Assignment Clause: Meaning, Sample & Drafting Tips (India)
An assignment clause controls whether a party may transfer its rights, obligations or the whole contract to someone else. Under Indian law, benefits can usually be assigned unless the contract is personal or prohibits it, but obligations cannot be transferred without the other party's consent — that requires a novation under section 62 of the Indian Contract Act.
How it works under Indian law
Indian law distinguishes the benefit of a contract from its burden. Contractual rights can generally be assigned unless the contract is personal in nature or expressly prohibits assignment, whereas a party cannot transfer its obligations without the counterparty's consent. Substituting a new party for both rights and obligations is a novation, which under section 62 of the Indian Contract Act, 1872 requires the agreement of all parties.
Sections 37 and 40 deal with performance: where the parties intend that a promise be performed personally, only the promisor can perform it; otherwise the promisor may employ a competent person to perform it. Debts and other actionable claims are transferred by a written instrument under section 130 of the Transfer of Property Act, 1882, and notice to the debtor matters for the assignee's position.
An assignment clause therefore usually prohibits both assignment and novation without consent, with a carve-out for group companies or financing, and says whether consent may be unreasonably withheld.
Drafting checklist
- Cover assignment, novation, transfer and subcontracting expressly.
- Say whether consent may be unreasonably withheld.
- Add carve-outs for affiliates, business sales and financing as needed.
- State whether a purported assignment in breach is void or merely a breach.
- Require the assignee to sign a deed of adherence.
- Check consistency with the change of control and subcontracting clauses.
Sample assignment clause
Two versions: a standard position and an alternative you can offer in negotiation. Replace every [placeholder] before use.
Standard assignment clause
Standard positionNeither Party may assign, transfer, novate, subcontract or otherwise deal with any of its rights or obligations under this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld or delayed. Any purported assignment in breach of this Clause shall be void. Notwithstanding the foregoing, either Party may, on written notice to the other, assign this Agreement in its entirety to an affiliate or to a successor to all or substantially all of its business to which this Agreement relates, provided that the assignee agrees in writing to be bound by this Agreement and is not a competitor of the other Party.
Financing-friendly version (assignment of receivables)
Supplier-favourable — allows receivables financing and factoringNothing in this Agreement shall prevent [Supplier] from assigning, by way of security or otherwise, its right to receive payment of any sums due under this Agreement to any bank, financial institution or factor, provided that [Supplier] gives [Customer] written notice of the assignment and [Customer] shall be entitled to make payment to the assignee in accordance with that notice. Such assignment shall not relieve [Supplier] of any of its obligations under this Agreement.
Who pushes for what
Typical negotiating positions on each side of the table.
Party with a large group or likely to restructure
Wants free assignment to affiliates and successors on notice.
Counterparty
Wants consent in all cases, or at least guarantees from the original party and no assignment to competitors.
Common middle ground
Consent not to be unreasonably withheld, intra-group transfers on notice with the assignee bound in writing.
Common mistakes
- Assuming an assignment clause covers share sales — it does not.
- Allowing assignment "to any affiliate" without requiring notice, a written undertaking or a guarantee.
- Prohibiting assignment of receivables, which can block a supplier's financing (and, for MSMEs, use of receivables platforms).
- Treating a transfer of obligations as an assignment instead of documenting a tripartite novation.
Frequently asked questions
What is the difference between assignment and novation?
Assignment transfers rights (the benefit). Novation under section 62 replaces the contract with a new one, usually substituting a new party who takes on both rights and obligations, and needs the consent of all parties.
Can a contract be assigned without the other party's consent in India?
Rights can generally be assigned unless the contract prohibits it or is personal, but obligations cannot be transferred without consent. Most commercial contracts require consent for both.
Does a merger require consent under an assignment clause?
It depends on the structure and wording. A court-sanctioned scheme of amalgamation transfers contracts by operation of the scheme, but a clause may still give the counterparty rights. Read the assignment and change of control clauses together.
Related tools, formats and guides
Build a clause library with approved fallbacks in CaseDocker
Store your approved clause language and pre-agreed fallback positions in CaseDocker's Contract Management module, and use Playbooks to route any deviation to the right approver before the contract goes out for signature.