Assignment and Assumption Agreement
Parties can use this Assignment and Assumption Agreement to transfer contractual rights and obligations to another party. Additionally, parties to this agreement can transfer assets that have associated duties and obligations (such as a permit or license).
This agreement assumes that parties are delivering it as an ancillary document in an asset purchase to transfer the seller’s rights and obligations under certain contracts to the buyer. Additionally, this agreement assumes that the parties are transferring “Assigned Contracts” in the related asset purchase agreement. Typically, parties can define “Assigned Contracts” by listing the specific contracts on a disclosure schedule to the Asset Purchase Agreement. However, listing the specific contracts on a disclosure schedule may be time consuming. Nevertheless, the list helps parties avoid ambiguity regarding the contracts assigned to and assumed by the buyer.On the other hand, parties may define the term by drafting a general description of the contracts being transferred. For example, parties may define the term as “all of Seller’s contracts with customers.” Parties commonly do this, especially when transacting the sale of an entire business. Moreover, doing this can help parties ensure that a contract inadvertently left off the schedule is included in the transfer. Some parties may choose to use a combination of these two methods.
If the Asset Purchase Agreement does not contain a defined term for the contracts being transferred, the contracts need descriptions in the Assignment and Assumption Agreement. Parties may do this by either or both of the methods mentioned above. Additionally, parties may accomplish this by attaching a schedule with a list of the contracts and/or a general description. The best method to use depends on the parties’ objectives.
Parties may include boilerplate provisions in the Assignment and Assumption Agreement. If so, they should be consistent with the boilerplate provisions contained in the related Asset Purchase Agreement.
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