name change vs assignment

Don’t Confuse Change of Control and Assignment Terms

• David Tollen
• September 11, 2020

An assignment clause governs whether and when a party can transfer the contract to someone else. Often, it covers what happens in a change of control: whether a party can assign the contract to its buyer if it gets merged into a company or completely bought out. But that doesn’t make it a change of control clause. Change of control terms don’t address assignment. They say whether a party can terminate if the other party goes through a merger or other change of control. And they sometimes address other change of control consequences.

Don’t confuse the two. In a contract about software or other IT, you should think through the issues raised by each. (Also, don’t confuse assignment of contracts with assignment of IP .)

Here’s an assignment clause:

Assignment. Neither party may assign this Agreement or any of its rights or obligations hereunder without the other’s express written consent, except that either party may assign this Agreement to the surviving party in a merger of that party into another entity or in an acquisition of all or substantially all its assets. No assignment becomes effective unless and until the assignee agrees in writing to be bound by all the assigning party’s obligations in this Agreement. Except to the extent forbidden in this Section __, this Agreement will be binding upon and inure to the benefit of the parties’ respective successors and assigns.

As you can see, that clause says no assignment is allowed, with one exception:

• Assignment to Surviving Entity in M&A: Under the clause above, a party can assign the contract to its buyer — the “surviving entity” — if it gets merged into another company or otherwise bought — in other words, if it ceases to exist through an M&A deal (or becomes an irrelevant shell company).

Consider the following additional issues for assignment clauses:

• Assignment to Affiliates: Can a party assign the contract to its sister companies, parents, and/or subs — a.k.a. its “Affiliates”?
• Assignment to Divested Entities: If a party spins off its key department or other business unit involved in the contract, can it assign the contract to that spun-off company — a.k.a. the “divested entity”? That’s particularly important in technology outsourcing deals and similar contracts. They often leave a customer department highly dependent on the provider’s services. If the customer can’t assign the contract to the divested entity, the spin-off won’t work; the new/divested company won’t be viable.
• Assignment to Competitors: If a party does get any assignment rights, can it assign to the other party’s competitors ? (If so, you’ve got to define “Competitor,” since the word alone can refer to almost any company.)
• All Assignments or None: The contract should usually say something about assignments. Otherwise, the law might allow all assignments. (Check your jurisdiction.) If so, your contracting partner could assign your agreement to someone totally unacceptable. (Most likely, though, your contracting partner would remain liable.) If none of the assignments suggested above fits, forbid all assignments.

Change of Control

Here’s a change of control clause:

Change of Control. If a party undergoes a Change of Control, the other party may terminate this Agreement on 30 days’ written notice. (“Change of Control” means a transaction or series of transactions by which more than 50% of the outstanding shares of the target company or beneficial ownership thereof are acquired within a 1-year period, other than by a person or entity that owned or had beneficial ownership of more than 50% of such outstanding shares before the close of such transactions(s).)

• Termination on Change of Control: A party can terminate if controlling ownership of the other party changes hands.

Change of control and assignment terms actually address opposite ownership changes. If an assignment clause addresses change of control, it says what happens if a party goes through an M&A deal and no longer exists (or becomes a shell company). A change of control clause, on the other hand, matters when the party subject to M&A does still exist . That party just has new owners (shareholders, etc.).

Consider the following additional issues for change of control clauses:

• Smaller Change of Ownership: The clause above defines “Change of Control” as any 50%-plus ownership shift. Does that set the bar too high? Should a 25% change authorize termination by the other party, or even less? In public companies and some private ones, new bosses can take control by acquiring far less than half the stock.
• No Right to Terminate: Should a change of control give any right to terminate, and if so, why? (Keep in mind, all that’s changed is the party’s owners — possibly irrelevant shareholders.)
• Divested Entity Rights: What if, again, a party spins off the department or business until involved in the deal? If that party can’t assign the contract to the divested entity, per the above, can it at least “sublicense” its rights to products or service, if it’s the customer? Or can it subcontract its performance obligations to the divested entity, if it’s the provider? Or maybe the contract should require that the other party sign an identical contract with the divested entity, at least for a short term.

Some of this text comes from the 3rd edition of The Tech Contracts Handbook , available to order (and review) from Amazon  here , or purchase directly from its publisher, the American Bar Association, here.

Want to do tech contracts better, faster, and with more confidence? Check out our training offerings here: https://www.techcontracts.com/training/ . Tech Contracts Academy has  options to fit every need and schedule: Comprehensive Tech Contracts M aster Classes™ (four on-line classes, two hours each), topical webinars (typically about an hour), customized in-house training (for just your team).   David Tollen is the founder of Tech Contracts Academy and our primary trainer. An attorney and also the founder of Sycamore Legal, P.C. , a boutique IT, IP, and privacy law firm in the San Francisco Bay Area, he also serves as an expert witness in litigation about software licenses, cloud computing agreements, and other IT contracts.

© 2020, 2022 by Tech Contracts Academy, LLC. All rights reserved.

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What Happens to a Contract When a Business Changes?

If a Company Changes Its Name, Are Contracts Still Valid?

• Contracts and Business Changes
• When a Business Changes its Name
• When a Business is Bought or Sold
• When a Business Declares Bankruptcy

Consult an Attorney

What if you have a contract with another business or person, and there is a significant change in one of the businesses?

Some business changes are small, like a location change, and some are large, like bankruptcy or a name change or one of the parties to the contract being bought by another business.

You might work for a business as an independent contractor , or your business might have a licensing agreement to sell the products of another business. Alternatively, your company may be leasing commercial space from someone.

The simple answer to what happens to a contract when a business changes is, "it depends on the contract."

Contract Sections and Business Changes

Many business contracts include sections dealing with what happens if there is a change in the business. Two contract principles that might affect the need to make a change in the contract are novation and assignment.

Novation is a substitution, including the substitution of one party or obligation for another in a contract. Here's how that works: Party A and Party B are the original signers of the contract. Party A has been bought by Party C. Parties A and B must agree to the novation and sign a novation agreement stating that Party C has been substituted for Party A. Party A is excused from liability by the novation agreement, and Party A gives up any rights against Party B.

A novation agreement may be part of an original contract, or it may need to be signed at the time of the change. In the case of a name change , for example, a novation agreement might be needed in order to make a new contract with the newly named business.

Assignment is a transfer of some property or ownership to someone else, including duties and rights. For example, some independent contractor contracts state that the duties of the contractor can't be assigned or transferred to someone else. Ownership of intellectual property (copyrights, trademarks, or trade secrets) is sometimes transferred to someone else. A contract might include the right to transfer the responsibilities of one of the parties of a contract to another business entity, which might include the assignment to a successor (new) company.

Another option for changing a contract for a business change is to create a letter of agreement that refers to the specific change and have both parties sign it.

Here's an example of an assignment agreement by which the assignor (the party who does the assigning) assigns a stock purchase agreement to an assignee (new owner). The assignee gains all the assignor's rights and interest in the property, and the assignee agrees to perform all "obligations, duties, liabilities, and commitments" of the assignor under the agreement.

Contract If a Company Changes its Name

Here is an example of what might happen to a contract if a business changes its name:

 "I have an employment contract with a business. I was informed this morning that the company has changed its name and legal entity. They even have a new sign on the building. Does this mean the contract is void? More to the point, does that mean I don't have to abide by the non-compete agreement?"

In these types of situations, a lot depends on the wording of the contract. Some contracts plan for the possibility of changes. 

Some contracts specifically state that the parties are "now known as XYZ Corporation," "by any other name," "by which the party may be titled," or something to that effect. Even if the possibility of a name change isn't specifically mentioned in the contract language, the business doesn't get out of contracts just by changing its name and legal type. 

If you think about it, that would be a neat way to avoid debts, by just changing the name of the business. So, no, a name/entity type change doesn't mean a contract is void.

