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ARTICLE · 03 JULY 2014

Assignment & novation clauses in commercial contracts

Rockwell Olivier
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This article explains assignment and novation and an entire agreement clause, with examples, particularly from leases.

AustraliaCorporate/Commercial Law
Paul Kordic
Paul Kordic

3.1 Assignment

An assignment clause usually allows a transfer of rights, benefits and obligations under a contract from one party to another.

A party will usually wish to ensure that it continues to deal with the party it originally contracts with. There may even be an option of terminating the contract in the event of an attempt at substituting the other party or in the event of a change of control in the other entity.

It is often desirable to have a process to have the final right of approval of any change in the other party.

In contractual relationships, where one of the parties has the "upper hand" over the other 5 assignment clauses can often operate unilaterally preventing the lessee from assigning.

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