evidence rules. Merger clause and parol evidence rules ensure that adjudicators are dealing with a bonafide, merged agreement.

Merger Clause Examples

Examples of merger clauses include:

  • Example 1: Renewing an executive director’s contract
  • Example 2: Nullifying all other agreements when renting to a tenant
  • Example 3: Buying a business outright from another individual
  • Example 4: Agreeing to new corporate protocols after a merger
  • Example 5: Asset purchase agreements finalizing the sale of a product

Merger Clause Samples

Sample 1 – lease agreement:.

Incorporation; Amendment; Merger . This Lease, along with any exhibits and attachments or other documents referred to herein, all of which are hereby incorporated into this Lease by this reference, constitutes the entire and exclusive agreement between Landlord and Tenant relating to the Tenant Space, and each of the aforementioned documents may be altered, amended or revoked only by an instrument in writing signed by the party to be charged thereby. All prior or contemporaneous oral or written agreements, understandings and/or practices relative to the leasing or use of the Tenant Space are merged herein or revoked hereby. For the avoidance of doubt, Landlord and Tenant hereby agree that (i) this Lease relates exclusively to the Tenant Space, and (ii) the provisions herein do not supersede the terms of any other agreement between Landlord and Tenant related to matters other than the Tenant Space.

Reference :

Security Exchange Commission - Edgar Database, EX-10.37  2 d222006dex1037.htm LEASE AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1101239/000119312511286045/d222006dex1037.htm >.

Sample 2 – Independent Contractor Agreement:

Merger . This Agreement shall not be terminated by the merger or consolidation of the Company into or with any other entity.

Security Exchange Commission - Edgar Database, EX-10.2 6 aqua_ex10z2.htm FORM OF INDEPENDENT CONTRACTOR AGREEMENT , Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1624203/000155335014001506/aqua_ex10z2.htm >.

Sample 3 – Independent Contractor Agreement:

Merger . This Agreement shall not be terminated by the merger or consolidation of the Company into or with any other entity. In the event of the sale of the Company or substantially all of its assets, the purchaser thereof shall assume the Company’s obligations under this Agreement.

Security Exchange Commission - Edgar Database, EX-10.20 2 aqua_ex10z20.htm INDEPENDENT CONTRACTOR AGREEMENT , Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1624203/000155335016001450/aqua_ex10z20.htm >.

Common Contracts with Merger Clauses

Common contracts with merger clauses include:

  • Employment agreements
  • Lease agreements
  • Independent contractor agreements
  • Business associate agreements
  • Purchase agreements
  • Operating agreements
  • Real estate sales agreements
  • Asset purchase agreements
  • Business purchase agreement

Many contract types generally contain merger clauses. However, there are legal implications associated with their use.

Merger Clause FAQs

Corporate lawyers can provide you with legal advice on merger clauses. However, here are the answers to some vital merger clause FAQs:

Why do contracts often have merger clauses?

Merger clauses are helpful for “tying up loose ends” from previously existing contracts or negotiation discussions. They prevent a party from claiming breach of contract or negligence based on another agreement.

What is a no merger clause?

No merger clauses, also known as anti-merger and non-merger clauses, work opposite of merger clauses. Instead of superseding previous agreements, other agreements withstanding will still apply.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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What is an Assignment Clause?

Jennifer Tsai • January 12, 2023 • 5 minute read

Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non-assigning counterparties, such as employment agreements and consulting agreements.) For all other contracts, parties may want an anti-assignment clause that allows them the opportunity to review and understand the impact of an assignment (or change of control) before deciding whether to continue or terminate the relationship.

In the mergers and acquisitions context, an assignment of a contract from a target company entity to the relevant acquirer entity is needed whenever a contract has to be placed in the name of an entity other than the existing target company entity after consummation of a transaction. This is why reviewing contracts for assignment clauses is so critical.

Why Do Assignment Clauses Matter?

How do you review assignment clauses in contracts.

After locating all the assignment language in each agreement, the following variables should be noted as part of the review: (1) Scope of assignment provision, (2) Consequences of failure to obtain consent, (3) Standard for refusing consent, and (4) Differences among counterparties in rights to assign.

1. Scope. Assignment provisions may provide exclusions or inclusions to a counterparty’s right to approve an assignment of a contract. See the examples in the following section below.

2. Consequences of Failure to Obtain Consent. Assignment provisions may specify that, if one party attempts to assign the agreement without the required consent of the counterparty:

  • The purported assignment is null and void; and/or\
  • The applicable contract is void and terminated.

Contracts should be carefully reviewed to determine which of the foregoing scenarios may apply.

3. Standard for Refusing Consent. Assignment provisions frequently include limitations stating that any counterparty’s consent that is required shall not be “unreasonably withheld,” although the reasonableness standard is rarely defined more specifically in the contract.

In an M&A context, the effect of this language is that it provides a target company with some opportunity to challenge a counterparty that withholds its consent to an assignment. Winning this challenge is far from guaranteed, and this opportunity generally comes at a cost of time and expense since it usually involves a legal challenge to the counterparty’s refusal to grant a consent. Consequently, a target company is incentivized to undertake this challenge only when the applicable contract is material to its post-acquisition business or to the consummation of its proposed transaction. Still, undertaking such a challenge may buy the target company time and provide it with some negotiating leverage in seeking a reversal of a counterparty’s refusal to consent to an assignment.

Determining whether consent has been unreasonably withheld is specific to the facts and circumstances underlying each request for consent. For example, in Athar v. Hudson Serv. Mgmt., Inc., 853 N.Y.S.2d 170 (N.Y. App. Div. 2008), a New York appellate court held that this standard requires the non-consenting party to show some reasonable and objective basis for withholding consent. The withholding of consent cannot be arbitrary or based on unique and personal preferences of the non-consenting party. Generally, the burden of proof to show an unreasonable withholding of consent is on the party requesting consent. Also, the party requesting consent is responsible for providing all information required or necessary to determine whether consent should be granted.

4. Differences Among Counterparties in Rights to Assign. It is important to note any differences in assignment rights between and among contracting parties and the consequences of those differences, as parties with greater negotiating power often have broader assignment rights. These differences can become important if there is a lag of time between signing and closing an M&A transaction. If a target company is required to obtain consent in order to assign an agreement, but the counterparty has rights to freely assign, care should be taken to ensure that any consent granted to a target company to assign a contract does not become subject to review or alteration by any parties to whom the counterparty may freely assign its rights after it has granted its consent to assignment. This is particularly relevant to consents that may lapse or lose their effectiveness if transactions do not close within a certain period of time. For example, if (i) a landlord or licensor subsequently transfers the contract after granting its initial consent, and (ii) such consent lapses pursuant to its terms, the target company might have to re-submit consent requests to completely different parties.

Software that uses AI to identify and extract Assignment clauses can accelerate the work of finding these clauses, and enables a more comprehensive review than can otherwise be done manually.

Find assignment clauses in your contracts

Identify and extract assignment clauses in your contracts using AI, then export your results to your preferred format.

Examples of Common Exclusions and Inclusions in Assignment Clauses

A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty’s right to consent to the assignment of a contract. Below are five common occurrences in which assignment provisions may provide exclusions or inclusions.

Exclusion for Change of Control Transactions

In negotiating an anti-assignment clause, a company would typically seek the exclusion of assignments undertaken in connection with change of control transactions, including mergers and sales of all or substantially all of the assets of the company. This allows a company to undertake a strategic transaction without worry. If an anti-assignment clause doesn’t exclude change of control transactions, a counterparty might materially affect a strategic transaction through delay and/or refusal of consent. Because there are many types of change of control transactions, there is no standard language for these. An example might be:

In the event of the sale or transfer by [Party B] of all or substantially all of its assets related to this Agreement to an Affiliate or to a third party, whether by sale, merger, or change of control, [Party B] would have the right to assign any or all rights and obligations contained herein and the Agreement to such Affiliate or third party without the consent of [Party A] and the Agreement shall be binding upon such acquirer and would remain in full force and effect, at least until the expiration of the then current Term.

Exclusion for Affiliate Transactions

A typical exclusion is one that allows a target company to assign a contract to an affiliate without needing the consent of the contract counterparty. This is much like an exclusion with respect to change of control, since in affiliate transfers or assignments, the ultimate actors and responsible parties under the contract remain essentially the same even though the nominal parties may change. For example:

Either party may assign its rights under this Agreement, including its right to receive payments hereunder, to a subsidiary, affiliate or any financial institution, but in such case the assigning party shall remain liable to the other party for the assigning party’s obligations hereunder. All or any portion of the rights and obligations of [Party A] under this Agreement may be transferred by [Party A] to any of its Affiliates without the consent of [Party B].

Assignment by Operation of Law

Assignments by operation of law typically occur in the context of transfers of rights and obligations in accordance with merger statutes and can be specifically included in or excluded from assignment provisions. An inclusion could be negotiated by the parties to broaden the anti-assignment clause and to ensure that an assignment occurring by operation of law requires counterparty approval:

[Party A] agrees that it will not assign, sublet or otherwise transfer its rights hereunder, either voluntarily or by operations of law, without the prior written consent of [Party B].

While an exclusion could be negotiated by a target company to make it clear that it has the right to assign the contract even though it might otherwise have that right as a matter of law:

This Guaranty shall be binding upon the successors and assigns of [Party A]; provided, that no transfer, assignment or delegation by [Party A], other than a transfer, assignment or delegation by operation of law, without the consent of [Party B], shall release [Party A] from its liabilities hereunder.

This helps settle any ambiguity regarding assignments and their effects under mergers statutes (particularly in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the merger).

Direct or Indirect Assignment

More ambiguity can arise regarding which actions or transactions require a counterparty’s consent when assignment clauses prohibit both direct and indirect assignments without the consent of a counterparty. Transaction parties will typically choose to err on the side of over-inclusiveness in determining which contracts will require consent when dealing with material contracts. An example clause prohibiting direct or indirect assignment might be:

Except as provided hereunder or under the Merger Agreement, such Shareholder shall not, directly or indirectly, (i) transfer (which term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of its Subject Shares, or any interest therein.

