Successors and assigns clause: what it does and does not do

Sample clause

Written for a supply agreement between Wabash Packaging, a fictional Chicago packaging maker, and Loop Street Foods, a fictional food manufacturer.

Successors and Assigns. (a) This Agreement binds and benefits the parties and their respective successors and permitted assigns. (b) Neither party may assign this Agreement, or delegate its performance, except as permitted by Section 18 (Assignment), and any purported assignment in breach of Section 18 is void. (c) For the purposes of this Section, a successor includes any entity into which a party is merged or consolidated, or which acquires all or substantially all of that party's assets, where it assumes that party's obligations under this Agreement by operation of law or in writing. (d) Nothing in this Agreement gives any person other than the parties and their successors and permitted assigns any right or remedy under it.

Sample wording, not legal advice.

Variants

What to negotiate

• Why it does not permit assignment

  Courts generally read a successors and assigns clause as describing who is bound after a lawful transfer, not as authorising transfers. The word permitted, as in permitted assigns, points back to the assignment clause. A party that wants freedom to assign must negotiate the assignment clause itself, and a party that wants to restrict assignment should make sure the assignment clause, not this one, says so clearly.

• Mergers

  In a statutory merger, the surviving company usually takes over the merged company's contracts by operation of law, and some courts have held that certain merger structures are not an assignment at all. A party that wants a say on mergers needs a change of control clause, or an assignment clause that expressly treats mergers as assignments, because a successors clause alone will not give it.

• Personal services

  Contracts for a particular person's skill, such as a named consultant or performer, generally cannot be delegated without consent even without a clause, because the other party bargained for that person. Stating that certain obligations are personal, as in the third variant, avoids argument where the contract also contains a general successors clause.

The risk of leaving it out

Leaving the clause out rarely changes the legal result, because successors by operation of law are generally bound anyway and the assignment clause governs transfers. But its absence can create doubt in a merger or asset sale about whether the benefit of the contract passed, and the third party wording in paragraph (d) is often placed here to prevent outsiders claiming rights.

What the clause does and does not do

It does confirm that a lawful successor, such as a company that absorbs a party in a merger, is bound by and can enforce the contract. It does confirm that a permitted assignee takes the benefit and burden. It does not permit either party to assign or delegate; that is the assignment clause's job. It does not give the other party rights on a change of ownership; that needs a change of control clause. It does not let third parties enforce the contract, and paragraph (d) says so expressly. Reading it beside the assignment clause, rather than alone, avoids most misunderstandings. Law checked on 21 October 2026. This page explains how the clause works and is not legal advice.

Assignment and delegation in US law

Under US contract law, rights under a contract are generally assignable and duties delegable unless the contract, a statute, or the nature of the performance prevents it. UCC section 2-210 states this for sales of goods, including that a delegation does not relieve the delegating party of its duty. An anti assignment clause can make an assignment a breach, or, if it says so clearly, void, which is why the sample states that a purported assignment in breach is void.

Successors in other jurisdictions

English and Australian contracts often use similar wording, though statutory mergers are less common there and a transfer of a business usually requires a novation of each contract, with the other party's consent, for the burden to pass. In those jurisdictions a successors and assigns clause is even more clearly a confirmation rather than a source of rights.

Drafting tips

Use permitted assigns, not just assigns, so the clause does not imply that any assignee is accepted. Cross refer to the assignment clause by number. If mergers are intended to pass the contract without consent, say so expressly, as in the second variant. Keep the third party rights sentence, which in the US prevents arguments that an outsider is an intended beneficiary.

Documents that carry this clause

Master services agreementA data consultancy and an insurer sign this once and then buy work under it for three years. It is the rare contract whose whole purpose is to make the next twenty contracts short.Mutual NDAA robotics company and a British parts maker want to look inside each other before agreeing to anything. Both sides are handing over trade secrets, which is the only real reason to make an NDA mutual.Shareholders agreement template for a company after a seed roundA shareholders agreement template sets out who owns what, who sits on the board, which decisions need shareholder consent, how shares are sold, and how a deadlock ends. This one is filled in for a Queensland veterinary diagnostics company that has just taken $1.5 million from one seed fund, leaving the two founders with 80 per cent between them. Its central number is an 85 per cent consent threshold for eight reserved matters, and the page below shows what that number does and does not protect.

Questions people ask