An Example of a Name Change Agreement

You can also sign a separate agreement to acknowledge the name change of a company. In this case, the change-of-name agreement includes:

• A document proving that the name has officially been changed with the state where the business is registered,
• The opinion of an attorney that the change of name was legally done,
• A list of contracts and purchase orders between the two parties,
• The agreement that all rights and obligations of both parties to these contracts are not affected by the change, and
• A statement that all contracts covered by the agreement are amended by substituting the name.

Contracts When a Business Is Bought or Sold

If a business has a major change in ownership, (the sale of a business, for example), part of the terms of the sale may be the assignment of the contract to the new owner. If the business sale documents don't specify, you might have to look at the contract itself. 

As part of the buy/sell process, a new contract may be substituted for a previous contract, with the agreement of both parties. This is the novation section discussed above.

Contracts When a Business Declares Bankruptcy

The bankruptcy judge in a bankruptcy process decides what happens to active ongoing contracts during the bankruptcy process. You can hire an attorney to protect your interest in the process, including making the debtor (the company in bankruptcy) specifically affirm or reject your contract. 

The amounts owed to you under a contract also fall into the bankruptcy process and you become a creditor of the company in bankruptcy. In Chapter 11 (reorganization), the debtor agrees to a plan, which creates new contract rights that replace or supersede pre-bankruptcy contracts.

You should know that if you and the debtor have an ongoing contract that obligates you both to certain requirements (buying and payment, for example), you can't stop doing what the contract requires during the bankruptcy risking being in default. 

At the end of the day, these matters are important and require legal advice. If you have a contract with a business and something changes, consult your attorney before you make any decisions, sign a new contract, or make statements that might compromise your status in the contract. 

SEC EDGAR. " Form of Novation Agreement ."

Cornell Legal Information Institute. " Novation ."

Cornell Legal Information Institute. " Assignment. "

Acquisition.Gov. " 42.1205 Agreement to Recognize Contractor's Change of Name ."

United States Courts. " Chapter 11 – Bankruptcy Basics ." The Discharge.

FAC Number: 2024-06 Effective Date: 08/29/2024

42.1205 Agreement to recognize contractor’s change of name.

(a) If only a change of the contractor’s name is involved and the Government’s and contractor’s rights and obligations remain unaffected, the parties shall execute an agreement to reflect the name change. The contractor shall forward to the responsible contracting officer three signed copies of the Change-of-Name Agreement , and one copy each of the following:

(1) The document effecting the name change, authenticated by a proper official of the State having jurisdiction.

(2) The opinion of the contractor’s legal counsel stating that the change of name was properly effected under applicable law and showing the effective date.

(3) A list of all affected contracts and purchase orders remaining unsettled between the contractor and the Government, showing for each the contract number and type, and name and address of the contracting office . The contracting officer may request the total dollar value as amended and the remaining unpaid balance for each contract.

(b) The following suggested format for an agreement may be adapted for specific cases:

Change-of-Name Agreement

The ABC Corporation (Contractor), a corporation duly organized and existing under the laws of __________ [ insert State ], and the United States of America (Government), enter into this Agreement as of __________ [ insert date when the change of name became effective under applicable State law ].

(a) The parties agree to the following facts:

(1) The Government, represented by various Contracting Officers of the _______________ [ insert name(s) of agency(ies) ], has entered into certain contracts and purchase orders with the XYZ Corporation, namely: ____________ [ insert contract or purchase order identifications ]; [ or delete "namely" and insert "as shown in the attached list marked "Exhibit A" and incorporated in this Agreement by reference." ]. The term "the contracts," as used in this Agreement, means the above contracts and purchase orders and all other contracts and purchase orders , including all modifications, made by the Government and the Contractor before the effective date of this Agreement (whether or not performance and payment have been completed and releases executed if the Government or the Contractor has any remaining rights, duties, or obligations under these contracts and purchase orders ).

(2) The XYZ Corporation, by an amendment to its certificate of incorporation, dated _________ 20___, has changed its corporate name to ABC Corporation.

(3) This amendment accomplishes a change of corporate name only and all rights and obligations of the Government and of the Contractor under the contracts are unaffected by this change.

(4) Documentary evidence of this change of corporate name has been filed with the Government.

(b) In consideration of these facts, the parties agree that-

(1) The contracts covered by this Agreement are amended by substituting the name "ABC Corporation" for the name "XYZ Corporation" wherever it appears in the contracts; and

(2) Each party has executed this Agreement as of the day and year first above written.

United States of America,

By _______________________________________________

Title _____________________________________________

ABC Corporation,

[ Corporate Seal ]

Certificate

I, ___________, certify that I am the Secretary of ABC Corporation; that ___________, who signed this Agreement for this corporation, was then _____________ of this corporation; and that this Agreement was duly signed for and on behalf of this corporation by authority of its governing body and within the scope of its corporate powers. Witness my hand and the seal of this corporation this ________ day of ____________ 20___.

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An official website of the General Services Administration

CAAC Consultation to Issue a Class Deviation from the Federal Acquisition Regulation (FAR) to eliminate hard copy original documents, signatures, notarization, seals on bonds and other seals for certain contract requirements

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Assignment vs Novation: Everything You Need to Know

Assignment vs. novation: What's the difference? An assignment agreement transfers one party's rights and obligations under a contract to another party. 4 min read updated on September 19, 2022

Assignment vs. novation: What's the difference? An assignment agreement transfers one party's rights and obligations under a contract to another party. The party transferring their rights and duties is the assignor; the party receiving them is the assignee. Novation is a mechanism where one party transfers all its obligations and rights under a contract to a third party, with the consent of the original counterparty.

The transfer of a benefit or interest from one party to another is referred to as an assignment. While the benefits can be transferred, the obligation or burden behind the contract cannot be. A contract assignment occurs when a party assigns their contractual rights to a third party. The benefit that the issuing party would have received from the contract is now assigned to the third party. The party appointing their rights is referred to as the assignor, while the party obtaining the rights is the assignee. 

The assignor continues to carry the burden and can be held liable by the assignee for failing to fulfill their duties under the contract. Purchasing an indemnity clause from the assignee may help protect the assignor from a future liability. Unlike notation, assignment contracts do not annul the initial agreement and do not establish a new agreement. The original or initial contract continues to be enforced. 

Assignment contracts generally do not require the authorization from all parties in the agreement. Based on the terms, the assignor will most likely only need to notify the nonassigning party.

In regards to a contract being assignable, if an agreement seems silent or unclear, courts have decided that the contract is typically assignable. However, this does not apply to personal service contracts where consent is mandatory. The Supreme Court of Canada , or SCC, has determined that a personal service contract must be created for the original parties based on the special characteristics, skills, or confidences that are uniquely displayed between them. Many times, the courts need to intervene to determine whether an agreement is indeed a personal service contract.

Overall, assignment is more convenient for the assignor than novation. The assignor is not required to ask for approval from a third party in order to assign their interest in an agreement to the assignee. The assignor should be aware of the potential liability risk if the assignee doesn't perform their duties as stated in the assigned contract.

Novation has the potential to limit future liabilities to an assignor, but it also is usually more burdensome for the parties involved. Additionally, it's not always achievable if a third party refuses to give consent.

It's essential for the two parties in an agreement to appraise their relationship before transitioning to novation. An assignment is preferential for parties that would like to continue performing their obligations, but also transition some of their rights to another party.

A novation occurs when a party would like to transfer both the benefits and the burden within a contract to another party. Similar to assignment, the benefits are transferred, but unlike assignment, the burden is also transferred. When a novation is completed, the original contract is deleted and is replaced with a new one. In this new contract, a third party is now responsible for the obligations and rights. Generally, novation does not cancel any past obligations or rights under the initial contract, although it is possible to novate these as well.

