assignment agreement australia

Assignment and Novation

What are assignment and novation clauses.

The two main legal tools for the transfer of the rights and/or obligations under a contract to another party are: assignment, for the transfer of benefits; and novation, for the transfer of rights/benefits and obligations. Each has unique features that must be taken into account when deciding which is the preferred option.

Assignment and novation clauses

Assignment, novation and other dealings boilerplate clauses, non-assignment clauses, withholding consent to an assignment.

The two main legal tools for the transfer of the rights and/or obligations under a contract to another party are:

• assignment, for the transfer of benefits; and
• novation, for the transfer of rights/benefits and obligations

Each has unique features that must be taken into account when deciding which is the preferred option.

Assignment clauses

A contracting party at common law has a general right to assign its rights without any consent or approval from the other party (unless by its very nature the right is personal). An assignment clause may be included in an agreement to exclude or limit this common law right. In order for the assignment of rights by one party to not be exercised unilaterally without the knowledge of the other party, it is common for contracts to include a provision that a party can only assign its rights under the contract with the consent of the other party.

After assignment, the assignee is entitled to the benefit of the contract and to bring proceedings (either alone or by joining the assignor depending in whether the assignment is legal or equitable) against the other contracting party to enforce its rights. The assignee does not become a party to the contract with the promisor. As the burden or obligations of the contract cannot be assigned, the assignor remains liable post assignment to perform any part of the contract that has not yet been performed.

Novation clauses

By executing a novation, a party can transfer both its rights/benefits and obligations. At common law, the obligations under a contract can only be novated with the consent of all original contracting parties, as well as the new contracting parties. This is because the novation extinguishes the old contract by creating a new contract.

A novation clause will usually provide that a party cannot novate a contract without the prior written consent of existing parties. Including a novation clause in an agreement is designed to prevent oral consent to a novation, or consent being inferred from a continuing party’s conduct. However, a court will look to the substance of what has occurred, and such a clause is not effective in all situations.

It is possible for a novation clause to prospectively authorise a novation to be made by another party unilaterally to a party chosen by the novating party. The courts will give effect to a novation made in this manner provided it is authorised by the proper construction of the original contract.

Option 1 – Assignment, novation and other dealings – consent required

A party must not assign or novate this [deed/agreement] or otherwise deal with the benefit of it or a right under it, or purport to do so, without the prior written consent of each other party [which consent is not to be unreasonably withheld/which consent may be withheld at the absolute discretion of the party from whom consent is sought].

Option 2 – Assignment, novation and other dealings – specifies circumstances in which consent can reasonably be withheld

(a)   [ Insert name of Party A ] may not assign or novate this [deed/agreement] or otherwise deal with the benefit of it or a right under it, or purport to do so, without the prior written consent of [ insert name of Party B ], which consent is not to be unreasonably withheld . 

(b) [ Insert name of Party A ] acknowledges that it will be reasonable for [ insert name of Party B ] to withhold its consent under this clause if:

(i)      [ Insert name of Party B ] is not satisfied with the ability of the proposed assignee to perform [ insert name of Party A ]’s obligations under this [deed/agreement];

(ii)      [ Insert name of Party B ] is not satisfied with the proposed assignee’s financial standing or reputation;

(iii)     the proposed assignee is a competitor of [ insert name of Party B ]; or

(iv)       [ Insert name of Party B ] is in dispute with the proposed assignee .

Click  here  for information on how to use this boilerplate clause.

A non-assignment clause prevents a party or parties from assigning the benefit of the contract. Non-assignment clauses are generally effective if they have been clearly drafted.

Contracts commonly provide for assignment with the consent of the other party. Such provisions usually provide that consent must not be unreasonably withheld and, where there is no such proviso, one may be implied. Accordingly, if it is intended that a party may withhold its consent to an assignment for any reason whatsoever (including on unreasonable grounds) clear contractual language should be used.

A purported assignment that contravenes such contractual restriction may constitute a breach of contract and result in an ineffective assignment.

The ‘reasonableness’ of withholding consent to an assignment is assessed by an objective standard and given a broad and common sense meaning.