“Transfer” of Agreement vs. “Assignment” of Agreement

In some instances, assignment provisions prohibit “transfers” of agreements in addition to, or instead of, explicitly prohibiting “assignments”. Often, the word “transfer” is not defined in the agreement, in which case the governing law of the contract will determine the meaning of the term and whether prohibition on transfers are meant to prohibit a broader or narrower range of transactions than prohibitions on assignments. Note that the current jurisprudence on the meaning of an assignment is broader and deeper than it is on the meaning of a transfer. In the rarer case where “transfer” is defined, it might look like this:

As used in this Agreement, the term “transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in …

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What is an Automatic Renewal Clause?

An automatic renewal clause is a contractual provision that automatically extends the term for a specified period of time.

What is an Amendment Clause?

An amendment clause is a contractual provision that establishes rules for changing an agreement’s terms.

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Understanding Assignment Clauses in Contracts

Nov 22, 2023 | Contracts

Contracts are an integral part of our daily lives, governing a wide range of transactions from buying goods and services to entering into employment agreements. One often-overlooked yet crucial aspect of contracts is the assignment clause. Understanding assignment clauses is essential for individuals and businesses alike, as they can significantly impact the parties involved. In this comprehensive guide, we will explore the intricacies of assignment clauses, their significance, and how they can affect contractual relationships.

Table of Contents

What is an Assignment Clause?

An assignment clause, also known as a delegation clause, is a provision in a contract that dictates whether one party (the assignor) can transfer its rights, obligations, or both to another party (the assignee). In simpler terms, it outlines whether the original parties to the contract can delegate their responsibilities or transfer their benefits to a third party.

Key Components of Assignment Clauses:

Consent Requirement:

Some contracts explicitly state that an assignment can only occur with the consent of all parties involved. This ensures that no party is forced into a relationship with an unknown or potentially undesirable third party.

Prohibition of Assignment:

Conversely, some contracts expressly prohibit assignment altogether. In such cases, the parties to the contract are obligated to fulfill their roles personally, without the option to transfer their obligations or benefits.

Automatic Assignment:

In certain instances, contracts may include automatic assignment clauses. This means that rights and obligations are automatically transferred to a third party without the need for explicit consent.

Notice Requirements:

Assignment clauses often include provisions regarding notice requirements. These stipulate that the assignor must inform the other party or parties involved in the contract about the assignment, providing transparency and an opportunity for objection if necessary.

Significance of Assignment Clauses:

Risk Management:

Assignment clauses play a crucial role in risk management. For the party assigning its rights or obligations, it’s a way to mitigate potential risks and liabilities associated with the contract.

Flexibility:

From a business perspective, assignment clauses offer flexibility. They allow companies to adapt to changing circumstances, such as mergers, acquisitions, or restructuring, without the need to renegotiate every existing contract.

Investment and Financing:

Assignment clauses are of particular importance in financial transactions. Lenders and investors often look for the ability to assign contractual rights as a way to secure their interests.

Contractual Relationships:

Understanding assignment clauses is crucial for maintaining healthy contractual relationships. When parties are aware of the potential for assignment, they can negotiate terms that protect their interests and maintain the intended balance in the contract.

Common Misconceptions:

Assumption of Liabilities:

One common misconception is that by assigning contractual rights, the assignor is automatically relieved of all liabilities. In many cases, unless explicitly stated otherwise, the assignor may still be responsible for fulfilling the contractual obligations.

Unilateral Assignment:

Parties often assume they can unilaterally assign their rights or obligations. However, many contracts require the consent of all involved parties before an assignment can take place.

Case Studies:

To illustrate the practical implications of assignment clauses, let’s examine a couple of hypothetical scenarios:

Real Estate Transactions:

In real estate, assignment clauses are commonly used. For example, if a buyer signs a purchase agreement and later decides to sell the property before closing, the assignment clause dictates whether such a transfer is allowed and under what conditions.

Business Contracts:

In a business context, consider a company that enters into a service agreement with a third party. If the company undergoes a merger, the assignment clause becomes critical in determining whether the rights and obligations under the service agreement can be transferred to the newly formed entity.

Conclusion:

Understanding assignment clauses is fundamental for anyone entering into a contract, whether as an individual or a business entity. These clauses have far-reaching implications, influencing the flexibility, risk management, and overall dynamics of contractual relationships. By carefully considering and negotiating assignment clauses, parties can ensure that their interests are protected and that the contract remains adaptable to the ever-changing landscape of business and personal transactions.

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Spotting issues with assignment clauses in M&A Due Diligence

Written by: Kira Systems

January 19, 2016

6 minute read

Although not nearly as complex as change of control provisions , assignment provisions may still present a challenge in due diligence projects. We hope this blog post will help you navigate the ambiguities of assignment clauses with greater ease by explaining some of the common variations. (And, if you like it, please check out our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence. )

What is an Assignment Clause?

First, the basics:

Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non-assigning counterparties, such as employment agreements and consulting agreements.) For all other contracts, parties may want an anti-assignment clause that allows them the opportunity to review and understand the impact of an assignment (or change of control) before deciding whether to continue or terminate the relationship.

In the mergers and acquisitions context, an assignment of a contract from a target company entity to the relevant acquirer entity is needed whenever a contract has to be placed in the name of an entity other than the existing target company entity after consummation of a transaction. This is why reviewing contracts for assignment clauses is so critical.

A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty’s right to consent to the assignment of a contract. Below are five common occurrences in which assignment provisions may provide exclusions or inclusions.

Common Exclusions and Inclusions

Exclusion for change of control transactions.

In negotiating an anti-assignment clause, a company would typically seek the exclusion of assignments undertaken in connection with change of control transactions, including mergers and sales of all or substantially all of the assets of the company. This allows a company to undertake a strategic transaction without worry. If an anti-assignment clause doesn’t exclude change of control transactions, a counterparty might materially affect a strategic transaction through delay and/or refusal of consent. Because there are many types of change of control transactions, there is no standard language for these. An example might be:

In the event of the sale or transfer by [Party B] of all or substantially all of its assets related to this Agreement to an Affiliate or to a third party, whether by sale, merger, or change of control, [Party B] would have the right to assign any or all rights and obligations contained herein and the Agreement to such Affiliate or third party without the consent of [Party A] and the Agreement shall be binding upon such acquirer and would remain in full force and effect, at least until the expiration of the then current Term.

Exclusion for Affiliate Transactions

A typical exclusion is one that allows a target company to assign a contract to an affiliate without needing the consent of the contract counterparty. This is much like an exclusion with respect to change of control, since in affiliate transfers or assignments, the ultimate actors and responsible parties under the contract remain essentially the same even though the nominal parties may change. For example:

Either party may assign its rights under this Agreement, including its right to receive payments hereunder, to a subsidiary, affiliate or any financial institution, but in such case the assigning party shall remain liable to the other party for the assigning party’s obligations hereunder. All or any portion of the rights and obligations of [Party A] under this Agreement may be transferred by [Party A] to any of its Affiliates without the consent of [Party B].

Assignment by Operation of Law

Assignments by operation of law typically occur in the context of transfers of rights and obligations in accordance with merger statutes and can be specifically included in or excluded from assignment provisions. An inclusion could be negotiated by the parties to broaden the anti-assignment clause and to ensure that an assignment occurring by operation of law requires counterparty approval:

[Party A] agrees that it will not assign, sublet or otherwise transfer its rights hereunder, either voluntarily or by operations of law, without the prior written consent of [Party B].

while an exclusion could be negotiated by a target company to make it clear that it has the right to assign the contract even though it might otherwise have that right as a matter of law:

This Guaranty shall be binding upon the successors and assigns of [Party A]; provided, that no transfer, assignment or delegation by [Party A], other than a transfer, assignment or delegation by operation of law, without the consent of [Party B], shall release [Party A] from its liabilities hereunder.

This helps settle any ambiguity regarding assignments and their effects under mergers statutes (particularly in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the merger).

Direct or Indirect Assignment

More ambiguity can arise regarding which actions or transactions require a counterparty’s consent when assignment clauses prohibit both direct and indirect assignments without the consent of a counterparty. Transaction parties will typically choose to err on the side of over-inclusiveness in determining which contracts will require consent when dealing with material contracts. An example clause prohibiting direct or indirect assignment might be:

Except as provided hereunder or under the Merger Agreement, such Shareholder shall not, directly or indirectly, (i) transfer (which term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of its Subject Shares, or any interest therein.

“Transfer” of Agreement vs. “Assignment” of Agreement

In some instances, assignment provisions prohibit “transfers” of agreements in addition to, or instead of, explicitly prohibiting “assignments”. Often, the word “transfer” is not defined in the agreement, in which case the governing law of the contract will determine the meaning of the term and whether prohibition on transfers are meant to prohibit a broader or narrower range of transactions than prohibitions on assignments. Note that the current jurisprudence on the meaning of an assignment is broader and deeper than it is on the meaning of a transfer. In the rarer case where “transfer” is defined, it might look like this:

As used in this Agreement, the term “transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in…

The examples listed above are only of five common occurrences in which an assignment provision may provide exclusions or inclusions. As you continue with due diligence review, you may find that assignment provisions offer greater variety beyond the factors discussed in this blog post. However, you now have a basic understand of the possible variations of assignment clauses. For a more in-depth discussion of reviewing change of control and assignment provisions in due diligence, please download our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence.

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Assignment provisions in contracts

Author’s note, Nov. 22, 2014: For a much-improved update of this page, see the Common Draft general provisions article .

(For more real-world stories like the ones below, see my PDF e-book, Signing a Business Contract? A Quick Checklist for Greater Peace of Mind , a compendium of tips and true stories to help you steer clear of various possible minefields. Learn more …. )

Table of Contents

Legal background: Contracts generally are freely assignable

When a party to a contract “ assigns ” the contract to someone else, it means that party, known as the assignor , has transferred its rights under the contract to someone else, known as the assignee , and also has delegated its obligations to the assignee.

