Successors and Assigns clause determines whether the parties' successors and assigns are subject to the benefits and obligations of the agreement. The clause may seek to (a) bind the non-assigning party to perform obligations in the favor of the assignee, and (b) bind the assignee to perform in favor of the non-assigning party. It is also sometimes used to determine whether rights and obligations can be assigned or delegated and may overlap with clauses styled "assignment" or "parties in interest."
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their [permitted] successors and assigns.
Successors and Assigns. This agreement benefits and binds the parties and their [permitted] successors and assigns.
Example 2—Application to Natural Persons
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their heirs, executors, administrators, [successors] and [permitted] assigns.
Note: The term "successor" can probably be omitted when applied to natural person, because individuals do not have successors.
There is a debate whether the clause is unnecessary (Ken Adams, Getting Rid of the "Successors and Assigns" Provision) or serves a number of different objectives (Tina L. Stark, Negotiating and Drafting Contract Boilerplate).
"My opinion is that you can accomplish anything a 'successors and assigns' clause purports to do in the assignment provision by requiring that for an assignment to be effective the assignee must sign an assumption section or document agreeing to assume all rights and obligations under the agreement. With successors no language is needed as when they assume control over the original party they still have the rights and obligation. The sole exception to that would be when one party includes special termination rights in the agreement where they have the right to terminate the agreement if there is a "change of control" the the is acquired by a competitor. In that situation both parties continue to have their own respective rights and obligations until the party with right elects to exercise it."
What is a Successors and Assigns Provision and should it be used? knowledgetonegotiate.com, March 21, 2012.
In many cases confusion occurs because successors and assigns language frequently overlaps with that found in assignment and parties in interest clauses. As in all cases, clarity is improved by keeping concepts independent and not creating compound clauses. There are four main concepts to consider:
- Assignment of Rights and Obligations: Can either or both the parties assign their rights and obligations?
- Transfer of Duties or Performance of Obligations: Can performance be transferred, delegated or subcontracted?
- Conditions to Assignment or Transfer: If permitted, what conditions apply?
- Assumption of Obligations: Is the non-assigning party obligated to perform in favor of the successor or assignee? Is the assignee bound by the terms of the agreement?
In most cases it is clearer to group all these concepts in a single clause. Alternatively, include elements (1), (2) and (3) in the assignment clause and separately handle (4) in the successors and assigns clause.