The relevant factors in assessing reasonableness will differ in each case and heavily depend on the particular circumstances, including the nature and object of the specific contract and the purpose of the non-assignment clause.  Relevant factors may include any defaults in obligations under the contract and the solvency and identity of the assignee.

A party’s actions in withholding consent will generally be considered unreasonable if the grounds relied upon to support the withholding are:

• extraneous or disassociated from the subject matter of the contract;
• materially inconsistent with any provision(s) of the contract; or
• based on collateral or improper considerations.

It is advisable, where withholding consent to an assignment, to clearly set out the reasons for withholding consent in a letter to the other party.

Transferring contracts: assignment and novation explained

Whether it's due to internal restructuring or meeting commercial requirements like a business sale, many companies encounter the need to transfer contracts from one entity to another. However, it's important to note that this process is not as simple as replacing one party's name with another. In most cases, contracts can be legally transferred through one of two methods: assignment or novation.

Assignment:

An assignment of a contract involves transferring the rights (but not the obligations) of the outgoing party to the incoming party. Typically, an assignment doesn't require the consent or agreement of the other party involved in the contract (the continuing party), unless specifically stated in the terms of the relevant contract.

To effect an assignment, a deed is often executed by both the outgoing party and the incoming party. If the consent of the continuing party is necessary, it is usually convenient to include this consent in the deed and have the continuing party execute it as well.

An assignment does not relieve the outgoing party of its ongoing obligations to the continuing party under the contract. In order to protect the outgoing party against future breaches of contract by the incoming party, it is common for the assignment deed to include provisions where the incoming party:

• promises to the outgoing party that it will fulfil the outgoing party's contractual obligations after the assignment date; and
• provides indemnification to the outgoing party against any claims made by the continuing party for any failures by the incoming party to fulfil those obligations after the assignment.

Even if the consent of the continuing party is not required, for the assignment to have legal effect written notice of the assignment must be given to the continuing party. This written notice ensures that all parties involved are informed about the transfer.

Another method to transfer contracts is through novation. In legal terms, novation refers to the substitution of a new contract for an existing one, maintaining the same terms as the original contract, but between the continuing party and the incoming party instead of between the continuing party and the outgoing party. Unlike assignment, a novation transfers both the rights and obligations under the relevant contract from the outgoing party to the incoming party.

In practice, novation is commonly achieved by substituting the outgoing party with the incoming party. This means that, from the effective date of the novation, the incoming party assumes all the rights and obligations previously held by the outgoing party, and the continuing party releases the outgoing party from any further obligations under the contract.

It is important to note that the agreement of the continuing party is always required for a novation to be legally effective. While novation offers certain advantages over an assignment, such as a better legal liability position for the outgoing party, it can be more challenging to accomplish due to the necessity of securing the continuing party's agreement.

Similar to assignment, novation typically involves executing a deed of novation, which states the agreement of all parties to substitute the outgoing party with the incoming party.

Other methods:

In addition to novation and assignment, there are indirect methods available for transferring rights and obligations under a contract. For example, where a party to a contract is a company, it may be possible to transfer the company's rights and obligations under a contract by the shareholders of that company transferring their shares in the company to a third party. By doing so, the company remains a party to the contract, eliminating the need for assignment or novation. Instead, a new shareholder obtains control of the company and indirectly obtains the benefit of the rights, and the burden of the obligations, of the company under the contract.

Choosing the right transfer method

When faced with the need to transfer a contract, whether through assignment, novation, or an indirect method, it is important to consider several factors to determine the best option for your specific situation, including:

• The terms of the contract itself – examine the terms to identify any provisions that prohibit, allow, or impose conditions on the transfer of the contract. Understanding these contractual provisions will help determine the available options and any limitations associated with each method.
• Consider your ultimate goal in transferring the contract - evaluate which party should bear the responsibility for liability arising under the contract, both before and after the transfer. This assessment will help clarify which method of transfer aligns better with your desired outcomes.
• The commercial position of the parties - consider the commercial positions of the outgoing party, the continuing party, and the incoming party. Assess factors such as the willingness of the continuing party to provide consent for the transfer. Understanding the potential challenges or cooperation you may encounter from the relevant parties will assist in selecting the most viable transfer method.