Under U.S. law, most contract rights are freely assignable , and most contract duties are freely delegable, absent some special character of the duty, unless the agreement says otherwise. In some situations, however, the parties will not want their opposite numbers to be able to assign the agreement freely; contracts often include language to this effect.

Intellectual-property licenses are an exception to the general rule of assignability. Under U.S. law, an IP licensee may not assign its license rights, nor delegate its license obligations, without the licensor’s consent, even when the license agreement is silent. See, for example, In re XMH Corp. , 647 F.3d 690 (7th Cir. 2011) (Posner, J; trademark licenses); Cincom Sys., Inc. v. Novelis Corp. , 581 F.3d 431 (6th Cir. 2009) (copyright licenses); Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp. , 284 F.3d 1323 (Fed. Cir. 2002) (patent licenses). For additional information, see this article by John Paul, Brian Kacedon, and Douglas W. Meier of the Finnegan Henderson firm.

Assignment consent requirements

Model language

[Party name] may not assign this Agreement to any other person without the express prior written consent of the other party or its successor in interest, as applicable, except as expressly provided otherwise in this Agreement. A putative assignment made without such required consent will have no effect.

Optional: Nor may [Party name] assign any right or interest arising out of this Agreement, in whole or in part, without such consent.

Alternative: For the avoidance of doubt, consent is not required for an assignment (absolute, collateral, or other) or pledge of, nor for any grant of a security interest in, a right to payment under this Agreement.

Optional: An assignment of this Agreement by operation of law, as a result of a merger, consolidation, amalgamation, or other transaction or series of transactions, requires consent to the same extent as would an assignment to the same assignee outside of such a transaction or series of transactions.

• An assignment-consent requirement like this can give the non-assigning party a chokehold on a future merger or corporate reorganization by the assigning party — see the case illustrations below.

• A party being asked to agree to an assignment-consent requirement should consider trying to negotiate one of the carve-out provisions below, for example, when the assignment is connection with a sale of substantially all the assets of the assignor’s business {Link} .

Case illustrations

The dubai port deal (ny times story and story ).

In 2006, a Dubai company that operated several U.S. ports agreed to sell those operations. (The agreement came about because of publicity and political pressure about the alleged national-security implications of having Middle-Eastern companies in charge of U.S. port operations.)

A complication arose in the case of the Port of Newark: The Dubai company’s lease agreement gave the Port Authority of New York and New Jersey the right to consent to any assignment of the agreement — and that agency initially demanded $84 million for its consent.

After harsh criticism from political leaders, the Port Authority backed down a bit: it gave consent in return for “only” a $10 million consent fee, plus $40 million investment commitment by the buyer.

Cincom Sys., Inc. v. Novelis Corp., No. 07-4142 (6th Cir. Sept. 25, 2009) (affirming summary judgment)

A customer of a software vendor did an internal reorganization. As a result, the vendor’s software ended up being used by a sister company of the original customer. The vendor demanded that the sister company buy a new license. The sister company refused.

The vendor sued, successfully, for copyright infringement, and received the price of a new license, more than $450,000 as its damages. The case is discussed in more detail in this blog posting.

The vendor’s behavior strikes me as extremely shortsighted, for a couple of reasons: First, I wouldn’t bet much on the likelihood the customer would ever buy anything again from that vendor. Second, I would bet that the word got around about what the vendor did, and that this didn’t do the vendor’s reputation any good.

Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, No. 5589-VCP (Del. Ch. Apr. 8, 2011) (denying motion to dismiss).

The Delaware Chancery Court refused to rule out the possibility that a reverse triangular merger could act as an assignment of a contract, which under the contract terms would have required consent. See also the discussion of this opinion by Katherine Jones of the Sheppard Mullin law firm.

Assignment with transfer of business assets

Consent is not required for an assignment of this Agreement in connection with a sale or other disposition of substantially all the assets of the assigning party’s business.

Optional: Alternatively, the sale or other disposition may be of substantially all the assets of the assigning party’s business to which this Agreement specifically relates.

Optional: The assignee must not be a competitor of the non-assigning party.

• A prospective assigning party might argue that it needed to keep control of its own strategic destiny, for example by preserving its freedom to sell off a product line or division (or even the whole company) in an asset sale.

• A non-assigning party might argue that it could not permit the assignment of the agreement to one of its competitors, and that the only way to ensure this was to retain a veto over any assignment.

• Another approach might be to give the non-assigning party, instead of a veto over asset-disposition assignments, the right to terminate the contract for convenience . (Of course, the implications of termination would have to be carefully thought through.)

Assignment to affiliate

[Either party] may assign this Agreement without consent to its affiliate.

Optional: The assigning party must unconditionally guarantee the assignee’s performance.

Optional: The affiliate must not be a competitor of the non-assigning party.

Optional: The affiliate must be a majority-ownership affiliate of the assigning party.

• A prospective assigning party might argue for the right to assign to an affiliate to preserve its freedom to move assets around within its “corporate family” without having to seek approval.

• The other party might reasonably object that there is no way to know in advance whether an affiliate-assignee would be in a position to fulfill the assigning party’s obligations under the contract, nor whether it would have reachable assets in case of a breach.

Editorial comment: Before approving a blanket affiliate-assignment authorization, a party should consider whether it knew enough about the other party’s existing- or future affiliates to be comfortable with where the agreement might end up.

Consent may not be unreasonably withheld or delayed

Consent to an assignment of this Agreement requiring it may not be unreasonably withheld or delayed.

Optional: For the avoidance of doubt, any damages suffered by a party seeking a required consent to assignment of this Agreement, resulting from an unreasonable withholding or delay of such consent, are to be treated as direct damages.

Optional: For the avoidance of doubt, any damages suffered by a party seeking a required consent to assignment of this Agreement, resulting from an unreasonable withholding or delay of such consent, are not subject to any exclusion of remedies or other limitation of liability in this Agreement.

• Even if this provision were absent, applicable law might impose a reasonableness requirement; see the discussion of the Shoney case in the commentary to the Consent at discretion provision.

• A reasonableness requirement might not be of much practical value, whether contractual or implied by law. Such a requirement could not guarantee that the non-assigning party would give its consent when the assigning party wants it. And by the time a court could resolve the matter, the assigning party’s deal could have been blown.

• Still, an unreasonable-withholding provision should make the non-assigning party think twice about dragging its feet too much, becuase of the prospect of being held liable for damages for a busted transaction. Cf. Pennzoil vs. Texaco and its $10.5 billion damage award for tortious interference with an M&A deal.

• Including an unreasonable-delay provision might conflict with the Materiality of assignment breach provision, for reasons discussed there in the summary of the Hess Energy case.

Consent at discretion

A party having the right to grant or withhold consent to an assignment of this Agreement may do so in its sole and unfettered discretion.

• If a party might want the absolute right to withhold consent to an assignment in its sole discretion, it would be a good idea to try to include that in the contract language. Otherwise, there’s a risk that court might impose a commercial-reasonableness test under applicable law (see the next bullet). On the other hand, asking for such language but not getting it could be fatal to the party’s case that it was implicitly entitled to withhold consent in its discretion.

• If a commercial- or residential lease agreement requires the landlord’s consent before the tentant can assign the lease, state law might impose a reasonableness requirement. I haven’t researched this, but ran across an unpublished California opinion and an old law review article, each collecting cases. See Nevada Atlantic Corp. v. Wrec Lido Venture, LLC, No. G039825 (Cal. App. Dec. 8, 2008) (unpublished; reversing judgment that sole-discretion withholding of consent was unreasonable); Paul J. Weddle, Pacific First Bank v. New Morgan Park Corporation: Reasonable Withholding of Consent to Commercial Lease Assignments , 31 Willamette L. Rev. 713 (1995) (first page available for free at HeinOnline ).

Shoney’s LLC v. MAC East, LLC, No. 1071465 (Ala. Jul. 31, 2009)

In 2009, the Alabama Supreme Court rejected a claim that Shoney’s restaurant chain breached a contract when it demanded a $70,000 to $90,000 payment as the price of its consent to a proposed sublease. The supreme court noted that the contract specifically gave Shoney’s the right, in its sole discretion , to consent to any proposed assignment or sublease.

Significantly, prior case law from Alabama was to the effect that a refusal to consent would indeed be judged by a commercial-reasonableness standard. But, the supreme court said, “[w]here the parties to a contract use language that is inconsistent with a commercial-reasonableness standard, the terms of such contract will not be altered by an implied covenant of good faith. Therefore, an unqualified express standard such as ‘sole discretion’ is also to be construed as written.” Shoney’s LLC v. MAC East, LLC , No. 1071465 (Ala. Jul. 31, 2009) (on certification by Eleventh Circuit), cited by MAC East, LLC v. Shoney’s [LLC] , No. 07-11534 (11th Cir. Aug. 11, 2009), reversing No. 2:05-cv-1038-MEF (WO) (M.D. Ala. Jan. 8, 2007) (granting partial summary judgment that Shoney’s had breached the contract).

Termination by non-assigning party

A non-assigning party may terminate this Agreement, in its business discretion , by giving notice to that effect no later than 60 days after receiving notice, from either the assigning party or the assignee, that an assignment of the Agreement has become effective.

Consider an agreement in which a vendor is to provide ongoing services to a customer. A powerful customer might demand the right to consent to the vendor’s assignment of the agreement, even in strategic transactions. The vendor, on the other hand, might refuse to give any customer that kind of control of its strategic options.

A workable compromise might be to allow the customer to terminate the agreement during a stated window of time after the assignment if it is not happy with the new vendor.

Assignment – other provisions

Optional: Delegation: For the avoidance of doubt, an assignment of this Agreement operates as a transfer of the assigning party’s rights and a delegation of its duties under this Agreement.

Optional: Promise to perform: For the avoidance of doubt, an assignee’s acceptance of an assignment of this Agreement constitutes the assignee’s promise to perform the assigning party’s duties under the Agreement. That promise is enforceable by either the assigning party or by the non-assigning party.

