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As contracts age, you may come to a point where you want to transfer your rights and benefits under a contract to another person. There are a couple of ways you can do this, one of which being through an assignment. Sometimes, your original contract will have an assignment clause detailing how you should go through the assignment process. However, not every contract has such a clause, so you can use a deed of assignment to transfer the original contract to another person. A deed of assignment is an important document you can use in a variety of situations. This article will help you understand:

  • how assignment works;
  • what is beneficial to put in your deed of assignment; and
  • some possible situations where you would use this legal document.

What is Assignment?

Assignments are a common way of transferring contracts in the commercial world. In an assignment, you, the assignor, assign the benefits and rights of the contract you hold to an assignee, a third party to your original contract. The assignee will then continue to perform the contract, and receive the benefits from doing so.

However, an assignment does not transfer your original obligations to the person you formed the contract with. You still have to perform your side of the contract.

For example, if you assign your lease to a new tenant, you still have to pay any rent you have owing. In most cases, assigning a contract does not need the consent of all parties. However, some contracts have an express clause prohibiting assignment, so it is important to check the terms of your contract.

What Is In a Deed of Assignment?

You will want to make sure you properly draft your deed of assignment to make sure you do not leave any avenues open for legal consequences later on. Your deed will vary depending on your situation, but generally, you will want to include:

  • who the assignor is;
  • who the assignee is;
  • the signatures of both parties;
  • witness signatures, if the situation requires;
  • contact details of both parties;
  • the nature of the contract or legal device you are assigning;
  • what benefits and rights you are assigning; 
  • any payments that need to be made; and 
  • how those benefits manifest – whether that be through financial means, or service performed.

If you are unsure about what your deed needs to cover, it is a good idea to obtain legal advice.

When You Would Use a Deed of Assignment

Transferral of Creditor Rights

You can use a deed of assignment to transfer the right to be paid a debt. This means that you would transfer the benefit of that debt payment to someone else, while the original party you contracted with still performs their end of paying back the debt.

Transferring Ownership of a Trade Mark

You may be in the situation where you are transferring the copyright of a trademark to someone else’s name.

For example, if you are a graphic designer, you would design the logo, and assign the copyright of the trademark or logo you created to someone else. This would require a signed deed of assignment as the legal document proving the transfer of ownership.

Selling a Business

In the process of selling your business, you may use a deed of assignment to transfer any pre-existing commercial contracts you have with customers to whoever is buying your business. This means that the new owner can still maintain those customer relationships without having to enter into an entirely new contract.

Assignment of Lease

Deeds of assignment are often used in real estate transactions. If you are a tenant, you may wish to assign your lease to new tenants and move off of the property. You would use a deed of assignment to transfer your rights under the lease to the new tenant.

However, there are some additional requirements that you need to consider in this process. Usually, you need the permission of your landlord, and you need to make sure that the new tenant is respectable, responsible and able to fulfil any financial obligations that may arise under the lease in the future.

Making an EQC Claim

If you are buying or selling a house, and there is an already existing claim by the Earthquake Commission (EQC) investigating potential natural disaster damage on the house, transferring that claim is a part of the purchase process. You can transfer (or have transferred to you) the rights to the benefit of that claim using a deed of assignment. The deed will need to include all information about the claim, such as reference numbers and insurance information 

Key Takeaways

Assignment is the process where you, the assignor, transfer the rights and benefits under a contract to a new person, the assignee. You need to formalise this process in writing in some way, and you can use a deed of assignment to fulfil this requirement. There are a variety of situations you can use a deed of assignment in, so it is important to tailor your deed to the specifics of your case. If you want more information or help with drafting your deed of assignment, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What is an assignment?

An assignment is when you (the Assignor) transfer your rights from a contract to someone else (the Assignee). But, you still have to fulfil any outstanding obligations you have under the contract.

What is a deed of assignment?

A deed of assignment is the contract outlining the assignment process. This is a written record of the transfer of rights that happens in an assignment and is signed by both the Assignor and the Assignee.

What do I need in a deed of assignment?

In a deed of assignment, you need to outline what exactly is being assigned to the third party. Both parties need to sign the document, and also the signatures of witnesses to the document.

When would I use a deed of assignment?

You can use a deed of assignment in a variety of situations. Often, you would use it as a proof of transfer of ownership of legal property. This can apply to intellectual property, such as trademarks, or real estate property, such as the lease on commercial premises of your business.

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