Assigning Contract Rights in Business Sales Transactions

While business sales transactions can be completed using a variety of formats, including a merger or a sale of ownership interests, it is common for the parties to agree on an asset purchase structure.  In that situation, the seller will need to deliver various transfer documents to complete the change of ownership including a bill of sale to transfer ownership of personal property, deeds of trust to transfer real property, and assignments for transfers of leases, contract rights, and intangible property. A separate assumption of liabilities also may be needed in appropriate cases.

Sale of a business often involves a transition period during which the seller will remain involved in certain aspects of the business.  For example, the parties may use an assignment of the rights, obligations, interests and liabilities associated with an identified contract in the context of a purchase and sale of business with the caveat that the assignor (i.e., seller) will continue to provide invoice and collection services under the contract for the benefit of the assignee (i.e., the buyer) until such time as the assignee elects to terminate such services and take on those activities on its own.  If necessary, the form should also include the consent of the beneficiary of the contract, the “customer”, to the assignment and to ongoing arrangement with respect to invoicing and collection.

A template for assigning contract rights in business sales transactions is available in Business Transactions Solutions (see Specialty Form § 291:242) for Westlaw Next users.  

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