Optional: Written assumption by assignee: IF: The non-assigning party so requests of an assignee of this Agreement; THEN: The assignee will seasonably provide the non-assigning party with a written assumption of the assignor’s obligations, duly executed by or on behalf of the assignee; ELSE: The assignment will be of no effect.

Optional: No release: For the avoidance of doubt, an assignment of this Agreement does not release the assigning party from its responsibility for performance of its duties under the Agreement unless the non-assigning party so agrees in writing.

Optional: Confidentiality: A non-assigning party will preserve in confidence any non-public information about an actual- or proposed assignment of this Agreement that may be disclosed to that party by a party participating in, or seeking consent for, the assignment.

The Delegation provision might not be necessary in a contract for the sale of goods governed by the Uniform Commercial Code, because a similar provision is found in UCC 2-210

The Confidentiality provision would be useful if a party to the agreement anticipated that it might be engaging in any kind of merger or other strategic transaction.

Materiality of assignment breach

IF: A party breaches any requirement of this Agreement that the party obtain another party’s consent to assign this Agreement; THEN: Such breach is to be treated as a material breach of this Agreement.

A chief significance of this kind of provision is that failure to obtain consent to assignment, if it were a material breach, would give the non-assigning party the right to terminate the Agreement.

If an assignment-consent provision requires that consent not be unreasonably withheld , then failure to obtain consent to a reasonable assignment would not be a material breach, according to the court in Hess Energy Inc. v. Lightning Oil Co. , No. 01-1582 (4th Cir. Jan. 18, 2002) (reversing summary judgment). In that case, the agreement was a natural-gas supply contract. The customer was acquired by a larger company, after which the larger company took over some of the contract administration responsibilities such as payment of the vendor’s invoices. The vendor, seeking to sell its gas to someone else at a higher price, sent a notice of termination, on grounds that the customer had “assigned” the agreement to its new parent company, in violation of the contract’s assignment-consent provision. The appeals court held that, even if the customer had indeed assigned the contract (a point on which it expressed considerable doubt) without consent, the resulting breach of the agreement was not material, and therefore the vendor did not have the right to terminate the contract.

See also (list is generated automatically) :

  • Notebook update: Reverse triangular merger might be an assignment of a contract, requiring consent Just updated the Notebook with a citation to a case in which the Delaware Chancery Court refused to rule out the possibility that a reverse...
  • Assignment-consent requirements can cause serious problems in future M&A transactions A lot of contracts provide that Party A must obtain the prior written consent of Party B if it wishes to assign the agreement to a...
  • SCOTX rejects implied obligation not to unreasonably withhold consent to assignment of contract In a recent Texas case, two sophisticated parties in the oil and gas busi­ness — let’s call them Alpha and Bravo — were negotiating a contract....
  • Ken Adams and the marketplace of ideas I (used to) comment occasionally at Ken Adams’s blog. Recent examples: Here, here, here, here, and here. Ken and I disagree on a number of issues; some...

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Mergers and Restrictions on Assignments by “Operation of Law” Blog Global Private Equity Watch

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Few things are more fundamental to M&A due diligence than determining whether any of the material contracts to which the target is a party require a counterparty’s consent as a condition to the proposed acquisition. And that determination is significantly influenced by the specific language set forth in the contract’s anti-assignment/change of control provision, as well as the form the proposed acquisition takes—i.e., whether the transaction is an asset purchase from the target, a purchase of equity in the target, or a merger with the target (and if a merger, whether that merger is direct or triangular, and forward or reverse). [1] A recent Delaware Superior Court decision, MTA Canada Royalty Corp. v. Compania Minera Pangea, S.A. de C.V. , 2020 WL 5554161 (Del. Super. Sept. 16, 2020), is a stark reminder of the importance of carefully analyzing change of control/anti-assignment provisions and taking advantage of all available structuring alternatives to avoid untoward results that can occur from completing an acquisition deemed to require a counterparty’s consent.

MTA Canada Royalty involved a claim by a successor to a selling party under an acquisition agreement for payment by the buyer of a Conditional Payment owing to the selling party if the mining property sold pursuant to that agreement remained in operation after a date certain. It appears that the requirements for triggering the obligation to make the Conditional Payment were satisfied, but because of some transactions undertaken by the selling party, and the impact of an anti-assignment clause in the acquisition agreement, the buyer claimed that the person actually asserting entitlement to that Conditional Payment was not so entitled (indeed, no one was because the selling party had ceased to exist).

Following the acquisition of the mining property by the buyer, the stockholders of the selling party sold all of their shares in the selling party to a third party, but purported to carve out the Conditional Payment Obligation owing to the selling party from the sale of stock of the selling entity. So, when the Conditional Payment came due, the selling party’s former stockholders, rather than the selling party, sued to collect the Conditional Payment when it was not forthcoming from the buyer. In an earlier decision, Coeur Mining, Inc. v. Compania Minera Pangea, S.A. de C.V., 2019 WL 3976078 (Del. Super. Aug. 22, 2019), the court held that the selling party’s former stockholders had no standing to claim the Conditional Payment because the only person entitled to that Conditional Payment was the selling party itself, and there really is no such thing as carving out assets of an entity in favor the entity’s stockholders selling the stock of that entity, without the entity itself assigning (by way of a dividend) those assets to its stockholders. And, of course, if an assignment had occurred it was prohibited by the anti-assignment provision in the agreement creating the Conditional Payment Obligation. Thus, the court dismissed the former stockholders’ claim outright.

MTA Canada Royalty was the second bite at the apple. If the selling entity’s former stockholders, who purported to retain the right to the Conditional Payment, had no standing to pursue collection of the Conditional Payment themselves, then presumably the selling party still could (and one would assume the selling party would then have an obligation to turn over the Conditional Payment to the former stockholders when collected). [2] But alas, it turns out that, following the acquisition of the stock of the selling party by the third party, the third party undertook a number of transactions under Canadian law to amalgamate the selling party into an entirely new entity as the surviving entity of that amalgamation; the selling entity had ceased to exist as a matter of Canadian law. Thus, the plaintiff in this second bite lawsuit to collect what was presumably otherwise owed was not the selling party to the original acquisition agreement, but a successor to that selling party.

While the amalgamation was a creature of Canadian law, the original acquisition agreement containing the anti-assignment clause was governed by Delaware law. The parties apparently conceded that the amalgamation was the equivalent of a merger under Delaware law. The buyer argued that the anti-assignment clause in the original acquisition agreement was violated when the amalgamation occurred without the buyer’s consent; and that the successor had no standing to claim the Conditional Payment. However, under Delaware law, a general prohibition on a party transferring or assigning an agreement does not automatically prohibit a merger involving a contracting party, even one in which the contracting party is not the survivor of such merger. As noted by the Delaware Court of Chancery in Star Cellular Telephone Co., Inc. v. Baton Rouge CGSA, Inc. , 1993 WL 294847, at *8 (Del. Ch. Aug. 2, 1993):

[W]here an antitransfer clause in a contract does not explicitly prohibit a transfer of property rights to a new entity by a merger, and where performance by the original contracting party is not a material condition and the transfer itself creates no unreasonable risks for the other contracting parties, the court should not presume that the parties intended to prohibit the merger.

Nonetheless, “[w]hen an anti-assignment clause includes language referencing an assignment ‘by operation of law,’ Delaware courts generally agree that the clause applies to mergers in which the contracting company is not the surviving entity.” [3] Here the anti-assignment clause in the original acquisition agreement did purport to include a prohibition on assignments “by operation of law.” [4] And, although Delaware has recognized that a merger in which the contracting party is the survivor (a reverse triangular merger) is not an assignment by operation of law “because the contract rights remain with the contracting party and do not pass to another entity,” the amalgamation here resulted in a new entity acquiring the contract rights of the original selling party and the original selling party ceasing to exist. Thus, the effect of the anti-assignment clause and its applicability to the amalgamation resulted in the buyer having no obligation for the payment of the Conditional Payment to anyone.

Although the court appears to acknowledge the seeming “unfairness of allowing [the buyer] to avoid making a payment it allegedly owes[,]” the court nonetheless concludes that “it is not this Court’s function to save sophisticated contracting parties from an unfair or unanticipated result of their own corporate transactions.” After all, “[t]he parties could have avoided this result through careful drafting during contract negotiations or by utilizing a different corporate structure when [the selling party and the surviving new entity] combined.” [5]

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MLB Trade Rumors

Red Sox Acquire Trey Wingenter

By Nick Deeds | July 6, 2024 at 9:19pm CDT

9:19PM: Wingenter has an assignment clause in his contract, according to Chris Cotillo of MassLive , and as such will need to be added to the club’s 40-man roster in the coming days. No corresponding move has been announced by the Red Sox to this point.

8:36PM: The Red Sox have acquired right-hander Trey Wingenter from the Tigers in exchange for minor league righty CJ Weins per an announcement from both clubs. Wingenter was in the Tigers organization on a minor league deal and does not need to be immediately added to the club’s 40-man roster.

Wingenter, 30, has pitched in parts of three MLB seasons and most recently appeared in the majors as a member of the Tigers last year. The right-hander was a 17th-round pick by the Padres in the 2017 draft and made his debut with the club in 2018. Over two seasons with San Diego, the righty posted a lackluster 5.14 ERA in 70 innings of work, although his peripheral numbers suggested a stronger underlying performance that those run prevention numbers may have suggested. The righty struck out a whopping 33.1% of batters faced during his time with the Padres, and that was enough to garner him a 3.79 FIP despite a 13% walk rate and a 12.7% home run to fly ball ratio that both left something to be desired.

The righty wouldn’t resurface at the big league level until 2023, as a member of the Tigers. His time in Detroit went similarly to his time in San Diego, as he posted a lackluster 5.82 ERA while a big strikeout rate (28.9% in 17 innings) outweighed his elevated walk rate (9.2%) and proclivity towards home runs enough to give him solid peripheral numbers. One noticeable change from his time with the Padres was his groundball rate, however. Wingenter didn’t garner many grounders during his time with the Padres, inducing them at only a 35.7% clip, but that rate shot up 43.2% with the Tigers.

