A Brief Introduction About Consent to Assignment
A contract or a clause that assigns the rights of property, trademarks, copyrights, or software, or for transfers of any business transactions is consent to assignment. As the name suggests, in the assignment of contracts, one party agrees to assign the rights of the property to another party. It is a written agreement that includes the terms and conditions of the transfer and enables both parties to be protected in the case of any discrepancies between them.
Who Takes the Consent to Assignment? – People Involved
Consent to assignment takes place between the owner of property or the transferor and the person to whom such assignment is to be made — the transferee. It is made either as a separate contract or a part of any existing agreement. For example, in the case of a software development agreement, post the development, the developer consents to the assignment of the rights to the software to his client or the customer.
Purpose of a Consent to Assignment – Why Do You Need It?
The purpose of an assignment in a contract is to clarify and establish the terms of the transfers that will take place. It states the conditions and events in the case of which the transfer will take place. It also sets out the conditions that must continue to prevail for the transfer or assignment to remain valid. Lastly, the document provides written proof of the transaction and a ready reference for all the terms, conditions, roles and responsibilities of the parties involved.
Contents of a Consent to Assignment – Inclusions
The important things to include in consent to the assignment are shown below:
- The name, address, and particulars of the transferor and transferee in the transaction to be taken place.
- The duration and validity of the contract.
- The particulars of the transfer. This should include details about the property being transferred or the rights that are being assigned.
- In case of a staggered transfer, the details and breakdown of each section must be mentioned. The various trenches of transfer should be laid out in the contract.
- The conditions that are required to be fulfilled for the assignment to take place.
- Any documentation required from either party to fulfill any of the conditions stated above.
- The details regarding the fees, brokerage or commission involved in the transaction and the details of any deposit that may be needed for the transfer of rights.
- Clauses on dispute resolutions and the waiver of the agreement.
- The details about any related future assignments.
How to Draft a Consent to Assignment?
When consent to assignment is being drafted, the following must be kept in mind:
- Based on what documentation is required for the fulfillment of any of the conditions that are set for an assignment of rights to take place, the clauses must be drafted to cater to the specific documents.
- In case the consent forms a part of another contract, it may affect the terms of the contract. You should note how the contract may be affected and include clauses accordingly.
- All the monetary aspects must be agreed upon. This included any fees and commissions as well as security deposits to be made. The same should be mentioned along with the due dates and timelines. The periodicity of the amounts should be discussed, i.e., whether it is a onetime fee or a recurring fee. Further, the refund of any deposits, on the vacancy/return of the property or the completion of the term of the contract must be discussed.
- Based on probable disputes, you can include dispute resolution measures to ensure that there are minimal conflicts at the time of the transaction.
- All terms of the contract must be explicitly stated.
During the negotiation of the contract, the following should be discussed and agreed upon between both parties:
- The duration of the contract or the period for which the rights are granted by the transferor. The rights to the property may be granted indefinitely or for a fixed period depending on the nature of the object for which the rights are being transferred.
- The fees and deposit amount must be agreed upon. Also, the periodicity of the same should be discussed.
- The conditions needed to be fulfilled for the assignment to take place should be discussed, and any reasons for previously withholding such assignment must be addressed.
Benefits & Drawbacks of Consent to Assignment
The benefits of having a documented consent in place are that it protects the parties in case of any disagreements.
It is most prevalent in the transfer to rights to property in the form of leases and is documented in consent to assignment of lease form. Since these are generally long-term contracts, it is beneficial for both parties to discuss the terms and covenants of the agreement in advance.
The main visible drawback of a formal agreement is the time-consuming process and the cost involved. However, on looking at the bigger picture, it is always better to agree to avoid disputes and as such, be saved from legal costs that they involve.
What Happens in Case of Violation?
In case of a violation of the contract(1), the actions stated therein may be applied. The disputes may be resolved using the processes laid out in the contract. Further, this event may call into question the termination of the assignment and transfer the ownership or the rights of the property back to its original owner or the transferor.
In case of damages caused to either party, the agreement would constitute a legally binding document and can also be presented in court for redressal of the matter.
The main intention of having the consent documented is to establish the terms of such transactions and to enable both parties to include their respective covenants.
Having a written agreement in place protects both parties in case any conflict arises between them.