Novation needs to be approved by both parties of the original contract and the new joining third party. Some amount of consideration must also be provided in the new contract in order for it to be novated, unless the novation is cited in a deed that is signed by all parties to the contract. In this situation, consideration is referring to something of value that is being gained through the contract.

Novation occurs when the purchaser to the original agreement is attempting to replace the seller of an original contract. Once novated, the original seller is released from any obligation under the initial contract. The SCC has established a three-point test to implement novation. The asserting party must prove:

• The purchaser accepts complete liability
• The creditor to the original contract accepts the purchaser as the official debtor, and not simply as a guarantor or agent of the seller
• The creditor to the original contract accepts the new contract as the replacement for the old one

Also, the SSC insisted that if a new agreement doesn't exist, the court would not find novation unless the precedence was unusually compelling.

If you need help determining if assignment vs. novation is best for you, you can  post your job  on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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• Novation Agreement
• What is Novation of Contract
• Novation of Contract
• Contract Novation Letter
• Deed of Novation
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• Assignment of Rights Example
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Assignment of Contract

Jump to section, what is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

• Direct mailers
• Place newspaper ads
• Make posts in online forums
• Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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CAN YOU SELL A GOVERNMENT CONTRACT: ASSIGNMENT, NOVATION, CHANGE OF NAME AND ASSIGNMENT OF CLAIMS

Contractors frequently ask if they can sell or transfer (assign) their government contract to another company.  The sale or assignment of a purely commercial contract is very common and well recognized at law. But for a Government contract, there are special rules.  Although a transfer can be made through a process known as “novation,” the contract can be annulled if the rules are not carefully followed.

Commercial Contracts May Generally Be Sold: Generally, commercial contracts can be sold or transferred to a third party.  Indeed, Article 2-210 of the Uniform Commercial Code (“UCC”) explicitly permits this, by stating:

§ 2-210. Delegation of Performance; Assignment of Rights.

(1) A party may perform his duty through a delegate unless otherwise agreed [].

(2) Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract [].

(4) An assignment of “the contract” or of “all my rights under the contract” or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. [].

UCC Article 2 has been adopted by 49 states and the District of Columbia.  Only Louisiana, which has a civil law (not an English Common Law) system, has declined to adopt it.

Government Contracts May Not Be Sold Or Assigned, Except through Novation: The simple answer to the question of the assignment or sale of a government contract, is “NO.”  U.S. law prohibits it, and states that any attempted transfer or assignment will annul the contract:

General Prohibition on Transfer of Contracts . The party to whom the Federal Government gives a contract or order may not transfer the contract or order, or any interest in the contract or order, to another party. A purported transfer in violation of this subsection annuls the contract or order so far as the Federal Government is concerned, except that all rights of action for breach of contract are reserved to the Federal Government.

41 U.S.C. § 6305, known as the “Contracts Act.”  This prohibition, which is repeated in FAR 42.1204, protects the government from secret asssignments, prevents possible multiple claims and makes unnecessary the investigation of assignments. See American Gov’t Properties and Houma SSA v. United States, Fed. Cl. No. 09-153 (Aug. 28, 2014).  There are only two exceptions: (1) where the Government waives the prohbition by giving clear assent to the assignment; and (2) where the assignment occurs by operation of law (e.g., where there was corporate success through merger or consolidation).  In American Gov’t Properties, the Court held that an assignment of the contract violated the Contracts Act since there was no exception, that the contract had been annulled (voided), and that therefore, the Court had no jurisdiction because there was no contract and the Contract Disputes Act did not apply.

Furthermore, as readers know, only responsible contractors may receive contract awards, and when a contractor sells or transfer a contract, unless special provision are made for government review, the Government will have no assurance that the buyer is responsible.

Novation-the proper way to transfer a Government contract:  The FAR does provide for transfer of a contract to a third party through a process called “novation” (substitution of a new contract for an existing one, between different parties).  The government has the option (but is not required) to recognize a third party as a “successor in interest” to a Government contract only when there is a transfer of: (1) all the contractor’s assets; or (2) the entire portion of the contractor’s assets involved in performing the contract. FAR 42.1204(a).

In order to effect a novation, the contractor must carefully following the procedure in FAR 42.1204, by submitting copies of a proposed novation agreement, along with detailed information on all affected contracts, evidence of the transferee’s capability to perform, and any other relevant information requested by the contracting officer.  Certain specific documents must also be submitted (bill or sale or merger; minutes of boards of directors authorizing the transfer, copies of corporate articles, opinion of legal counsel, balance sheets, evidence of security clearances, if required, consent of sureties).  Even more important, the novation agreement must provide that:

(1)   the transferee assumes all the transferor’s obligations under the contract, and is receiving all the assets devoted to the contract

(2)   the transferor guarantees performance of the contract by the transferee (a bond may be used)

(3)   the transferor waives all rights under the government contract

(4)   Both transferor and transferee must comply with all Federal laws.

A sample novation agreement is included in the FAR, and should be used for all novations. FAR 42.1204.  REMEMBER: The novation will not take effect until approved by the Contracting Officer and the Contract is modified, in writing, to acknowledge and accept the novation.  Until that happens, the transferor must continue to perform, and all payments will be made to the contractor whose name appears on the contract.

Change of Name Only: If only a change of the contractor’s name is involved and the Government’s and contractor’s rights and obligations remain unaffected, the contractor may simply forward to the contracting officer copies of the Change of Name Agreement, a list of contracts, the State document effecting the name change, and the opinion of legal counsel.  FAR 42.1205.  Once again, this section of the FAR includes a simple “Change of Name Agreement” which can be used.  Again, this should be memorialized in a modification to the contract.

You Cannot Sell Your Government Contract Invoices:  In the commercial world, invoices can be sold or “factored” to get immediate cash flow.  A financial factor may buy your invoiced receivables at a discount.  Collecting from the customer then becomes the factor’s responsibility. You cannot “sell” or factor your government contract invoices to a third party, because the Contracts Act states “ [the contractor] may not transfer the contract or order, or any interest in the contract or order, to another party”  41 U.S.C. § 6305(a).  But there is another lawful method, outlined in the Contracts Act, and 31 U.S.C. § 3727, the Assignment of Claims Act of 1940, that permits something similar, but not identical.

Under the Assignment of Claims Act, a Government contractor may obtain financing for its contract by borrowing money from a bank or financial institution and then assigning moneys due or to become due under a contract if the assignment is made to a that bank or financial institution, the contract does not prohibit the assignment, and generally, the assignment covers all unpaid amounts payable, is made to only one party, and is not subject to any further assignment.  There is a specific procedure in FAR 32.805, which requires formal submission of the Notice of Assignment to the Contracting Officer, and an acknowledgement of that instrument of assignment by the Contracting Officer.  Once acknowledged, the assignment takes effect.

The contract must then be modified, and all future payments of invoices must be made only to the assignee.  If the Government erroneously pays the contractor, the bank or financing institution may bring a suit against the government to recover any contract payment made to the contractor. Produce Factors Corp. v. United States, 467 F.2d 1343, 1349 (Ct.Cl.1972). An erroneous payment made by the Government is no bar to the rightful claimant, the assignee bank. Central Nat’l Bank v. United States, 91 F.Supp. 738, 741 (Ct.Cl.1950) (citation omitted).

Summary:  While commercial contracts may be sold or assigned to a third party, Government Contracts may not be.   However, government contracts may be transferred through novation, where the government gives its formal written approval after submission of specific information and assurances.  A simple change of the contractor’s name does not require a novation.  Finally, although government contractors may not “sell” their invoices, they may obtain loans from financial institutions and assign the proceeds of the contract to the financial institution granting the loan.

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Home » Guidance » Novation and Change of Name Agreements

Novation and Change of Name Agreements

By: John Ford, Senior Consultant, Government Contracting Industry Practice and Brendan Halloran, Senior Manager, Government Contracting Industry Practice

We sometimes have clients ask us about the possibility of buying or selling a contract. This results in us having to explain the prohibition against the buying or selling of contracts contained in the Anti-Assignment Act (AAA) and how it applies to the concept of novating a contract. We will discuss these issues here.

