“Is this ‘Successors and Assigns’ clause a problem?”

Question: I want to sign an independent contractor agreement with a company to perform services for them. I will be paid on a monthly basis, paid one month after providing the services.

This paragraph is in the agreement:

“Successors and Assigns:  I may not assign my rights or obligations arising under this Agreement without the employer’s prior consent. However, the employer may assign its rights and obligations under this Agreement without my consent. This Agreement will be for the benefit of the employer’s successors and assigns, and will be binding on my heir, legal representatives and permitted assignees.”

Thank you!

Marlton, New Jersey

Answer: You’re welcome, Elizabeth, and thank you for writing in!

This “successors and assigns” clause is, in my view, unfair and a trick.

It is not a problem that you cannot transfer your rights and obligations under the Agreement, because (a) they want your services, no one else’s, and (b) you or your estate could always sue for what is due you.

It is also not a problem that the employer can transfer its rights and obligations under the Agreement, because (a) a business needs such flexibility, and (b) you probably don’t care who gets your services or who pays you.

The problem is with the last sentence, which is a common drafting trick. It says, in effect, “You and your successors must perform your services,” BUT “the company’s successors do not have to honor this Agreement.” It is “double-one-sided.”

Compare the last sentence of your clause with what it SHOULD say:  “This Agreement is binding upon, and for the benefit of, both the employer’s and the employee’s successors and assigns.” That is mutual, that is fair, and that is honest. I think you should request that the sentence is rewritten that way.

Without that, you might just end up losing out. With that, you are much safer from being abused.

By the way, I’ve written an entire newsletter on this subject, which you can read by clicking [here].

Thanks for writing in. If this was helpful, consider telling two people about our blogsite. I’d appreciate it.

Best, Al Sklover

©  2010 Alan L. Sklover, All Rights Reserved.

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