By carefully evaluating these factors, you can make an informed decision on the most suitable transfer method for your specific circumstances.

For more information and to navigate the transfer process smoothly, please contact any member of the Sierra Legal team, whose contact details can be found here ( Link ).

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January 8, 2024 by Jean Kallmyr

Understanding Deed of Assignment

In the realm of legal transactions in Australia, a Deed of Assignment holds significant importance. This legal document serves as a powerful tool for the transfer of rights and obligations between parties. Whether in the context of real estate, intellectual property, or other contractual agreements, a Deed of Assignment plays a crucial role in facilitating the seamless transfer of assets.

Deed of Assignment

A Deed of Assignment is a legally binding document that allows one party, known as the assignor (the party relinquishing the rights, benefits, or obligations), to transfer specific rights, benefits, or obligations to another party, referred to as the assignee (the party receiving the assigned rights, benefits, or obligations).

This legal instrument is commonly employed when there is a need to assign contractual rights, such as in real estate transactions, business sale transactions, intellectual property transfers or the assignment of debts. The deed must be properly executed and delivered to be legally effective.

Key Clauses of Deed of Assignment

A clear and concise description of the intention to assign, the rights, benefits, or obligations being transferred should be outlined in the document.

In many assignments, there is a consideration involved, which refers to the value exchanged between the parties. This could be in the form of money, services, or any other agreed-upon consideration.

The assignor typically provides assurances that they have the legal right to transfer the specified rights and that these rights are free from any encumbrances, and the assignee normally guarantees to perform specific contractual obligations under the specified rights.

Covenants are promises made by one or both parties regarding their future actions. For example, the assignor may covenant that they will not interfere with the assigned rights after the transfer and the assignee covenants that it will take over the obligations of the assignor under a specific contract.

The indemnity clause outlines the responsibilities of the parties in case of any losses or liabilities arising from the assignment. For example, it specifies which party will bear the costs associated with legal challenges or disputes.

Common Uses in Australia

Real estate transactions.

Deeds of Assignment are commonly used in the transfer of property rights, for example, in the sale of off-the-plan properties or when a buyer wants to transfer their rights under a property contract to another party.

Intellectual Property

Artists, authors, or inventors may use Deeds of Assignment to transfer their intellectual property rights, such as trade marks, copyrights or patents, to another individual or entity.

Debt Assignment

Assignments of debts are also facilitated through Deeds of Assignment. This occurs when a creditor transfers their rights to collect a debt to another party.

Contractual Agreements

Businesses often use Deeds of Assignment to transfer contractual rights and obligations when there is a change in ownership or a need to delegate specific responsibilities, for example, the assignment of leases or supplier contracts.

The IP House Lawyers has assisted many of our clients in drafting, preparing and executing various forms of Deed of Assignment. Please contact us on the details below if you need any assistance in relation to drafting and preparing a Deed of Assignment.

For any further information or queries on the above content, please contact us.

Jean Kallmyr | Lawyer, The IP House Lawyers | t: 0435 799 831 | e: [email protected]

Key Contact

Claire Darby | Managing Director/Lawyer, The IP House Lawyers | t: 0412 998 951 | e: [email protected]

The information and contents of this publication do not constitute any legal or financial advice. This publication is intended only for reference purposes for The IP House Lawyers’ clients and prospective clients.

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Intellectual Property Assignment Agreement

What is an intellectual property assignment agreement.

An Intellectual Property Assignment Agreement is a document by which someone releases some intellectual property which they created such as a work of art, a writing, a film. some computer code, or any other piece of intellectual property ("the work") and gives away or transfers all the rights to someone else. This type of agreement is used in situations where the creator of the work ("the transferor") is okay with the work being used for another purpose, and where the transferor is okay with not keeping any rights to the work.