The Anti-Assignment Act, 41 U.S.C. §6305 states in part: The party to whom the Federal Government gives a contract or order may not transfer the contract or order, or any interest in the contract or order, to another party. A purported transfer in violation of this subsection annuls the contract or order so far as the Federal Government is concerned, except that all rights of action for breach of contract are reserved to the Federal Government.

Note that this section only prohibits a contractor from transferring a contract. The AAA has been interpreted as permitting the government to waive the application of the AAA and consent to the transfer of a contract when it is in the government’s interest to do so. Such consent is a discretionary act on the part of the government and the AAA does not require the government to grant such consent. If a contractor transfers a government contract without the government’s consent, the AAA specifies that the transfer “annuls the contract or order so far as the Federal Government is concerned.” Thus, the recipient of the contract will receive no benefit from it and the transferring contractor may be liable to the government for breach of contract damages.

The AAA has also been interpreted as not applying to transfers by operation of law. Thus, it does not prohibit the transfer of a contract if the transfer is incident to the transfer of a business through a will or a transfer incident to an order by a bankruptcy court. Therefore, if such a transfer occurs, it is not prohibited by the AAA and the contract is not subject to being terminated for default by the government.

As stated above, the AAA has been interpreted as giving the government discretion to consent to the transfer of a contract when it is in the government’s interest to do so. This concept has been incorporated in Federal Acquisition Regulation (FAR) Subsection 42.12.

FAR 42.1204(a) states in part that: The Government may recognize a third party as the successor in interest to a Government contract when the third party’s interest in the contract arises out of the transfer of- (1) All the contractor’s assets; or (2) The entire portion of the assets involved in performing the contract.   Examples of such transactions include, but are not limited to- (i) Sale of these assets with a provision for assuming liabilities; (ii) Transfer of these assets incident to a merger or corporate consolidation.

It should be noted that some mergers constitute a transfer by operation of law. When this occurs, no novation is necessary.

In contrast, FAR 42.1204(b) provides that “[a] novation agreement is unnecessary when there is a change in the ownership of a contractor as a result of a stock purchase, with no legal change in the contracting party, and when that contracting party remains in control of the assets and is the party performing the contract.”

To begin the novation process, the contractor (transferor) must submit a request to the responsible contracting officer. If any of the contracts proposed for transfer have been assigned to an Administrative Contracting Officer (ACO), that ACO will be the responsible contracting officer. If none of the affected contracts held by the transferor have been assigned to an ACO, the contracting officer responsible for the largest unsettled (unbilled plus billed but unpaid) dollar balance of contracts will be the responsible contracting officer. Along with the request, the contractor must submit the documentation listed in FAR 42.1204(e) and (f).

If the government consents to the transfer, FAR 42.1204(i) provides a model novation agreement. This model contains the minimum information that must be included in the novation agreement. However, the parties can add additional terms.

Once a contract is novated, the transferee becomes liable for performance of the contract and is responsible for the actions of the transferor that occurred prior to the transfer. For example, if the transferor submitted defective pricing in regard to a contract, the transferee is responsible for the price reduction. On the other hand, if a claim accrued to the transferor prior to the transfer, the transferee can assert that claim.

As the foregoing demonstrates, novations can be a complicated process. They generally should not be undertaken without the benefit of professional assistance. The documentation required for submission to the ACO that is responsible for reviewing and executing the novation agreement can be extensive. It is advisable to start planning and engage with the ACO soon after the need for a novation is identified. Detailed information on the affected contracts is needed early in the process, so contractors should ensure they have done their due diligence identifying the contracts that will be novated.

Regarding a change of name, FAR 42.1205 describes the process for doing so. Such agreements are executed by the responsible contracting officer as described above after the contractor submits a request for a name change. Like FAR 42.1204, 42.1205 contains a model change of name agreement.

If you have questions concerning novations or other contracting matters, do not hesitate to contact us for advice and assistance.

Assignment vs. Novation

What's the difference.

Assignment and novation are both legal concepts that involve the transfer of rights and obligations from one party to another. However, there are some key differences between the two. Assignment refers to the transfer of a single party's rights under a contract to another party, while the original party still remains liable for the performance of the contract. On the other hand, novation involves the substitution of one party with another, where the original party is completely released from their obligations and the new party assumes all rights and liabilities. In essence, assignment is a transfer of rights, whereas novation is a transfer of both rights and obligations.

Further Detail

Introduction.

When it comes to legal agreements and contracts, there are various mechanisms that can be used to transfer rights and obligations from one party to another. Two commonly used mechanisms are assignment and novation. While both assignment and novation involve the transfer of rights and obligations, they differ in their legal implications and the extent of the transfer. In this article, we will explore the attributes of assignment and novation, highlighting their similarities and differences.

Assignment refers to the transfer of rights and obligations from one party (the assignor) to another party (the assignee). In an assignment, the assignor remains a party to the original contract, but transfers some or all of their rights and obligations to the assignee. The assignee steps into the shoes of the assignor and assumes the rights and obligations associated with the contract.

One of the key attributes of assignment is that it does not require the consent of the other party to the original contract. The assignor can unilaterally transfer their rights and obligations to the assignee without seeking the consent of the other party. However, the assignor must provide notice to the other party about the assignment, as failure to do so may result in the assignment being ineffective.

Another important aspect of assignment is that it does not extinguish the original contract. The assignor remains liable to the other party for any breaches or obligations that existed prior to the assignment. This means that the assignee can enforce the rights under the original contract against the assignor if necessary.

Furthermore, assignment can be partial or complete. In a partial assignment, the assignor transfers only a portion of their rights and obligations to the assignee, while retaining the rest. In a complete assignment, the assignor transfers all of their rights and obligations to the assignee.

It is worth noting that certain rights and obligations may not be assignable. For example, personal services contracts or contracts that involve personal skill or expertise may not be assignable without the consent of the other party. Additionally, assignment may be prohibited by the terms of the original contract.

Novation, on the other hand, refers to the substitution of a new party for one of the original parties to a contract. In a novation, the original contract is extinguished, and a new contract is formed between the remaining original party and the new party. The new party assumes all the rights and obligations of the departing party, effectively replacing them in the contract.

Unlike assignment, novation requires the consent of all parties involved. The departing party, the remaining original party, and the new party must all agree to the novation and execute a novation agreement. This agreement explicitly states the intention to substitute the original party with the new party and outlines the rights and obligations that will be transferred.

Novation has the effect of releasing the departing party from any further liability or obligations under the original contract. Once the novation is complete, the departing party is no longer bound by the terms of the contract and is relieved of any future obligations. The new party assumes all the rights and obligations as if they were an original party to the contract.

It is important to note that novation is a more complex process compared to assignment. It involves the creation of a new contract and the consent of all parties, which may require additional negotiations and formalities. Novation is often used in situations where a party wants to completely replace an existing party with a new party, such as in mergers and acquisitions or when transferring ownership of a business.

While assignment and novation both involve the transfer of rights and obligations, there are several key differences between the two mechanisms. Let's explore these differences:

Assignment does not require the consent of the other party to the original contract, whereas novation requires the consent of all parties involved. In assignment, the assignor can unilaterally transfer their rights and obligations to the assignee without seeking the consent of the other party. Novation, on the other hand, requires the explicit agreement of all parties to substitute the original party with a new party.

Legal Implications

Assignment does not extinguish the original contract, and the assignor remains liable for any breaches or obligations that existed prior to the assignment. The assignee can enforce the rights under the original contract against the assignor if necessary. In contrast, novation extinguishes the original contract and releases the departing party from any further liability or obligations. The new party assumes all the rights and obligations as if they were an original party to the contract.

