Assignment & Subcontracting
Also called: Assignment Clause · Novation · Subcontracting Clause
An assignment clause controls whether a party can transfer its contractual rights or obligations to someone else. A subcontracting clause controls whether it can delegate performance while remaining responsible. Most commercial contracts restrict both without the other party’s consent.
In more detail
The distinction matters. Assignment transfers the benefit of a contract; novation transfers both benefit and burden and requires all parties to agree. Subcontracting delegates the work but leaves the original party liable for it.
For the customer, the risk is receiving performance from an entity they never evaluated. For the supplier, an overly rigid restriction can block routine business activity such as using specialist subcontractors or reorganising group entities.
The workable middle ground is usually consent not to be unreasonably withheld, with carve-outs for intra-group transfers and a clear statement that the original party remains fully responsible for any subcontractor’s performance.
What our lawyers check
- Whether restrictions are mutual or one-sided
- Whether consent is absolute or qualified by a reasonableness standard
- Whether the contracting party stays liable for subcontractor performance
- Carve-outs for group reorganisations and change-of-control interaction
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
All glossary terms