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What Is An Assignment Agreement?

Businesses and individuals use assignment agreements for many purposes. These agreements (or contracts) can have different names.  Whatever the agreement or contract might be called, the general idea is simple: one person (usually called the "Assignor") transfers to another person (usually called the "Assignee") ownership of or control over some asset or other property or an interest in some asset or other property.  Often the transfer of these rights requires the Assignee to assume the obligations that are related to the transferred property (and, for this reason, you may see references to contracts called "assignment and assumption agreements").

Stand-Alone Assignment Agreements

Assignment agreements can be used as "stand-alone" contracts to transfer a property right.  For example, when a person is a party to a contract or otherwise has a legal right that provides her or him with the right to be paid money in the future, that contract or other right may allow (or not prohibit) the person to assign her or his rights to receive that money to someone else.  

Assignment Agreements in Asset Sales

But, assignment agreements are also often used in the context of a transaction or relationship that has a number of other moving parts and other, related agreements. In such a case, an assignment contract may be required in order to make another contract effective for purposes of that overall transaction or relationship. For example, when one business is acquiring the assets of another business, the Asset Purchase Agreement ("APA") will often include a provision or clause that states that it is a condition to closing the asset deal that the buyer and seller enter into a separate (but related) assignment and assumption agreement. If the closing of the asset sale does not happen simultaneously with the signing of the APA, but is to happen some time after the APA is signed, then the APA will typically include as an exhibit a form of Assignment and Assumption Agreement which the parties have negotiated, prepared, and agreed to before they sign the APA.

The final, "execution copy" of that assignment and assumption agreement will be signed at the later closing. The final assignment and assumption agreement that is executed and delivered at closing will be much shorter than the APA. It can be used (among other purposes) by the buyer (the Assignee) to show that the buyer owns the assigned asset or assets, and by the seller (the Assignor) to prove that it is the buyer that now has assumed all of the obligations related to the assigned asset(s), but without having to show the full APA, which may have confidential or other non-public information in it. In asset purchase deals, it is common to have several assignment agreements, depending on the nature of the assets sold. For example, there might be general Assignment and Assumption Agreement along with a separate Trademark Assignment Agreement, Patent Assignment Agreement, Copyright Assignment Agreement, Domain Name Assignment Agreement, and/or other assignment agreements. 

Startup Assignment Agreements

Another example of an assignment agreement that is commonly used as part of a larger transaction or relationship occurs in the context of startups. This is especially true for startups whose business relies on software and other technology, copyrights, trademarks, inventions, trade secrets, processes, patents or other intellectual property ("IP") that the founders have acquired, developed, or contributed to.  These contracts often go by the (somewhat "clunky") name of Confidential Information and Inventions Assignment Agreements ("CIIA's") or Proprietary Information and Inventions Assignment Agreements ("PIIA's"). By whatever name called, the purpose here is for the founders of a startup to assign any and all ownership and other rights that may have or may later claim to have in the IP they worked on, acquired, or contributed to ... both before and after they form their corporation or limited liability company ("LLC"). It is typical that founders of a startup sign their respective CIIA's / PIIA's as a condition to them being issued stock or membership interests in their newly formed corporation or LLC. The CIIA / PIIA is a very important document for a startup and should be prepared properly and signed by each person with some actual or potential claim to the IP to be used in the business. Among other things, investors in a startup will be reluctant or unwilling to invest in a company that is IP-dependent if they can not get comfort that the company is the legal owner of the IP on which its success will depend.

For Employees and Consultants 

A CIIA / PIIA may also be required for employees and consultants as a condition to being employed or retained. Although it is true that, as a general rule, anything an employee develops or works on for an employer during the course of employment that is within the scope of the work for which the employee is hired belongs the employer, the assignment of rights and waiver of claims included in the CIIA / PIIA provide the twin benefits of clarifying and memorializing the employee's understanding and acknowledgment . While all business contracts should be prepared by (or at least reviewed and discussed with) a lawyer with relevant experience, contracts involving employment law require particular attention. Employment laws generally (and in particular in certain states) are often not only very pro-employee, but are hostile to the employer, and these laws are often un-intuitive and complex. (This is not a judgment statement, but an assessment of the current legal landscape for employers.) Caution should be taken by every business before entering into any contract with an employee. 


DO IT RIGHT

There are many other possible business arrangements that would benefit from an assignment agreement.  Both the assignor and the assignee should make sure that the contract they sign has been properly prepared for protecting their interests.  Contact an experienced business / corporate attorney if you are contemplating entering into a stand-alone assignment agreement, or a transaction or other business relationship that requires the use of an assignment of assets, rights, properties or other interests. Make an appointment now for a free consultation.  

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