Novation is generally more complex compared to assignment. It involves the creation of a new contract and the consent of all parties, which may require additional negotiations and formalities. Assignment, on the other hand, is a simpler process that does not require the creation of a new contract or the consent of the other party to the original contract.

Extent of Transfer

Assignment can be partial or complete, depending on the intention of the assignor. The assignor can transfer only a portion of their rights and obligations to the assignee, while retaining the rest. In a complete assignment, the assignor transfers all of their rights and obligations to the assignee. Novation, on the other hand, involves the complete substitution of a new party for one of the original parties. The new party assumes all the rights and obligations of the departing party.

Prohibited Assignments

While assignment allows for the transfer of most rights and obligations, there may be certain rights and obligations that are not assignable. For example, personal services contracts or contracts that involve personal skill or expertise may not be assignable without the consent of the other party. Additionally, assignment may be prohibited by the terms of the original contract. Novation, on the other hand, does not face the same limitations as assignment, as it involves the creation of a new contract with the consent of all parties.

In conclusion, assignment and novation are two mechanisms used to transfer rights and obligations from one party to another. Assignment involves the transfer of rights and obligations from the assignor to the assignee, while the assignor remains a party to the original contract. Novation, on the other hand, involves the substitution of a new party for one of the original parties, resulting in the creation of a new contract.

While assignment does not require the consent of the other party and does not extinguish the original contract, novation requires the consent of all parties and releases the departing party from any further liability or obligations. Novation is generally more complex compared to assignment, and it allows for the complete substitution of a new party. However, both assignment and novation have their own legal implications and limitations, which should be carefully considered when transferring rights and obligations under a contract.

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Transferring ownership/ Assignments FAQs

Assignment Center has replaced the Electronic Patent Application System (EPAS) and Electronic Trademark Assignment System (ETAS). Assignment Center makes it easier to transfer ownership or change the name on your patent or trademark registration. 

See our how-to guides on using Assignment Center for   patents  and  trademarks . If you have questions, email  [email protected]  or call customer service at 800-972-6382.

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Transferring Ownership / Assignments

• Transferring Ownership / Assignments, Procedures

The Assignment Recordation Branch in the Public Records Division processes and records assignment documents for both patent and trademark properties.

Essentially the rules:

(1) specify the minimum information about the transaction that must be submitted;

(2) require submitters to submit this information of a separate cover sheet; and

(3) specify that submissions must be legible and of such quality to permit processing; and

(4) pay the proper recording fee.

The rules permit submission of true copies of assignment-related documents; original documents are not required nor desired, as they will not be returned.

You may contact the Assignment Center customer service desk at 571-272-3350 from 8:30 a.m. to 5 pm ET Mondays through Fridays, except on federal holidays. You may e-mail questions about electronic filing to [email protected] .

Payment may be made by use of a check, credit card, money order or USPTO deposit account if submitting documents in paper. Trademark assignments submitted electronically may be paid by credit card, USPTO deposit account or electronic fund transfer (EFT). The USPTO accepts VISA, MASTERCARD, AMERICAN EXPRESS and DISCOVER credit cards.

>> see How to Pay Fees for a current fee schedule and for more about fee payments

No. All documents that meet the minimum requirement in 37 CFR 3 are processed and recorded. Persons buying or selling properties should be sure that there is an accurate chain of title in place before submitting recordation requests.

No, these forms are not mandatory. However, the USPTO strongly encourages their use. Completing the forms in their entirety ensures that all the required information for recordation has been sent to the office. The forms are available in PDF-fillable format on the USPTO Forms page , thus making them quick and easy to prepare.

When these forms are received in the USPTO, they are scanned along with the supporting documentation. The bibliographic data from the cover sheet is then entered into the PTAS system and the documents are processed.

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Spotting issues with assignment clauses in M&A Due Diligence

Written by: Kira Systems

January 19, 2016

6 minute read

Although not nearly as complex as change of control provisions , assignment provisions may still present a challenge in due diligence projects. We hope this blog post will help you navigate the ambiguities of assignment clauses with greater ease by explaining some of the common variations. (And, if you like it, please check out our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence. )

What is an Assignment Clause?

First, the basics:

Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non-assigning counterparties, such as employment agreements and consulting agreements.) For all other contracts, parties may want an anti-assignment clause that allows them the opportunity to review and understand the impact of an assignment (or change of control) before deciding whether to continue or terminate the relationship.

In the mergers and acquisitions context, an assignment of a contract from a target company entity to the relevant acquirer entity is needed whenever a contract has to be placed in the name of an entity other than the existing target company entity after consummation of a transaction. This is why reviewing contracts for assignment clauses is so critical.

A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty’s right to consent to the assignment of a contract. Below are five common occurrences in which assignment provisions may provide exclusions or inclusions.

Common Exclusions and Inclusions

Exclusion for change of control transactions.

In negotiating an anti-assignment clause, a company would typically seek the exclusion of assignments undertaken in connection with change of control transactions, including mergers and sales of all or substantially all of the assets of the company. This allows a company to undertake a strategic transaction without worry. If an anti-assignment clause doesn’t exclude change of control transactions, a counterparty might materially affect a strategic transaction through delay and/or refusal of consent. Because there are many types of change of control transactions, there is no standard language for these. An example might be:

In the event of the sale or transfer by [Party B] of all or substantially all of its assets related to this Agreement to an Affiliate or to a third party, whether by sale, merger, or change of control, [Party B] would have the right to assign any or all rights and obligations contained herein and the Agreement to such Affiliate or third party without the consent of [Party A] and the Agreement shall be binding upon such acquirer and would remain in full force and effect, at least until the expiration of the then current Term.

Exclusion for Affiliate Transactions

A typical exclusion is one that allows a target company to assign a contract to an affiliate without needing the consent of the contract counterparty. This is much like an exclusion with respect to change of control, since in affiliate transfers or assignments, the ultimate actors and responsible parties under the contract remain essentially the same even though the nominal parties may change. For example:

Either party may assign its rights under this Agreement, including its right to receive payments hereunder, to a subsidiary, affiliate or any financial institution, but in such case the assigning party shall remain liable to the other party for the assigning party’s obligations hereunder. All or any portion of the rights and obligations of [Party A] under this Agreement may be transferred by [Party A] to any of its Affiliates without the consent of [Party B].

Assignment by Operation of Law

Assignments by operation of law typically occur in the context of transfers of rights and obligations in accordance with merger statutes and can be specifically included in or excluded from assignment provisions. An inclusion could be negotiated by the parties to broaden the anti-assignment clause and to ensure that an assignment occurring by operation of law requires counterparty approval:

[Party A] agrees that it will not assign, sublet or otherwise transfer its rights hereunder, either voluntarily or by operations of law, without the prior written consent of [Party B].

while an exclusion could be negotiated by a target company to make it clear that it has the right to assign the contract even though it might otherwise have that right as a matter of law:

This Guaranty shall be binding upon the successors and assigns of [Party A]; provided, that no transfer, assignment or delegation by [Party A], other than a transfer, assignment or delegation by operation of law, without the consent of [Party B], shall release [Party A] from its liabilities hereunder.

This helps settle any ambiguity regarding assignments and their effects under mergers statutes (particularly in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the merger).

Direct or Indirect Assignment

More ambiguity can arise regarding which actions or transactions require a counterparty’s consent when assignment clauses prohibit both direct and indirect assignments without the consent of a counterparty. Transaction parties will typically choose to err on the side of over-inclusiveness in determining which contracts will require consent when dealing with material contracts. An example clause prohibiting direct or indirect assignment might be:

Except as provided hereunder or under the Merger Agreement, such Shareholder shall not, directly or indirectly, (i) transfer (which term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of its Subject Shares, or any interest therein.