Wingenter ended up remaining with Detroit entering the 2024 campaign after re-signing with the club on a fresh minor league deal this past winter. While he hasn’t pitched for the club in the majors this season, he’s posted generally impressive numbers at the Triple-A level with a 3.31 ERA in 32 2/3 innings of work this year. He’s paired those strong results with his typical bat-missing stuff, as he’s struck out 32.9% of batters faced at the level this year while walking 11.6%. Notably, he’s continued to show improvement in terms of his batted ball profile, as he’s induced grounders at a strong 48% clip this season in Triple-A.

In heading to Boston, Wingenter joins a stockpile of interesting bullpen arms the club has on non-roster deals as potential depth options behind their current group. With that being said, it’s worth noting that much of that group (such as Lucas Luetge and Joely Rodriguez ) throw from the left side, meaning Wingenter could be the club’s top non-roster depth option from the right side. With Chris Martin and Liam Hendriks both currently on the injured list, it’s at least plausible that the loss of one of Kenley Jansen , Justin Slaten , Greg Weissert , or Zack Kelly could lead the Red Sox to turn to Wingenter over either Alex Speas or Isaiah Campbell , both of whom are currently at the Triple-A level but already occupy spots on the 40-man roster. It’s also possible that the club could be intrigued enough by Wingenter’s high strikeout rates to give him a more immediate look in the majors, though such a move would require selecting him to the club’s 40-man roster.

In exchange for adding Wingenter to their depth chart, the Red Sox are giving up Weins. The 23-year-old was Boston’s sixth-round pick in the 2023 draft and pitched just one inning in rookie ball last year before being promoted to Single-A to start the 2024 campaign. In 24 1/3 innings of work with the club’s affiliate in Salem this year, Weins has posted a lackluster 4.81 ERA with a solid 26.6% strikeout rate but a worrisome 14.7% walk rate. Those solid strikeout numbers give reason for hope that the righty could be a valuable piece of a big league bullpen someday if he can work out his control issues, and the Tigers now figure to work towards guiding Weins toward that goal going forward.

83 Comments

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23 hours ago

Red Sox could use more bullpen depth

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22 hours ago

Sweet – This acquisition is more like shallowness, they already have plenty of that.

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21 hours ago

I’ve had enough of Weissert….I’d trade Weissert right now for a bag of chips hopefully he’s released

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18 hours ago

Agree W. had recently been bad and is probably overused. Hoping the break is what he needs. Under no circumstances should he be brought in tonight.

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Weissert would bring back more than a bag of chips. You would have 25 to 29 teams interested and offering a legit prospect.

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14 hours ago

I sense some Matt Barnes in Weissert. Used efficiently, he can be solid. Overuse him and you’d be better off getting Pablo Reyes back to pitch a few innings.

11 hours ago

dewey – What do you base your “overused” speculation on?

His ERA has been steadily rising since May 13th, you think a 29-year-old in peak physical shape would tire out that soon in the season?

Even in games like June 28th he got hammered despite not throwing a pitch for 3 days.

I think we need to hold pitchers accountable for their performances. He didn’t pitch Friday, he had plenty of time to “recover” from Thursday’s game.

The only excuse that *could* be made for yesterday is the fact he was facing the same organization that he was a part of from 2016-2023 so obviously the Yankees know his strengths and weaknesses better than anyone.

let – Sorry I have to disagree with you on this one.

Barnes through his Age 29 season had pitched 314 innings with an 11.7 K/9 and was well established with a career 2.8 bWAR.

Weissert halfway through his Age 29 season has pitched 68 innings with a 9.4 K/9 and has yet to establish himself with a career -0.5 bWAR.

10 hours ago

It’s how he’s used as well as how oftrn. It just seems like he’s in every game. It might though just be me and he’s hit a rough patch Fever. Hopefully, it’s not that the league has developed a book on him already.

Fever, not everyone comes up at the same age. I don’t have the stats but more important to me would be to compare 70 innings, rather than age.

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Weissert has improved against RHH this year, struggles against LHH. I would have comped Schreiber rather than Barnes. He is a useful pitcher, if used right, but not somebody you can throw out there in any situation against any lineup.

9 hours ago

tff – That’s a great comp, Schreiber has been absolutely pounded by LHB this season. I hope we see him next weekend.

Speaking of LHB, hafta give a shout out to my man Devers. Against the reigning Cy Young winner he smacks hit #1,000 before his 28th birthday and in his next at bat he hits an absolute moonshot against him.

I’ve been comparing him to Manny for many years now, he’s earning his contract.

7 hours ago

Devers isn’t Manny, Manny was probably the 2nd best hitter in a generation just behind Bonds. If ya want to say Griffey Jr I’d listen to that. If Devers can get a .340 35 HR season then we can begin to put him in that category. He strikes out a lot more than Manny ever did.

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2 hours ago

Tff17 – So how do you get around Cora being manager and using him incorrectly?

Thought you weren’t talking to me, TF?

I don’t see any way around that, do you? As long as Cora is the manager, he’s going to use his bullpen pieces as he sees fit.

Might also be limits to how many weaknesses a manager can protect against? Even under the best manager, Weissert is going to need to face some lefties. He’s just best off if that number is kept to a minimum, at least when the game is on the line.

kingburn – Devers has a PR machine behind him that leads you to think he’s better than he is. Manny was a machine like Papi. Devers is the guy missing the clutch gene.and has NOT put up Manny=like numbers. His career OPS+ for 19 seasons was 154!!!! Devers OPS+ never was as high as his 19 year average in his first 7 years. This year, while he off to his typical first half hot streak and he’s hitting better than ever before as he usually does before he slumps after the all-star break his OPS+ is 158 four points higher than Manny’s average. By year end, it will be below 154 like all other years where he starts out hot and fades. Manny’s 27 year old season produced an OPS+ of 174 which led the league.

Devers is a huge step down from Manny offensively and defensively and that says volumes about his defense!!!

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Guys got a wicked arm and strikes people out. He looked like a diamond in the rough when the Tigers signed him last year. Hope he gets a chance in Boston.

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Seconded ✌️

Great news. Maybe some magic still left. Bailey do your thing

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And Sparky Anderson said Rusty Meacham had as good of a curveball as Sandy Koufax !

Loved Sparky, but everyone knows he’d tell people that some third baseman in A-ball who batted .192 with 1 homer was going to be the next Mike Schmidt.

12 hours ago

Sparky was the ultimate Tigers optimist. I forget who he compared Barbaro Garbey to one time but it made me laugh.

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Crazy man. He once said Johnny Bench was the greatest catcher to ever play the game. Ok, fine, maybe he was right on that one.

Motor – He will definitely get a chance, and probably very quickly.

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This guy is giving off a Braiser vibe to me. Add a couple pitches and tweaking of the fb mechanics and *poof*, a quality mlb pitcher is pulled from a hat. …until batters adjust. Fix Trey, give him a couple weeks of awesomeness, then trade him for a better prospect than Weins. Like trading up on Craigslist!

DBH – We can only hope!

I don’t think Braiser is a good comp though, he had past success before getting fixed by the Dodgers. Dominant in 2018, sucked in 2019, dominant in 2021, sucked in 2022 until he went to the Dodgers in early 2023, and he sucks now (hoping Olm doesn’t see this post!).

Wing has never experienced success and at least two other organizations have tried to fix him.

I’m fine with taking a flyer on him, but I’d like to know who gets bumped from the 40 and I’d like an assurance that he won’t get thrown into a high leverage situation right away in the middle of a WC chase.

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To late… good bye cruel and middle cut slider world!!

5 hours ago

Article says he doesn’t have to go on the 40-man

20 seconds ago

DBH – Original article says “not immediately” and the update 43 minutes later says they must add him within the coming days. I wouldn’t steer you wrong brother.

And how about Devers, he goes oppo again!! Talk about a Yankee killer!!

Or playing the housing market….buy a dumpster fire, fix it up sell for 50%+ profit

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Trey Wingenter is a promising pitcher known for his fastball velocity and slider. He’s shown potential as a reliever with the ability to rack up strikeouts effectively when he’s on his game. However, his career has been somewhat hampered by injuries, which have limited his playing time and development. When healthy, he has demonstrated the capability to be a solid bullpen piece with the potential for higher leverage situations due to his stuff. Overall, he’s an intriguing player to watch when he’s able to stay on the field consistently.

I don’t know the pitcher but Tiger fans are supportive. Hopefully Sox fans get the last laugh. If he shows nothing until we see someone DFAed who should not have been, what’s the harm with taking a flyer? Detroit is doing the same with the return who I have never seen. Look how the Sox signed Refsnyder and all the laughs then. Teams make these moves every season, similar to a Rule 5 wildcard. Every once in a while there is a blue moon

19 hours ago

AI or a copy paste from a 2017 prospect write up?

@YourDreamGM

No, just me writing up my evaluation of him as a player.

4 hours ago

I figured. Just a lil joke because it would fit right in on fangraphs mlb etc. Well written.

Print your playoff tickets, Red Sux!

@cooperhill

The team is currently in the playoffs, thanks to the expansion of playoff teams by MLB. It’s similar to how we give trophies to all our kids now and have no fail policies all through their life. Imagine not failing at all in life until you become an adult and then learn the very hard reality when one gets fired from their job.

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it’s always funny when the people who either gave out the participation trophies or are from that generation whine about those who got them as they gave themselves those trophies.

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Correct. It’s not the kids making the rules, it’s the adults who do and then blame the kids for not being “tough” like they were.

20 hours ago

When did I give myself a trophy?

@ellisburks

I wasn’t blaming the kids. I literally was blaming the adults.

Unfortunately, MLB is catering to others, trying to increase their pocketbook like other sports when the uniqueness of having to win to get in brought out true races when it happened. I can live with one wild card as to have the chance of a Yankees – Red Sox ALCS was amazing in 03vand 04 but it’s overkill with three. Separately, don’t get me started about the ghost rule. If it was so good, why not use it in the playoffs. While I’m at it, get rid of the pizza box bases, oven mitts and require batters to only use shin guards and helmets or at least call it a strike/foul ball if you’re hit on an extended face guard or elbow pad.