By releasing the rights, the transferor gives up any control over what happens to the work . The person that receives the rights to the work ("the transferee") can then do anything they want with it - including copying it, distributing it, publishing it , or whatever else they would like. This may occur, for example, when a graphic designer (transferor) creates a logo for a client (transferee), and has no intention to use the logo again. They may "assign" the logo to the client, so that the client can use it however they like, including modifying it, printing it on various products, and distributing it to whomever they like.

If the parties are unsure about these matters or need assistance with them, they should seek legal advice.

What is the difference between an Intellectual Property Licence Agreement and an Intellectual Property Assignment Agreement?

An Intellectual Property Assignment Agreement is different from an Intellectual Property Licence Agreement . An Intellectual Property Licence Agreement can be used when the creator of the work ("the licensor") wants to retain some control over the work. For example, they may want to be able to provide copies of work to many different third parties ("the licensees"). This might apply, for example, when a software developer (licensor) creates some software, and lets people (licensees) purchase an annual subscription to use it. The software developer might want to control how people use it, for example, by preventing them from making copies or modifying the code. The software developer might also want to be able to provide copies to many different licensees at once. In these circumstances, the parties may consider using a Intellectual Property Licence Agreement instead.

On the other hand, in an Intellectual Property Assignment Agreement , the owner gives up any control over what happens to the work. The person that receives the work can then do anything they want with it - including copying it, distributing it, publishing it, or whatever else they would like.

Is it mandatory to have an Intellectual Property Assignment Agreement?

No, but if one party is letting another party have or use their intellectual property, then it is crucial in order to protect the rights of both parties . It helps ensure that both parties understand the arrangement, as well as managing risks.

What is an "assignment"?

In this agreement, "assignment" of intellectual property means the transferring of the intellectual property from one party to another.

What is an "assignor"?

The assignor is the owner of the intellectual property. The assignor "assigns" the intellectual property to the assignee.

What is an "assignee"?

This is the person or organisation that receives the intellectual property. The intellectual property is assigned to them from the assignor.

What is not allowed in an Intellectual Property Assignment Agreement?

Conduct that amounts to "anti-competitive" or "cartel" conduct under the Competition and Consumer Act 2010 (Cth) ("CCA") should not be included in this Agreement.

Terms that restrict competition, control prices, limit market access or deter innovation might amount to anti-competitive or cartel conduct under the CCA. Some of these things used to be permitted in IP contracts under the CCA. However, some amendments to the CCA in 2019 changed this, so that some of these things are now prohibited.

Therefore, if the parties have any concerns at all about whether or not they are going to be affected by these laws, they should strongly consider obtaining legal advice . This Agreement is only designed for use among parties which are not engaging in anti competitive or cartel conduct.

What has to be done once an Intellectual Property Assignment Agreement is ready?

Please note that for some intellectual property in Australia, transfers or assignments of the intellectual property need to be undertaken through relevant authorities . For example, in the case of trademarks (eg, logos and other branding), or patents, these are managed by IP Australia. In order to validly transfer a trademark or patent , the parties may need to make an application with IP Australia . In addition, if a business name is being assigned, then this will need to be organised through the Australian Securities and Investments Commission. However, even if the transfer is being undertaken through IP Australia or another similar authority, this Intellectual Property Assignment Agreement should be prepared first , so it can be submitted to the relevant authority as evidence of what has been agreed.

Once this document has been prepared and before it is signed, make sure that both parties (both the party assigning the intellectual property, and the party receiving the intellectual property) receive a copy of the document. Both parties should be given some time to review the document to make sure that their details are correct, that they understand the various terms, and that they are happy with the various terms.

Both parties should then sign the document . If the parties are individual persons (rather than companies) then the document may be set up to have their signatures witnessed by independent witnesses who are aged over 18 . The parties cannot witness each other . Both parties should then keep a copy of the document for their own records. If the parties are registering the assignment with a relevant authority (such as IP Australia in the case of trademarks), then they should also make a third copy of the document which can be submitted to the relevant authority.

The parties can then take any further steps as required by the relevant authority. For example, in the case of IP Australia , there is a "change ownership" request form which can be submitted via the organisation's "online services" platform.