“Transfer” of Agreement vs. “Assignment” of Agreement

In some instances, assignment provisions prohibit “transfers” of agreements in addition to, or instead of, explicitly prohibiting “assignments”. Often, the word “transfer” is not defined in the agreement, in which case the governing law of the contract will determine the meaning of the term and whether prohibition on transfers are meant to prohibit a broader or narrower range of transactions than prohibitions on assignments. Note that the current jurisprudence on the meaning of an assignment is broader and deeper than it is on the meaning of a transfer. In the rarer case where “transfer” is defined, it might look like this:

As used in this Agreement, the term “transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in…

The examples listed above are only of five common occurrences in which an assignment provision may provide exclusions or inclusions. As you continue with due diligence review, you may find that assignment provisions offer greater variety beyond the factors discussed in this blog post. However, you now have a basic understand of the possible variations of assignment clauses. For a more in-depth discussion of reviewing change of control and assignment provisions in due diligence, please download our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence.

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Novation and Change of Name

Novation and change of name agreements.

Novation and Change of Name Agreements, as outlined in FAR 42.12, describe the procedures necessary to request that the government recognize a name change or a successor in interest to a contract (Novation). If a GSA Schedule contractor legally changes their name, or the contractor’s assets are transferred to another entity, the contractor must notify the responsible government Contracting Officer immediately using the following procedures. A contract modification cannot be issued to recognize a Novation or Change-of-Name Agreement without submission of the required information.

Determining the agency responsible for executing your Novation or Change-of-Name:

• If the transferor has contracts (not task/purchase orders issued under the GSA Schedule) with other government agencies in addition to the GSA Schedule contract, the agency responsible for processing the Novation or Change-of-Name Agreement modification is the agency with the largest unsettled (unbilled plus billed but unpaid) dollar balance of contract obligations.
• If the largest unsettled dollar balance is from task/purchase orders utilizing a GSA Schedule contract, GSA is the agency responsible for processing the Novation or Change-of-Name Agreement modification.
• If the transferor has multiple GSA Schedule contracts, the Contracting Officer for the specific GSA Schedule contract with the largest unsettled task order dollar balance is the contracting officer responsible for processing the Novation or Change-of-Name Agreement modification.
• When a Novation or Change-of-Name Agreement has been processed by another government agency or a different GSA office and needs to be recognized for a GSA Schedule contract, submit the following:
• A request to recognize the Novation or Change-of-Name Agreement modification processed by the other agency/GSA office.
• A copy of the SF-30 signed by the responsible contracting officer.
• A copy of the Novation or Change-of-Name Agreement signed by the responsible contracting officer.

Which is Appropriate: A Novation Agreement or a Change of Name Agreement?

A Change-of-Name Agreement applies when:

• Only a change in the contractor’s name is involved
• Contractual rights and obligations remain unaffected

A Change-of-Name Agreement is needed to:

• Recognize a legal change of the business name
• Recognize a legal change of the “Doing Business As” name, even if the legal business name remains unchanged

A Novation Agreement applies when:

• Transfer of all of the contractor’s assets has occurred
• Transfer of the entire portion of assets involved in the performance of the contract has occurred

A Novation Agreement is needed to:

• Recognize a third party as the successor in interest to the government contract
• Recognize the transfer of the related assets

A Novation Agreement is not needed when:

• There is a change of ownership due to a stock purchase
• There is no legal change in the contracting party
• The contracting party remains in control of assets and is the party performing the contract

Novation Agreement Checklist

Required documents:.

You may not have all of these documents, but each must be addressed:

• A sample of the Novation Agreement
• If the incorporating State does not require a corporate seal, include a statement to that effect on a separate page
• The effective date of the transfer from this document should be reflected in the Novation Agreement paragraph (a)(2) and in the attorney opinion letter.
• Authenticated copy of instrument effecting asset transfer (bill of sale, certificate of merger, contract, deed, court decree, etc.)
• Contract Number and type
• Name and address of contracting office
• Total dollar value
• Approximate unpaid balance
• Must include a statement that the transfer was properly affected under the applicable state law
• Must state the effective date of the transfer
• Letter should be addressed to the attention of the government Contracting Officer
• If the corporation was formed for a purpose other than to receive the transferor’s assets, include a statement to that effect.
• If either company does not have a Board of Directors, include a statement to this effect and include a copy of the appropriate company’s Articles of Incorporation to confirm that the company elected not to have a Board of Directors
• Certified copy of Stockholder Meeting Minutes (for both transferee and transferor) approving transfer of assets
• Need copies that were dated both immediately before transfer and immediately after transfer
• Include independent auditor report if available
• Evidence of any security clearance requirements (if required)
• Consent of sureties if bonds are used (if required)

A GSA Schedule contractor, with at least 50 full-time employees and a federal contract (or subcontract) worth more than $50,000, must maintain an Affirmative Action Program (AAP) for each of its establishments and include all employees.

Responsibility Determination

The transferee must be registered in the System for Award Management (SAM) database.

Capability to Perform

• If the Transferee is planning to use a different price list, submit two copies of the new commercial catalog/price list
• Certification that no change has occurred in the Commercial Sales Practices since the original award or subsequent modification, or
• Complete and submit a Commercial Sales Practices Format if the commercial sales practices of the transferee are different from those of the transferor
• If the Transferee is a large business, a commercial subcontracting plan must be submitted with the novation documents. The contract will not be novated without an approved Subcontracting Plan. Subcontracting Plan template is available in Attachment 13 to the solicitation.

Change of Name Agreement Checklist

• A sample of the Change of Name Agreement
• The effective date of the transfer from this document should be reflected in the Change-of-Name Agreement paragraph (a)(2) and in the attorney opinion letter.

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How to change your name and what government agencies to notify

You might change your name through marriage, divorce, or court. Update your new name with Social Security, the motor vehicle office, and other government agencies.

How to legally change your name

The process of changing your name through marriage, divorce, or a court order can vary between states. 

Before you get married, you must apply for a marriage license. After you apply for the license and get married, your new name will be reflected on your marriage certificate. Contact the local government where you are getting married to learn about applying for a marriage license and how to change your name.

When you file for divorce, you can change your name back to the name you used before you got married. In most states, you may do so when you apply for your divorce decree. Contact your local government to learn more about changing your name when you file for divorce.

Court order

In most cases, you must file a petition with your local court to change your name. To do so, you may need to file paperwork and appear before a judge to complete the process. Find your local government website and contact your circuit court to get information about how you can legally change your name.

Government agencies to notify when you change your name

Use certified copies of marriage and divorce certificates or name change orders as proof to notify these federal and state agencies that you changed your name.

Social Security card

Notify the Social Security Administration  (SSA) early. Other agencies learn of name changes through the SSA.

Driver’s license or state ID card

Contact your  state motor vehicle office . Having an updated license or state ID will make changing your name with other agencies easier.

Tax returns

Every name on your tax return must match Social Security Administration records. The IRS says it is critical to  update names with the SSA before filing your tax return .

U.S. passport

Report your name change  to the State Department as soon as possible to get an updated passport.

Naturalization certificate and certificate of citizenship

Complete a USCIS application online or by mail  to update the name on your naturalization or citizenship certificate.

Veterans benefits

If you receive veterans health care or benefits, notify the Department of Veterans Affairs (VA) .

Voter registration

Update your state voter registration:

• Online through vote.gov  or
• By mail using the National Mail Voter Registration form

Postal service

Report your name change to the  local post office  that delivers your mail.

State benefits programs

Contact your  state's social services office  if you receive SNAP (food stamps), TANF (welfare), or other public assistance.

State and property taxes

Notify your state taxing authority .

If you own a home, notify the city or county property tax office.

LAST UPDATED: February 2, 2024

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Risk Management Blog

Ucc & corporate due diligence resource guide for legal and financial professionals, 5 types of ucc3 change statements.