I’m talking about those who gave them out vs those that got them. Either way complaining about participation trophies is pretty lame.

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We don’t know you bro. It’s possible you give yourself trophies numerous times throughout the day.

I like the pizza box bases, it’s brought the stolen base back as a thing. I don’t mind the pitch clock either, we didn’t need to have games ending at midnight and kids not being able to watch the whole thing. What I absolutely hate is the ghost runner, pretty much it forces ya to score at least 2 in extras to win. That runner from second is going to score more often than not, especially if the runner has some speed.

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LMMFAO Someone’s toes got stepped on , that must have a case full of participation trophies.

Pitch clock I love but that alone would have increased stolen bases. You can’t compare Lou Brock, Maury Wills or Rickey Henderson to anyone today due to the changes. At least get rid of the mitt that extends a player’s hand.

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8 hours ago

You’ve obviously never seen a player get a fastball to the face. The extended face guard is something that is long overdue. Nobody is going to lean into a 100 mph heater with their head because they have the face guard.

I was just responding in general to the other comment. Want directed at you. I think we were all in agreement.

Well since they have the 3rd Wild Card spot and only 5.5 games behind the Yankees for the top Wild Card spot, it’s probably a good idea to print playoff tickets. Thanks for the help!

Not so fast…KC, Houston, and Tampa are still right there too within a couple games. As surprising Boston has been I think Houston is going to have a big 2nd half.

King – Right you are! Astros are on a roll and when they get back some major talent in guys like Tucker and Verlander and Garcia they will be even more of a strong contender.

The Royals I expect to add enforcements at the deadline because they are in GFIN mode.

The Rays are kinda iffy, I think it will depend on who they decide to sell off.

Astros will win the division and the Twins, Seattle, Boston and KC will fight for the last WC spots.

I am aware it’s early July. It was sarcasm. Either way Red Sox will have a better record than The Yankees end of the year. That you can book.

Dewey – Don’t count out the Rangers. They still have a mash unit of star players waiting to return in the second half. Scherzer has made a difference and deGrom will too not to mention Mahle. Oh yeah, their stud 3B Jung was the catalyst last year that put them on a huge run and he’ll be back as well. Carter too is returning!! Talent wise they are better than Houston when healthy and way better than Boston, Minnesota, KC and the pretenders known as Seattle (will finish 3rd in division and watch the playoffs on their big screens!!)

Plenty of season left for things to change significantly. Bregman will go into a big slump like he always does before getting hot in Sept. Altuve and Alvarez can’t get hurt and how long will it take for Tucker to get in the groove and perform to his full abilities? Houston only wins in a perfect storm. If healthy, Texas wins the West with superior pitching and 8 position players that match-up with Houston.

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Per Quinn Riley on X:

“Newly acquired Sox reliever Trey Wingenter had a *50%* whiff rate on his gyro slider last year in 17 G w/ the DET (5.8 ERA). Reaches 99 with the FB but it gets hit hard with its poor shape. 3.31 ERA in AAA this year w/ a 46.7% SL whiff rate and he’s also developed a new splitter.”

Sounds like he may be serviceable if they fix the shape of his fastball which I assume is too straight.

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Dude is pretty burly and throws some mean cheese- but the train stays on the tracks. Not a bad add, I’d take him back in SD!

Could be serviceable as is. But if they improve him they really got something.

This is what Bailey was brought in to fix, we shall see. I’m betting he gets a sweeper next year.

Wonder if his fastball would move better with a little less velo? Or at least make it easier to locate?

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3 hours ago

All in – totally agree

Cooper – He will ignore the career 5.28 ERA and come up with some obscure analytic in an attempt to justify the “demonstrated the capability to be a solid bullpen piece” claim.

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The bullpen has been gassed over the last 3 days so i expect shuffling of the deck coming

Hopefully, tonight is not a taxing evening

dewey – Kelly hasn’t pitched since Thursday and Boozer, Horn, Jansen and Slaten haven’t pitched since Friday.

And tomorrow is an offday.

So I’m pretty sure Cora won’t be running out of pitchers to use tonight.

Easy win for the Tigers just got a free prospect. Wingenter wasn’t 40 man worthy.

Another win win as Boston didn’t lose much. A reliever they can find easily and cheap in any draft. If they thought much of him they should have kept him. Nothing jumped out as me as being special must keep. You add guys like that everywhere and hope you get lucky. One is good as the next.

I like Wingenter in low leverage. Come in and get a RHB out. Pitch entire inning vs a RHB heavy lineup. Not a good fit for Fenway though. But he was cheap to get. And just takes 1 coach to improve something. But as is he is good as one of your weakest pen arms.

YDGM, read my above post. We worded it differently but basically are in agreement. Would you marry me, my wife and I far less lately on being on the same page…

17 hours ago

Lol. You can show your wife that the world’s greatest baseball mind agrees with you. That will impress her!!!!!!!

Let’s get real. I ain’t scouting 6th round pick A ball relievers very hard unless asked to do so. I ran him through my formula and it came out as expected. Sox know him better than anyone so gotta trust them if that’s your team.

Tigers fan should be happy receiving anything and Sox fans should see how their new reliever does and never think about that prospect again. I think our way of viewing it is best but seen someone looking at his career era and that’s fine as well. Probably just as likely to be at 5 vs 3 but I would choose in the middle of the two. Might not be enough sample size to even think about looking at era because he will have to really show well to be back next year. Hope he does but I still won’t be looking at his era but it will give a better indicator for those who do.

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Bitter beer face.

' src=

Ok. MLBTR will no longer get my business. The Gigi crowd has taken over the site and Tiger baseball and administration here support abuse of posters.

Tiger fans here are so dumb. Chris Illich hired a kid, who is delighted just to have the position and job. A veteran POBO, would have demanded a budget to build.a winner.

Chris Illich has no intention of building a winner.

Administration does not do thier jobs here.

' src=

Or maybe it’s you that’s dumb, Stuperfife. I’m glad, if true, that you’ll leave this board. We won’t miss your act and indecipherable drivel. Don’t go away mad, just go away.

A banner day for Tigers fans if this is true. Unfortunately, I doubt you can stay away.

Stuperfife is back, under a different name. Trevor is Waiting or something like that, babbling on about himself being someone named Trevor (not Bauer) needing to be signed by the Tigers. He’s delusional and a drama queen.

' src=

This is a simple move similar to the Alex Speas move big arm see if you can harness it. It’s unlikely but you never know when someone figures it out and who knows maybe the pitching lab led can help one of these guys. This is a low risk move only costs a 40 man spot maybe they can somewhat harness the control of one of these guys. It’s obvious that Breslow likes big arms.

Bruin – Agreed, but there’s a fine line between confidence and arrogance. It’s cool the 3 B’s are confident they can fix a pitcher who has been brutal his entire career, but let’s see who gets bumped from the 40 and let’s see if Cora eases him into low leverage situations or throws him into the fire like he did with Campbell and Slaten to name two.

Can I start the…. Must win for the Sox tonight?? And use it the rest of the season…???

' src=

They gonna pick up Golic and Kenny Mayne too?

Aside from that….YOU GUYS PROBABLY PUT KETCHUP ON YOUR HOTDOGS.

Sts!!! Away Satan!!! From Chicago!! You could’ve said Ditka is a packers fan and statement would have been more true!!!LOL!!

30 mins ago

Stuperfife, you and your alter egos can leave now, as you threatened above. Oh yeah you can’t because you love the drama. Your brain is so bloody after it’s long bleed that it’s a wonder you can read your own comments,

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assignment clause for merger

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assignment clause for merger

Private Equity

A recent federal court decision applying Delaware law, , 2021 WL 2716307 (S.D.N.Y. July 1, 2021), explores some rare contractual territory— , the question whether, in the absence of consent, a valid assignment may be made by a party of its rights to pursue a claim for damages for breach of a merger agreement, notwithstanding an anti-assignment clause that declared “void” any assignment of “any or all of” such party’s “rights under” that merger agreement. Surely, some might say, the right to claim damages for a breach of a contact is a “right[] under” that contract and would accordingly be prohibited by such a broad anti-assignment clause. Not so says the United States District Court for the Southern District of New York; and, in case you were wondering, this holding is consistent with long standing law concerning the scope of even the broadest anti-assignment provisions.

An important component of buy-side diligence is identifying the target’s material contracts that contain anti-assignment or change-of-control clauses, evaluating whether the proposed acquisition will trigger any of the identified clauses, and determining the consequences of proceeding with the proposed acquisition in the absence of consent if the clause is in fact triggered. Many times, there are structuring alternatives to avoid triggering the identified clause — , in the absence of a change-of-control clause, a stock purchase or reverse merger may be a means of structuring the transaction so there is no actual assignment of the contract at all.  And sometimes, the consequence of triggering the clause is not a void assignment or a terminable contract, but simply a breach of contract with limited or no real damages. But when there is an unquestionable assignment occurring, and the anti-assignment clause declares any assignment triggered by the clause to be void, are certain assignments of rights related to a contract nonetheless outside the scope of that anti-assignment clause?

did not involve an anti-assignment clause in a target contract. Instead, involved an anti-assignment clause in a merger agreement between a potential buyer, RPM Mortgage, Inc. (“RPM”), and the target, Entitle Direct Group, Inc. (“Entitle”). But the legal principles involved in resolving this case have potential applicability in both diligence and deal structuring generally.

In , the merger between Entitle and RPM failed for reasons that were disputed, but Entitle terminated the agreement while apparently preserving its right to sue for damages based on alleged breaches by RPM. Thereafter, Entitle entered into and closed an alternative merger with a third party in which Entitle was the surviving company. But as part of making that alternative merger deal, one of the shareholders of Entitle, Partner Reinsurance Company Ltd. (“Partner Re”), bargained to retain any claim Entitle had against RPM for the original failed merger agreement. Because that claim belonged to Entitle, as the party actually harmed by the failed merger (as opposed to its individual shareholders), Partner Re obtained an assignment from Entitle when the merger with the third party closed that “assign[ed] to Partner Re the exclusive right to pursue any claims [Entitle] may have in respect of [the failed merger agreement].”