Which documents should be attached to an Intellectual Property Assignment Agreement?

It is not mandatory to attach anything in particular to this Intellectual Property Assignment Agreement. However, anything that can help identify the intellectual property may be attached. This could include photographs or images if appropriate.

What must an Intellectual Property Licence Agreement contain?

The following things may be included in this Agreement:

• A description of the work being assigned in as much detail as possible.
• The date when the assignment will take place.
• Any rights that the assignor may retain (such as a right to display a copy of the work in their portfolio).
• Information about applicable fees and payment terms.
• Any applicable warranties .

Importantly, if the assignor is providing a warranty against defects , then the Australian Consumer Law imposes certain requirements on the assignor. This includes requirements that warranty documentation be presented in a certain way, that specific information and wording be included in the warranty documentation, and that the mandatory wording be provided with the product itself (rather than the assignee being referred to information on a website). Therefore, if the assignor is considering providing a warranty against defects, seek legal advice .

Which laws are applicable to an Intellectual Property Assignment Agreement?

There are no laws outlining what must be put into an Intellectual Property Transfer Agreement. Overall, intellectual property in Australia is covered primarily under Commonwealth law , including the Copyright Act 1968 .

This agreement is a contract between the transferor and the transferee. Ordinary principles of contract law , as provided by the common law, will also apply.

Since September 2019, some amendments to the Competition and Consumer Act 2010 (Cth) ("CCA") may also impact many intellectual property arrangements in Australia. In particular, the CCA prohibits some conduct which is considered " anti competitive " or " cartel conduct ".

If the parties have any concerns at all about whether or not they are going to be affected by these laws, they should strongly consider obtaining legal advice .

By way of general explanation, prior to 13 September 2019, section 51(3) of the CCA provided an exemption for some matters involving licensing or assignment of intellectual property. This meant, for example, that conduct involving licensing or assignment of intellectual property, which might otherwise be considered "anti competitive", might have been permitted .

However, starting on 13 September 2019, with the repeal of section 51(3) , those matters involving licensing or assignment of intellectual property may no longer be permitted. The legislation places significant obligations on the parties, and its implications may be quite broad. There is also potential for this legislation to affect some conditions which may be common in many traditional intellectual property arrangements. The penalties for breach of these laws are also very high .

Further information about the changes is available on the website of the Australian Competition and Consumer Commission .

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Guides to help you

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Intellectual Property Assignment Agreement - template

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Assignment Agreements

An IP Assignment Agreement is a document sells or assigns an asset to a third party. There are generally similar to licensing agreements except that Assignor is selling their entire rights to the IP to another party. These documents are necessary to move the ownership of a patent or trade mark to another person. 

In these documents, the ownership is actually moved to a new party.

Often Assignment Agreements are integrated into employment contracts or consulting agreements. Alder IP can work with you develop a suitable assignment agreement for your needs.We are particularly experienced with patent, know-how and trademark assignment agreements. For assignment agreements to be valid in Australia, they must be in writing and recorded with IP Australia (in the case of registered rights such as designs, trade marks or patents).

Most Assignment Agreements include Consideration. Consideration is a legal term that essentially allows both parties to receive something out of the trade. The minimum Consideration can in some cases be as little as one dollar.

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What Is A Deed of Assignment, Anyway?

In any business, contracts will be everywhere you go — from your customers to suppliers, contractors, employees, graphic designers and even your monthly subscriptions!

However, contracts generally are signed between two parties.

So, what happens if one party wants to transfer or assign their rights and obligations under a contract to another party ?

This is where a Deed of Assignment comes in.

What Is A Deed?

In the legal world, there are two main types of legal documents: agreements and deeds.

Agreements are generally the most common contracts you’ll see. However, deeds work a little differently.

Put simply, a deed needs to be physically signed and witnessed in person. This means that it’s difficult to sign deeds with international parties.

So, it’s important to understand that a deed has specific requirements for execution.

What Is A Deed of Assignment?

