This contract tip explains an essential part of every assignment provision.
Every contract that restricts assignment should say that any attempted assignment that violates the restriction is void.
This phrase is powerful as it goes beyond just restricting the party. It removes the ability of the party to act in violation of that restriction.
Let's start with what happens if you do NOT include the phrase.
Say the contract prohibits the assignment of its rights and obligations but is silent about being void if attempted. Then a party violates that restriction and enters into an agreement to assign it to a third party.
Sure, the party that violated the restriction would be in breach of the agreement and may be liable for damages.
But most courts in the U.S. would allow that assignment to take place. They consider it an agreement breach like any other.
But if the contract includes the void language, the party has no authority to assign. Even if the party tries to assign, it is as if the assignment never happened.
Of course, courts may find equitable reasons to reach a different outcome, so we never know for sure. But including the void language gives you a much stronger case to stop that assignment.
What other advice would you add to think about when doing assignment clauses?