It’s an amendment filing to an original UCC1 financing statement that changes or adds information to the originally filed UCC1. It’s a filing tool secured parties use to manage their UCC portfolio to maintain their perfected security interests.

Importantly, • the timing of UCC3 recording execution • the accuracy of the data changes or additions • and choosing the correct amendment type can all be critical to maintaining a perfected security interest and the original UCC1 priority position.

Before discussing what a UCC3 is, its various types and how they are utilized, a quick review of UCC1s is in order. UCC1 financing statements are recorded filings which give notice to other creditors of a security interest in specific collateral used to secure debt. They are typically recorded to perfect the security interests of a secured party to prioritize their claim position in the event of a debtor default. UCC1s are subject to the effects of subsequently filed documents, whether those documents attach to the original filing, like a UCC3, or not, like a Federal tax lien.

Some of these subsequently filed documents can prime a perfected security interest, like Federal tax liens.

Others, like UCC3s if not executed according to statute, can cause a secured party to lose effectiveness of their lien, their UCC1, and all claims on any collateral should there be a default.

It’s that last piece that is vitally important about UCC3s: they can affect previously perfected security interests depending on when and where they are recorded, what they do, and how accurate the new data is.

What are the Different Types of UCC3s?

There are five different types of UCC3s.

• Continuations – extends the financing statement effectiveness for another five years;
• Party Amendments – adds or amends debtor or secured party information, such as changes to the legal name or the address
• Collateral Amendments – adds or removes collateral from the collateral description, or restates the collateral description completely
• Assignments – transfers “full” or “partial” rights in the filing from one secured party to another
• Terminations – extinguishes a financing statement prior to its five-year lapse date

Where and how are UCC3s recorded?

UCC3s are recorded in the same jurisdiction as the effective UCC1 it amends. A step by step process on how to execute a UCC3 filing can be found here .

What are some examples of the critical nature of each UCC3 type?

• Continuations – there is a 6 month window prior to the UCC1 5-year lapse date in which a Continuation must be recorded for it to be effective; Continuations are not effective if recorded after the lapse date and the UCC1 lapses and becomes ineffective
• Party Amendments – these amendments often coincide with name changes and/or address changes to business entity documents of the parties involved; these name changes and address changes typically require amendments to the original UCC1 identifying these changes within a specific time frame; address changes that involve a change of state have specific UCC3 filing protocols for secured parties to follow within specific time frames
• Collateral Amendments – partial releases are executed as a DELETE collateral descriptions, a critical aspect of this type of UCC3; a collateral restatement  is a replacement of a prior collateral description, not an addition to that prior description, so a secured party’s security interest in any collateral that is not fully restated in the UCC3 collateral amendment risks becoming unperfected
• Assignments – sometimes a new UCC1 is required instead of an assignment, depending, and failure to recognize what is required in a situation can result in a secured party’s lien becoming ineffective
• Terminations – other parties can terminate a UCC1 besides the secured party; also, RA9 requires no signatures to record terminations; a termination can be recorded by the debtor under certain circumstances; monitoring services are available which alert secured parties to when another party files a termination on one of their UCCs; contact the secured party to verify the effectiveness of a recorded termination.

Once a UCC1 is recorded and a security interest is perfected, a secured party’s focus shifts to maintaining that perfected security interest and managing the UCC1 going forward until it either lapses or is terminated.

UCC3s are a tool which secured parties use to manage that process.

Another important conversation about UCC3s are common mistakes that are made regarding them. Use the button below to download our Free Reference Guide: Top 3 Mistakes on UCC3 Change Statement .

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Out-law / your daily need-to-know.

Out-Law Guide 4 min. read

Assignment and novation

19 Aug 2011, 4:40 pm

Assignment involves the transfer of an interest or benefit from one person to another. However the 'burden', or obligations, under a contract cannot be transferred.

Assignment in construction contracts

As noted above only the benefits of a contract can be assigned - not the burden. In the context of a building contract:

• the employer may assign its right to have the works constructed, and its right to sue the contractor in the event that the works are defective – but not its obligation to pay for the works;
• the contractor may assign its right to payment of the contract sum - but not its obligation to construct the works in accordance with the building contract or its obligation to meet any valid claims, for example for defects.

After assignment, the assignee is entitled to the benefit of the contract and to bring proceedings against the other contracting party to enforce its rights. The assignor still owes obligations to the other contracting party, and will remain liable to perform any part of the contract that still has to be fulfilled since the burden cannot be assigned. In practice, what usually happens is that the assignee takes over the performance of the contract with effect from assignment and the assignor will generally ask to be indemnified against any breach or failure to perform by the assignee.  The assignor will remain liable for any past liabilities incurred before the assignment.

In construction contracts, the issue of assignment often arises in looking at whether collateral warranties granted to parties outside of the main construction contract can be assigned.

Funders may require the developer to assign contractual rights against the contractor and the design team as security to the funder, as well as the benefit of performance bonds and parent company guarantees. The developer may assign such rights to the purchaser either during or after completion of the construction phase.

Contractual assignment provisions

Many contracts exclude or qualify the right to assignment, and the courts have confirmed that a clause which provides that a party to a contract may not assign the benefit of that contract without the consent of the other party is legally effective and will extend to all rights and benefits arising under the contract, including the right to any remedies. Other common qualifications on the right to assign include:

• a restriction on assignment without the consent of the other party, whether or not such consent is not to be unreasonably withheld or delayed;
• only one of the parties may assign;
• only certain rights may be assigned – for example, warranties and indemnities may be excluded;
• a limit on the number of assignments - as is almost always the case in respect of collateral warranties;
• a right to assign only to a named assignee or class of assignee.

Note that in some agreements where there is a prohibition on assignment, it is sometimes possible to find the reservation of specific rights to create a trust or establish security over the subject matter of the agreement instead.

Legal and equitable assignment

The Law of Property Act creates the ability to legally assign a debt or any other chose in action where the debtor, trustee or other relevant person is notified in writing. If the assignment complied with the formalities in the Act it is a legal assignment, otherwise it will be an equitable assignment.

Some transfers can only take effect as an equitable assignment, for example:

• an oral assignment;
• an assignment by way of charge;
• an assignment of only part of the chosen in action;
• an assignment of which notice has not been given to the debtor;
• an agreement to assign.

If the assignment is equitable rather than legal, the assignor cannot enforce the assigned property in its own name and to do so must join the assignee in any action. This is designed to protect the debtor from later proceedings brought by the assignor or another assignee from enforcing the action without notice of the earlier assignment.

Security assignments

Using assignment as a way of taking security requires special care, as follows:

• if the assignment is by way of charge, the assignor retains the right to sue for any loss it suffers caused by a breach of the other contract party;
• if there is an outright assignment coupled with an entitlement to a re-assignment back once the secured obligation has been performed, it is an assignment by way of legal mortgage.

Please see our separate Out-Law guide for more information on types of security.

Restrictions on assignment

There are restrictions on the assignment of certain types of interest on public policy grounds, as follows:

• certain personal contracts – for example, a contract for the employment of a personal servant or for the benefit of a motor insurance policy cannot be assigned;
• a bare cause of action or 'right to sue' where the assignee has no commercial interest in the subject matter of the underlying transaction cannot be assigned;
• certain rights conferred by statute – for example, a liquidator's powers to bring wrongful trading proceedings against a director – cannot be assigned;
• an assignment of a contract may not necessarily transfer the benefit of an arbitration agreement contained in the contract;
• the assignment of certain rights is regulated – for example, the assignment of company shares or copyright.

If you want to transfer the burden of a contract as well as the benefits under it, you have to novate. Like assignment, novation transfers the benefits under a contract but unlike assignment, novation transfers the burden under a contract as well.

In a novation the original contract is extinguished and is replaced by a new one in which a third party takes up rights and obligations which duplicate those of one of the original parties to the contract. Novation does not cancel past rights and obligations under the original contract, although the parties can agree to novate these as well.

