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Permitted Assigns Legal Meaning

The answer is that if one of the contracting parties is a human being, the term “successor” is out of place. Humans don`t have followers. If a contracting party dies before the contract has been fully performed, he or she has a personal representative of the estate (called an “executor” in other states) and heirs. Companies and certain other legal entities have “successors”. A successor to a corporation is, for example, another corporation into which that corporation is merged. Individuals do not “merge” with other people, except in science fiction movies. 1. Assignee`s obligation to perform: According to Tina`s book, some courts have held that a successor and assignee clause in a contract requires the assignee of all rights under that contract to perform the assignor`s obligations under that contract. However, such participation is contrary to recognized law. Contractual confidentiality dictates that it depends on whether the assignee assumes the assignor`s obligations. See 9-48 Corbin on Contracts § 871 (“However, if the assignee is bound by a legal obligation to provide the service, it is because it has expressed an intention to undertake it by accepting the contract.”) The contract between the assignor and the non-assignor would not affect the matter, and a successors and assigns provision in that contract would be ineffective in compelling the assignee of any rights under this contract to perform its obligations under this contract.

A typical “successor and assign” clause will state, in sum and content: “This Agreement and all rights [benefits] and obligations [what you must do to receive the benefits] apply [fanciful word for “transfer”] for the benefit of the parties and their respective successors and assigns.” An easy way to show what an assignment is would be if a tenant of a rented property decides to move and transfers or sublets the property to a third party. The new tenant then has the right to settle in the property, as well as the obligation to respect all the conditions of the initial lease. However, there are times when contract language affects the ability to do this type of mapping. Contracts may prohibit assignment by means of a clause, while some contracts simply require the assignee to accept the agreement. Tina`s book offers an alternative successor and assigns a provision that is supposed to “clarify the purpose and application of the provision.” However, the first two paragraphs of the alternative provision – the other two concern ancillary matters – serve to fulfil two of the five presumed functions described earlier in this chapter, namely functions 2 and 1 respectively. Thus, although the subsidiary provision could serve to clarify its purpose, it was of little use if one of the objectives was to state the obvious and the other would be invalid. Have you ever read towards the end of a contract that there seems to be a lot of things that have nothing to do with the subject of the contract, but that the lawyers think they should be there? Sometimes people call it “boilerplate.” Some people may think this is unnecessary or standard wording. While the general topics covered by these “master keys” are usually pretty much the same, specific wording and variation can make a big difference – meaning you need to make sure it fits your transaction. When I want to research a one-size-fits-all contractual provision, I usually start by consulting Negotiating and Drafting Contract Boilerplate (Tina L.

Stark ed. 2003). That is what I did in this case – there is a chapter devoted to successors and the allocation of commissions. [Update 12. April 2013: For recent articles on the “Successors and Assigns” provision, see “The Successors and Ascesets` and Successor Liability” (here) and “The Illinois Appellate Court`s Problematic Take on the Traditional Recital of Consideration and `Successors and Assigns` Dispositions” (here).] Tina`s book suggests that the problem with successors and traditional assignments is that “the layout is cut in such a way that its purposes are obscured.” Personally, I think the problem is that it is a provision with no useful purpose. This raises the question of how it became part of contracts. What happens if the person with whom you enter into a contract dies before the contract is performed? Or what if the company you have a contract with sells all of its assets, including the contract, to another company before the contract is executed? Or what if you contract with a company because you trust its current owners, but along the way, those owners change. The answer is that it depends, and it may depend on what the “successor and assign” clause actually says, and sometimes either party will have a real interest in the answer. 5. Binding the parties: Taking the traditional language of a successor at face value and assigning a provision indicates that the parties intend to be legally bound.

Such a declaration would be invalid because it is not a condition of the enforceability of a contract that the parties intend or express are legally bound. See MSCD 2.29 and Farnsworth on Contracts § 3.7. After preparing thousands of contracts and negotiating issues with “successors and assigns” in court, we can help you with all your contractual requirements. 2. Binding a non-assigning party: Tina`s book indicates that a second purpose of the successor and assignment provision is to reformulate the common law so that the non-assigning party is obligated to act for the benefit of the assignee after an assignment.

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