TL;DR: The successors and assigns clause is the contractual equivalent of a will - it determines whether your deal survives a merger, acquisition, death, or restructuring. Most lawyers treat it as pure boilerplate and copy it reflexively from the last agreement they drafted. That is a mistake. A poorly drafted successors and assigns provision can inadvertently allow a competitor to step into your counterparty's shoes after an acquisition, or conversely, render your contract unenforceable against a successor entity following a statutory merger. The clause interacts in subtle and critical ways with assignment restrictions, change-of-control provisions, and anti-assignment statutes. In an era of constant M&A activity, this "standard" clause deserves far more attention than it typically receives.
What Is a Successors and Assigns Clause?
A successors and assigns clause provides that the rights and obligations under the agreement shall be binding upon, and inure to the benefit of, the parties and their respective successors and permitted assigns. In practical terms, it ensures that if a party to the contract undergoes a change in legal identity - whether through merger, consolidation, reorganization, death (for individuals), or permitted assignment - the contract continues in force and is enforceable by and against the entity or person that steps into the original party's position.
"Successors" generally refers to entities that acquire the rights and obligations of a party by operation of law - most commonly through merger or consolidation (where the surviving entity succeeds to the merged entity's contracts by statute) or through inheritance and estate administration. "Assigns" refers to third parties to whom a party has transferred its contractual rights or delegated its duties through a voluntary act of assignment.
The clause serves a dual function: it extends the contract's reach to future parties (binding successors), and it limits that reach to only those transfers that are authorized ("permitted" assigns). Without it, questions arise about whether a contract automatically transfers in a merger, whether an assignee can enforce the agreement, and whether the original party remains liable after assignment. The clause resolves these questions - or at least, it should, if properly drafted.
Why It Matters
Key Elements of a Well-Drafted Successors and Assigns Clause
Market Position & Benchmarks
Where Does Your Clause Fall?
Market Data
Sample Language by Position
Broad (Pro-Transferor): "This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs, and legal representatives. Nothing in this Section shall limit or restrict the right of either party to assign this Agreement in accordance with its terms."
Standard (Balanced): "This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No assignment or transfer of this Agreement or any rights or obligations hereunder shall be effective except in compliance with Section [X] (Assignment). This Agreement is not intended to, and shall not, create any third-party beneficiary rights."
Restrictive (Pro-Counterparty): "This Agreement shall be binding upon and inure to the benefit of the parties and their successors by merger or consolidation only, and such assigns as are expressly permitted under Section [X]. Notwithstanding the foregoing, the obligations of [Party] under Sections [Y] and [Z] are personal to [Party] and shall not be transferable to any successor or assign without the prior written consent of [Counterparty], which consent may be withheld in [Counterparty's] sole discretion."
Example Clause Language
Technology License Agreement: "This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns; provided, however, that the licenses granted under Section 2 are personal to Licensee and shall not inure to the benefit of, or be exercisable by, any successor of Licensee that is a Competitor (as defined herein) of Licensor, unless Licensor provides its prior written consent. For purposes of this Section, a 'successor' includes any entity that acquires all or substantially all of Licensee's assets or that merges with or into Licensee."
Private Equity Fund Agreement (LPA): "This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. No Limited Partner may transfer, assign, or encumber its Interest except in compliance with Article IX. Any purported transfer in violation of Article IX shall be void and of no effect."
Employment Agreement: "This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and upon the Executive and the Executive's heirs, executors, administrators, and legal representatives. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform it."
Common Contract Types
Negotiation Playbook
Key Drafting Notes
Common Pitfalls
Jurisdiction Notes
United States: State law governs the interpretation of successors and assigns clauses, with Delaware law being particularly influential due to the volume of corporate transactions governed by Delaware entities. Delaware courts have consistently held that anti-assignment provisions do not prevent transfer of contracts by operation of law in a merger (Meso Scale Diagnostics, LLC v. Meso Scale Technologies, LLC, Del. Ch. 2011). The UCC (Article 2) provides default rules for delegation of performance and assignment of rights in goods contracts. Federal anti-assignment statutes (41 U.S.C. § 6305) restrict assignment of government contract claims without agency approval.
United Kingdom: English law distinguishes between assignment (transfer of rights) and novation (transfer of rights and obligations, requiring counterparty consent). A successors clause that purports to bind assigns to obligations may be ineffective as to obligations, since obligations generally cannot be transferred without novation. The Contracts (Rights of Third Parties) Act 1999 may give successors and assigns enforcement rights if the contract expressly identifies them as beneficiaries - making the no-third-party-beneficiary exclusion (which is standard in English law contracts) particularly important. In company law, a merger under the Companies (Cross-Border Mergers) Regulations 2007 effects a universal succession of all rights and obligations.
European Union and Civil Law Jurisdictions: Civil law systems generally recognize universal succession by operation of law in mergers, meaning that the surviving entity automatically assumes all contractual rights and obligations without the need for counterparty consent. In Germany, this is governed by the Transformation Act (Umwandlungsgesetz), which provides for universal succession in mergers, demergers, and changes of legal form. In France, the principle of universal succession (transmission universelle) applies in mergers under the Commercial Code. However, contracts with intuitu personae elements (those entered into on the basis of the personal qualities of a party) may be excepted from automatic transfer, even in a universal succession context. The EU Cross-Border Mergers Directive (2005/56/EC, recast as 2019/2121/EU) harmonizes the principle that cross-border mergers effect universal succession across member states.
Related Clauses
This glossary entry is provided for informational and educational purposes only and does not constitute legal advice. The enforceability and interpretation of successors and assigns provisions depend on the applicable jurisdiction, the specific contract language, and the nature of the transaction. Parties should consult qualified legal counsel when drafting or negotiating these provisions, particularly in the context of mergers, acquisitions, or other structural transactions.
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