When Partner Re sued RPM for damages arising from the failed merger agreement between Entitle and RPM, RPM sought to dismiss the case because “Partner Re lack[ed] contractual standing to pursue [the] action.” In other words, RPM argued that the purported assignment by Entitle of its rights to pursue damages for RPM’s alleged breach of the failed merger agreement was ineffective because of the anti-assignment clause set forth in the Entitle/RPM merger agreement. Note that RPM did not challenge the merger between Entitle and the third party because Entitle survived that merger— , the merger was a reverse merger.

The anti-assignment clause in the Entitle/RPM merger agreement read as follows:

. No Party to this Agreement may directly or indirectly assign any or all of its rights or delegate any or all of its obligations under this Agreement without the express prior written consent of each other Party to this Agreement. This Agreement shall be binding upon and inure to the benefit of the Parties to this Agreement and their respective successors and permitted assigns. Any attempted assignment in violation of this Section 11.6 shall be void.

Had the court sided with RPM, the assignment agreement between Partner Re and Entitle provided that Entitle had no obligation to pursue the claim on behalf of Partner Re—so this was not just a question of who was going to sue, but whether there was going to be any suit at all. But the court sided with Partner Re.

The Entitle/RPM merger agreement was governed by Delaware law; thus the scope of its anti-assignment clause was determined by applying Delaware law. While “Delaware courts recognize the validity of clauses limiting a party’s ability to subsequently assign its rights,” they “generally follow the approach of the Restatement (Second) of Contracts § 322(2)[a] (1981).” And, “[t]hat section provides that ‘[a] contract term prohibiting assignment of rights under that contract, unless a different intention is manifest, … does not forbid assignment of a right to damages for breach of the whole contract or a right arising out of the assignor’s due performance of his entire obligation[.]’” As noted by the court, this rule has been applied by “[c]ourts across the country … to permit assignments of claim[s] for damages even where the relevant parties’ contract includes a clear prohibition on the assignment of rights or duties.”

Thus, because Entitle had assigned to Partner Re only its claims for damages arising from the alleged breach of the failed merger agreement by RPM, the assignment “was unaffected by the Merger Agreement’s anti-assignment clause.” Interestingly, the court noted that there is a distinction between claims for breach of contract, which are not considered “rights under” a contract, and claims for payments to be made under a contract prior to a breach, which are considered “rights under” a contract. The bottom line: if you wish to restrict assignment of claims for damages arising from breach of contract (and even other rights that arise following full performance by a party under a contract), you have to be explicit in your anti-assignment clause regarding such rights; and a mere restriction on the assignment of “any or all rights under the contract” lacks the required explicitness.

And while we are on the subject of anti-assignment clauses and explicitness requirements, there are two additional explicitness rules in Restatement (Second) of Contracts § 322 that merit attention. The first is that a clause only prohibiting an assignment of “the contract,” without more, does not prohibit the assignment of rights arising from that contract; instead it only prohibits the delegation or assignment of a party’s obligations.  Thus, depending on the continued performance required by a target under a contract and recognition of this rule by the jurisdiction governing the contract, a mere prohibition on the assignment of “the contract” may not prevent a transaction involving the assignment of the target’s rights under that contract.

The second rule is one that is frequently overlooked. But, when this rule is recognized by the applicable jurisdiction, it can provide potential structuring flexibility. The second rule states that a contractual provision that prohibits the assignment of rights under the contract, without more, does not render an assignment made in violation of that clause ineffective; instead, such a clause only permits the other party to sue for damages for a breach of that clause.  The second rule thus distinguishes between the power to assign and the contractual right to assign; if the power to assign is restricted, then no assignment in violation of that provision can occur, but if only the right to assign is restricted, then an assignment in violation of that provision gives rise to a breach of contract.

An anti-assignment clause declaring void an assignment made in violation of that clause is categorized as a clause restricting the power to assign, while those that do not are typically viewed as only limiting the right to assign.  Of course, if the contract permits the non-breaching party to terminate upon breach of the contract by the other party (like many leases do when the tenant breaches an anti-assignment clause), that distinction may be of little value. But in other cases where there are no appreciable compensatory damages arising from an assignment in breach of a right-to-assign anti-assignment clause, this rule could permit an assignment made in violation of such a clause to otherwise remain valid. Being aware of the caselaw of the specific jurisdiction that governs the contract, however, remains paramount.

When faced with drafting an anti-assignment clause, it is obviously important to draft clearly to cover what the parties intend to cover; and when faced with interpreting an anti-assignment clause drafted by others it is likewise important to read carefully the words the parties chose to express their intent in the contract. But reading or drafting clarity is not enough. It is also important know how the courts have interpreted similar clauses and what additional words are sometimes required to accomplish your objectives, as well as what the absence of those words may mean as you are considering structuring alternatives in the face of an anti-assignment clause lacking those words.



   (↵ returns to text)
Glenn West Weil , Weil’s Global Private Equity Watch, September 22, 2020, ; Glenn West Weil , Weil’s Global Private Equity Watch, April 27, 2020, . Stephen L. Sepinuck, , 2018-Aug. Bus. L. Today 1. 29 Williston on Contracts § 74:22 (4th ed.).

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Guide to the june 2024 amendments to the competition act.

June 25, 2024

Important amendments to the Competition Act became law on June 20, 2024, following Royal Assent of Bill C- 59, the Fall Economic Statement Implementation Act, 2023 . The Government of Canada has made these changes as a part of its modernization of Canada’s competition regime.

This guide provides an overview of the most important changes.

The guide is not a legal document and does not replace legal advice. The Competition Bureau will be reviewing and updating its enforcement guidance to ensure transparency and predictability for the business and legal communities.

On this page:

More effective merger control, stronger powers to address anti-competitive agreements, enhanced refusal to deal provision.

  • Improvements to the deceptive marketing provisions

Expanded private access to the Competition Tribunal

Other changes.

Effective merger control is essential for Canadians to receive the benefits of a competitive marketplace. Anti-competitive mergers can lead to real harm in the economy, including higher prices, fewer choices, and lower levels of innovation.

The Competition Act includes provisions to address anti-competitive mergers . While the Competition Bureau can review any merger in Canada, the Bureau must be notified in advance of mergers that exceed certain financial thresholds. This allows the Bureau to conduct a review and, if necessary, challenge a merger before the Competition Tribunal or obtain remedies prior to the transaction closing.

The amendments to the Competition Act make important changes that allow the Competition Bureau to address anti-competitive mergers more effectively. This includes:

  • Merging parties may seek to rebut this presumption if there is sufficient evidence that the merger will not substantially prevent or lessen competition.

When does the new presumption apply for mergers?

Under the changes to the Competition Act , a merger is presumed to be anti-competitive if it significantly increases concentration or market share.

  • Concentration is measured with a concentration index , which is defined as the sum of the squares of the market shares in the relevant market. This is also known as the Herfindahl-Hirschman Index .

This presumption applies if, in any relevant market:

  • the concentration index after the merger increases or is likely to increase by more than 100; and
  • the concentration index after the merger is or is likely to be more than 1,800, or
  • the combined market share of the parties to the merger or proposed merger is or is likely to be more than 30%.

The specific thresholds for this presumption can be updated through regulations.

  • Previously, merger remedies only had to lessen the competitive harm caused by the merger so that it was not substantial.
  • Clarifying that the Competition Tribunal can consider competitive harm in labour markets, as well as the risk of coordination between competitors, when deciding whether a merger or a part of a merger should be allowed.
  • As an example, a company’s sales into Canada now count towards the transaction-size threshold for notification purposes.
  • Extending from one year to three years the period the Competition Bureau has to challenge a merger for which it was not notified.
  • The changes temporarily pause mergers when there is a pending application for an injunction before the Competition Tribunal.
  • Previously, parties could close a merger before the Competition Tribunal was able to issue a decision on an injunction application.

Other recent amendments to the Competition Act have removed the efficiencies defence for anti-competitive mergers, and expanded the list of factors that the Competition Tribunal could consider to decide whether a merger will harm competition.

The Competition Act contains both criminal and civil provisions dealing with anti-competitive agreements between businesses. The amendments significantly strengthen the civil provision which prevents companies from entering into agreements that substantially prevent or lessen competition.

Specifically, the changes:

  • Previously, the Competition Bureau could only challenge existing or proposed agreements that harmed competition in the present or were likely to in the future.
  • Allow the Competition Tribunal to impose monetary penalties and order parties to an anti-competitive agreement to take actions necessary to restore competition.
  • Previously, only the Competition Bureau had the authority to challenge anti-competitive agreements under the civil provision.

In most cases, businesses have the right to decide who they do business with. However, the Competition Act prohibits a business from refusing to deal with another business if that refusal harms competition and meets other conditions.

The changes:

  • Previously, the provision only applied to extreme cases where a refusal was substantially affecting the entirety of the business that was refused.
  • This change will help independent firms that provide repair services get access to the information and parts they need to repair products.

Improvements to the deceptive marketing practices provisions

Under the Competition Act , it is illegal to advertise or market something in a way that is false or misleading .

The changes strengthen the Competition Bureau’s ability to act against bogus discount claims and drip pricing by:

  • Requiring that businesses be able to establish that their discount claims are genuine.
  • Previously, some firms had interpreted the Competition Act as allowing them to pass their own business taxes and regulatory compliance costs onto consumers as mandatory hidden fees.

The changes also tackle unsupported environmental claims, commonly known as greenwashing, by:

  • Requiring that claims about the environmental benefits of a product be supported by adequate and proper testing.
  • Requiring that claims about the environmental benefits of a business or business activity be based on adequate and proper substantiation in accordance with an internationally recognized methodology.
  • The Bureau is assessing the impact of these requirements and expects to provide guidance, in due course, that will offer transparency and predictability for the business and the legal communities in the enforcement of the law.