Novation is only possible with the consent of the original contracting parties as well as the new party. Consideration (the 'price' paid, whether financial or otherwise, by the new party in return for the contract being novated to it) must be provided for this new contract unless the novation is documented in a deed signed by all three parties.

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How to Legally Change Your Name and Gender at the Same Time

Changing your name and your gender all at once may seem overwhelming, but it's probably going to be easier to do both at the same time.

Find out more about legal name change

by   Geoff Williams

Geoff specializes in personal finance and business articles. He is a regular contributor to U.S. News & World Rep...

Read more...

Updated on: September 11, 2024 · 9 min read

How to change your legal name by petition

How to change your gender marker, how long does it take to change your name and gender marker, how much does it cost to change your name and gender marker, do i need a lawyer to get my name and gender marker changed.

Changing your name and gender at the same time starts with filing a written request to the court for a name change. After getting it approved you can update your records. To change your gender marker is a simpler process, which typically means updating your preferred gender on documents such as a passport. Both a name change and a gender marker change may require paying fees, and requirement will depend on your state's laws.

Generally, if you’re going to change your legal name , you’ll need to file a petition with your local court. A petition is simply a formal written request to the court. Here’s what you’ll need to do:

Step 1: Research your state’s laws

As with many legal decisions, the laws governing how people change their names vary from state to state. You may want to consider working with a lawyer. Working with somebody who knows the territory well can be a cost-effective way to simplify the process of changing your legal name and steer you away from making any expensive or time-consuming mistakes.

Step 2: Complete the required forms

Changing your legal name may require filling out many forms. This depends on your state's laws. For instance, you might need to fill out a name change application and also an affidavit, which is a written statement signed under oath and offered up to a judge.

A minor would likely have more forms, including one to be signed by a parent or guardian.

Step 3: File your petition

Most petitions for changing your legal name can be filed at the local courthouse or clerk’s office. Depending on your state, you may need to bring paperwork, such as your birth certificate.

Step 4: Publish notice of your name change

This can feel invasive, and it’s arguably an outdated practice that anyone needs to publish their new identity, but it’s a practice with historical roots. Traditionally, publishing somebody's name change gave townspeople a heads up, in case the person was changing their name for an unethical reason such as avoiding paying a debt.

If you’re uncomfortable sharing with the world that you're changing your legal name, a lawyer can help. If you make a convincing case to a judge that publishing your name would cause you harm, you may be able to get this requirement waived.

Step 5: Attend a court hearing

A hearing for a petitioned name change is typically a straightforward process, and it’s unlikely you have anything to worry about. (If you are nervous, though, that’s where an attorney can guide you through the process.)

You will be asked to share your current name. Afterwards, you’ll typically be asked what you want to change your name to—and you’ll offer a simple explanation of why.

Unless there’s some persuasive reason why your chosen name shouldn’t be approved, the judge should approve it. Your family and friends, if they haven’t been doing so already, can start calling you by your new legal name.

Step 6: Receive your court order

The petitioner—you, in this case—will receive copies of the court-ordered name change from the clerk’s office. You’ll want to make copies and store the decree in a safe place. You may, down the road, need proof of your name information, such as when you update your federal and state records.

Step 7: Update your records

This is going to be a process, possibly a long one. There are many different types of documents you may need to alter your name. Because of that, you may want to consult a lawyer or start brainstorming a name change checklist .

For instance, assuming you drive, you'll have to get your driver's license changed. But you may have financial accounts, estate planning documents, or deeds and titles that need to be changed.

The term gender marker refers to what you select on documents when you’re asked what your gender is. Generally, you will select M if you identify as a male, F if you identify as a female, or X if you would rather not specify.

Changing your gender marker on federal documents

You’ll want to change your gender on federal documents to keep them current, and a good place to start is with your Social Security card. Simply contact the Social Security Administration (SSA) and fill out the application for a new Social Security card (Form SS-5). Bring identification with you, but you don’t need medical or legal evidence of your gender designation. You simply update your new designation on the form.

Once you’ve made the change, the SSA will update their records and mail your free replacement card.

After that, you'll likely want to change your name and legal gender on your birth certificate.

Changing your gender marker on state documents

Once you've changed some of your federal records, such as your Social Security card and birth certificate, you'll likely want to change your legal gender with your state documents.

The steps you'll need to take will vary from state to state. In some states, like California, you may find it fairly easy; in other states, you may find more red tape.

In any case, you’ll likely want to start with updating your driver's license. You may need to submit your court name change order certifying how you now identify, and you may need to complete paperwork such as a “declaration of gender change” form.

On the other hand, depending on your state, you may not need to worry about showing a court order showing that you have made a legal transition to a new gender.

Keep in mind that in most states, you’ll need to be 18 years old, or at least an emancipated minor, to make a gender marker change on state documents.

Plan for at least a couple of months, although it may take longer, depending on your state. Scheduling a hearing to legally change your name and gender will probably take the longest time. After that, it may take a few weeks to get everything changed on your federal and state identification documents.

Don’t be surprised if it takes several months, or longer, if you have many documents that need updating. You'll be changing your Social Security card, birth certificate, and likely a driver's license, and possibly many other legal documents.

The cost to legally change your name and gender varies from state to state, but you should plan on budgeting for at least $500. While changing your Social Security card is free, some of the costs you may encounter with other legal documents and various expenses include:

• A filing fee. This is likely to be the costliest fee and might run several hundred dollars. In California, the filing fee in courts is in the neighborhood of $435 and $450 . In some parts of Louisiana, the filing fee can reach $500. Other states will have lower fees. Provided you’re able to change both your name and gender at the same time, you should only have to pay this once.
• Cost of publishing your name in the newspaper. Some states require people with name changes to publish their new identity in the local newspaper, part of a longstanding tradition. Generally, you can expect to pay between $80 and $120.
• Fee to update birth certificates. This also varies by state. Just to give you an idea of what you might pay to change your birth certificate: Michigan’s fee is $50, and Wyoming charges $55.
• Fee to update your driver’s license. This may be pretty minimal. For instance, to change information other than your address in Nevada, you would pay $8.25.
• Passport fee. If you have a passport and need to update your information, and if it’s been over a year since your passport was issued, it’s $130 to renew your passport.

You may get some fees, such as the filing fee, waived if it’s a financial hardship to pay it. If you have an attorney, they can help you with this.

Nobody is required to hire anyone to help change what they're called or what gender they identify as. That said, it's not a bad idea to have some help. The new name and gender mark journey can be complicated and frustrating, especially in states with stricter laws and red tape.

While it can be time-consuming to change one’s name and gender, the nice part of all of this is almost anyone can do it, if they want to. Nobody goes through a gender transition lightly, of course, but in most cases, with changing your name , if you wanted to change it for any reason, you can.

A capable lawyer can help you make these changes more efficiently.

Can I change my name if I have a criminal record?

If you have a criminal record, you may find it difficult or impossible to change your name. Where people run into trouble is if they have a felony on their record, especially if they are on a sex offender registry or if they’ve been convicted of stealing somebody's identity. If you are worried about your background, a good lawyer can advise you on whether you can change your name.

Do I need to publish my name change in a newspaper?

Depending on the state, if you change your legal name, you may need to publish your name change in your local newspaper. (Sometimes you can get that requirement waived, especially if you have a good lawyer to help make your case.) It can seem invasive to be forced to publish your updated name in the paper, but it’s part of a long-standing tradition that came about for a good reason—to make it harder for people to commit fraud.

What is a gender marker?

A gender marker is a term used to describe an individual’s gender identity. Most often, you’ll find that somebody identifies as F (female) or M (male). But some people prefer to use X, if they consider themselves non-binary (an identity that doesn’t fit as male or female), intersex (a person born with a combination of male and female biological traits), or gender non-conforming (your behavior or appearance doesn’t conform to social expectations of how your gender should act).

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