A Deed of Assignment is a legal document that transfers or assigns the legal rights and obligations to another party.

And it varies depending on your situation.

For example, an assignment could work for simple things like intellectual property . When a graphic designer creates a logo for you, you might want to make sure that logo is owned by you. In this case, the graphic designer would “assign” that copyright to you.

Or, if you’re selling your business , you might want to transfer your contractual relationships to whoever is purchasing your business. 

For example, if you have existing contracts with suppliers to your cafe business, you might look at transferring these to the buyer. Here, you’d sign a Deed of Assignment to transfer the rights and obligations of that contract to the new owner of your business.

A Deed of Assignment makes sure that you no longer have continuing obligations and rights as a signatory to that contract . The last thing you want is to be liable or accountable for a contract you forgot to assign to someone.

If you need help putting together a Deed of Assignment, let’s chat!

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Assignment agreements

Assignment (or transfer) of contracts is a ticklish subject. You have to get it right otherwise you might encounter problems further down the track. Generally, if you only need, have or can obtain consent to transfer from some, not all, of the parties, assignment agreements are likely to be the solution. Closely related to assignment is novation.

Assignment agreement

This template is for the transfer or assignment of contracts between two parties. It can be used to transfer a wide range of contracts, but is most commonly used to assign customer contracts to the buyer of a business, either where novation is impractical, or where the original contracts allow assignment. Also included with the agreement is a letter template to customers informing them of the assignment.

Deed of assignment: life insurance policy or endowment policy

This is a deed of assignment for transferring the rights in an insurance policy or endowment policy to some other person or company, for money or value. Not suitable for divorce situation. It is easy to complete.

Deed of assignment: life or endowment policy by trustees

This deed of assignment transfers an endowment or other life assurance policy from trustees to beneficiary. It includes a template notice to the insurer that the policy has been transferred. The document is easy to complete.

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• Deed of assignment of debt

This document is a deed of assignment of debt.

An agreement that transfers one party’s rights in a contract but not its obligation or liabilities to a third party is called an assignment.

When advising a party who wishes to assign their rights under an agreement to a third party, it is important to:

• have a clear understanding of the laws relating to assignment; and
• review the initial agreement to consider whether the assignor is entitled to assign their rights. If they are, whether these assignment rights are unfettered or restricted. For example, in many contracts a party is required to obtain the written consent of the third party in order to assign rights created under the contract.

This precedent can be used for the assignment of simple contract debts, specialty debts and judgment debts. It can also be readily adapted to apply to an equitable assignment of part of a debt.

Deed or contract

An assignment of rights does not need to be set out in the form of a deed like this precedent. However, in order for any undertakings in the instrument to be enforceable against the assignor, the assignee will either have to:

• provide valuable consideration to the assignor in which case the assignment of rights can be recorded in a contract; or
• if the assignee does not provide valuable consideration then the assignment must be recorded in a deed.

Notice to the debtor

Notice of the assignment should be given to the debtor and, where the benefit of a guarantee securing payment of the debt is also being assigned, to the guarantor as soon as possible.

Power of attorney

The power of attorney in clause 3 is desirable where:

• part of a debt is being assigned: except in Western Australia, a statutory assignment of part of a debt is not possible with the result that the assignee is unable to sue for the debt in his or her own name; and
• a judgment debt is being assigned: while a statutory assignment of a judgment debt carries with it the right to enforce the judgment debt, it does not, of itself, give the assignee the right to control the proceedings relating to any appeal from the judgment giving rise to the judgment debt. See Gould v Skinner [1983] Qd R 377 at 389.

The stamp duty implications of the assignment should be considered.

Related precedents

• Basic loan agreement
• Guarantee of payment of loan
• Real property mortgage
• General security deed
• Amendment and restatement agreement
• Deed of priority
• Forbearance of debt agreement
• Loan agreement checklist

This document has been authored for LexisNexis by Elise Margow, Principal, Legally Speaking .

This document is prepared with the assistance of Specialist Editors Geoff Geha, Partner, Clayton Utz and Karen Lee, Principal and Consultant, Legal Know-How .