Under the Competition Act , private parties can apply directly to the Competition Tribunal to challenge certain types of anti-competitive conduct.

  • Previously, private access was limited to provisions involving refusal to deal, price maintenance, exclusive dealing, tied selling and market restriction, and abuse of dominance.
  • Previously, in most cases, only businesses whose entire operations were directly and significantly impacted by the alleged anti-competitive conduct were permitted to apply directly to the Competition Tribunal.
  • Allow the Competition Tribunal to order those who contravene the Competition Act to make monetary payments to persons affected by the anti-competitive conduct.

These changes will come into force on June 20, 2025.

  • Civil mechanism for enforcing consent agreements: Most civil cases under the Competition Act are resolved through a negotiated consent agreements that set out what companies agree to do to resolve concerns. The amendments provide the Competition Bureau with a new tool to enforce compliance with these agreements, including the option for the Competition Tribunal to impose administrative monetary penalties if parties don’t meet their commitments. This will help ensure that businesses follow through on the terms of their consent agreements.
  • Reprisal actions: The amendments prohibit anyone from penalizing, harassing or disadvantaging another person based on that person’s communication or cooperation under the Competition Act . This provides an additional layer of protection for whistleblowers, complainants, industry participants and others that come forward and provide assistance under the Competition Act .
  • Cost awards: The amendments limit the circumstances where the Competition Bureau would be required to pay costs following a case at the Competition Tribunal. This change reduces the chilling effect that potential cost awards can have on public interest enforcement.
  • Environmental collaboration certificates: Businesses considering collaborating with one another to protect the environment can seek a certificate from the Competition Bureau confirming that the Competition Act ’s conspiracy, bid-rigging and civil agreement provisions will not apply to the collaboration. The Bureau can grant a certificate if it is satisfied that the agreement is for the purpose of protecting the environment and that it will not harm competition.

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  6. Merger Clause explained by Attorney Steve

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  1. What Is An Assignment Clause? #shorts

  2. 2.1 MERGERS & ACQUISITION OF COMPANIES

  3. English assignment If clause imperative and suggestion

  4. Noun Clause

  5. Assignment Clause & EMD with Matt Duke

  6. Assignment Clauses

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  1. Assignment; Merger Sample Clauses

    Sample 1. Assignment; Merger. Company may not assign this Agreement or any of its rights or delegate any of its duties under this Agreement without the prior written consent of T-Mobile. For purposes of this Section 11 (b), an "assignment" shall include a corporate reorganization or spin-off of business units or related assets, to any ...

  2. Assignment Clause: Meaning & Samples (2022)

    Assignment Clause Examples. Examples of assignment clauses include: Example 1. A business closing or a change of control occurs. Example 2. New services providers taking over existing customer contracts. Example 3. Unique real estate obligations transferring to a new property owner as a condition of sale. Example 4.

  3. Don't Confuse Change of Control and Assignment Terms

    An assignment clause governs whether and when a party can transfer the contract to someone else. Often, it covers what happens in a change of control: whether a party can assign the contract to its buyer if it gets merged into a company or completely bought out. ... They say whether a party can terminate if the other party goes through a merger ...

  4. Assigning Contracts in the Context of M&A Transactions

    One of the key considerations in structuring merger and acquisition (M&A) transactions is determining which contracts of the target company, if any, will remain in effect for the acquiror following closing. This post will briefly outline: (1) the general rules of contract assignment; (2) the effect of anti-assignment clauses and other ...

  5. Assignment and Merger Sample Clauses

    Sample 1 Sample 2. Assignment and Merger. (134) 01/08/16 Contractor shall not assign, or transfer any interest in this Contract without the prior written consent of DHS. In case of a merger between Contractor and another entity, Contractor must notify DHS immediately. DHS shall have the right to request that the resulting entity provide ...

  6. ASSIGNMENT; MERGER OR REORGANIZATION Sample Clauses

    Sample Clauses. ASSIGNMENT; MERGER OR REORGANIZATION. Executive may not assign any of his rights, duties or obligations hereunder without prior written consent of the Company. The rights and obligations of the Company under this Agreement may, without the consent of Executive, be assigned by the Company to any Affiliate of the Company or to any ...

  7. Merger Clause (Overview: What Is It And Why It's Important)

    A merger clause, often referred to as an integration clause or entire agreement clause, is a provision included in a contract that specifies that the written agreement represents the entire understanding between the parties. It serves to clarify that the contract, and the terms and conditions outlined within it, supersedes any prior oral or ...

  8. Merger Clause: Meaning & Samples (2022)

    Merger Clause Examples. Examples of merger clauses include: Example 1: Renewing an executive director's contract. Example 2: Nullifying all other agreements when renting to a tenant. Example 3: Buying a business outright from another individual. Example 4: Agreeing to new corporate protocols after a merger. Example 5: Asset purchase ...

  9. Assignment and Successors Contract Clauses (381)

    Assignment and Successors.The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all of the business or the assets of the Company (by Company, by merger or otherwise), otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates.

  10. Mergers and Restrictions on Assignments by "Operation of Law"

    Nonetheless, " [w]hen an anti-assignment clause includes language referencing an assignment 'by operation of law,' Delaware courts generally agree that the clause applies to mergers in which the contracting company is not the surviving entity.". [3] Here the anti-assignment clause in the original acquisition agreement did purport to ...

  11. What is an Assignment Clause?

    An assignment clause regulates the extent to which a party's interest in a contract may be assigned to another party; anti-assignment clauses are common because without them, generally, contracts are freely assignable. ... in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the ...

  12. Understanding Assignment Clauses in Contracts

    If the company undergoes a merger, the assignment clause becomes critical in determining whether the rights and obligations under the service agreement can be transferred to the newly formed entity. Conclusion: Understanding assignment clauses is fundamental for anyone entering into a contract, whether as an individual or a business entity.

  13. Assignments Contract Clause Examples

    Assignments. No Party shall assign this Agreement or any part hereof without the prior written consent of the other Parties. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns. Any attempted assignment in violation of the terms of this ...

  14. Merger Contract Clause Examples

    Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Section 252 of the DGCL and Section 53-14-7 of the NMS, the Company shall be merged with and into the Acquiror at the Effective Time (as hereinafter defined). Following the Effective Time, the separate corporate existence of the Company ...

  15. Spotting issues with assignment clauses in M&A Due Diligence

    This is why reviewing contracts for assignment clauses is so critical. A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty's right to consent to the assignment of a contract ...

  16. Merger, Consolidation or Sale of Assets; Assignment Sample Clauses

    For purposes of this Agreement, a merger, consolidation or sale of all or substantially all of a party 's assets shall not be deemed an assignment; provided that such party 's rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction and shall not be transferred separate from all or ...

  17. Assignment provisions in contracts

    See also (list is generated automatically):. Notebook update: Reverse triangular merger might be an assignment of a contract, requiring consent Just updated the Notebook with a citation to a case in which the Delaware Chancery Court refused to rule out the possibility that a reverse...; Assignment-consent requirements can cause serious problems in future M&A transactions A lot of contracts ...

  18. Stuff You Might Need to Know: What Assignments Do Broad Anti-Assignment

    The anti-assignment clause in the Entitle/RPM merger agreement read as follows: Successors and Assigns. No Party to this Agreement may directly or indirectly assign any or all of its rights or ...

  19. Know the Law: When is an "Assignment" Clause Worth Fighting For?

    A. First, it's important to understand the purpose of the assignment clause. "Assignment" occurs when a party transfers its rights and obligations under a contract to another party. Generally, unless the parties have agreed otherwise, each can assign its rights and obligations freely. Article 2 of the Uniform Commercial Code, a set of ...

  20. Mergers and Restrictions on Assignments by "Operation of Law"

    Nonetheless, "[w]hen an anti-assignment clause includes language referencing an assignment 'by operation of law,' Delaware courts generally agree that the clause applies to mergers in which ...

  21. MERGER ASSIGNMENT Sample Clauses

    MERGER ASSIGNMENT. This Agreement embodies the entire Agreement between AGLSC and Contractor. The parties shall not be bound by or liable for any statement, writing, representation, promise, inducemen...

  22. PDF Appendix a Standard Clauses for New York State Contracts

    STANDARD CLAUSES FOR NYS CONTRACTS APPENDIX A Page 2 June 2023 TABLE OF CONTENTS Page 1. Executory Clause 3 2. Non-Assignment Clause 3 3. Comptroller's Approval 3 4. Workers' Compensation Benefits 3 5. Non-Discrimination Requirements 3 6. Wage and Hours Provisions 3-4 7. Non-Collusive Bidding Certification 4 8.

  23. Red Sox Acquire Trey Wingenter

    9:19PM: Wingenter has an assignment clause in his contract, according to Chris Cotillo of MassLive, and as such will need to be added to the club's 40-man roster in the coming days. No ...

  24. Assignment Sample Clauses: 400k Samples

    Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, but shall not be assigned by any party without the prior written consent of the other parties. Sample 1 Sample 2 Sample 3 See All ( 1k) Assignment. Neither party may assign any of its rights or obligations ...

  25. Judge delays ban on noncompete agreements for small number of employers

    Related article FTC unanimously moves to block $4 billion merger of mattress giants The US Chamber of Commerce, in a statement, characterized the limited preliminary injunction as a win.

  26. Stuff You Might Need to Know: What Assignments Do Broad Anti-Assignment

    Note that RPM did not challenge the merger between Entitle and the third party because Entitle survived that merger—i.e., the merger was a reverse merger. The anti-assignment clause in the Entitle/RPM merger agreement read as follows: Successors and Assigns. No Party to this Agreement may directly or indirectly assign any or all of its rights ...

  27. Guide to the June 2024 amendments to the Competition Act

    More effective merger control. Effective merger control is essential for Canadians to receive the benefits of a competitive marketplace. Anti-competitive mergers can lead to real harm in the economy, including higher prices, fewer choices, and lower levels of innovation. The Competition Act includes provisions to address anti-competitive mergers.