What to Do When You're Asked to Sign a One-Sided Contract
You’re a freelancer, thrilled to land a big client, but their contract arrives, and it’s a red-flag parade: they can cancel anytime, you’re liable...
6 min read
You’re a freelancer selling your graphic design business, and a $10,000 client contract is part of the deal. You want to transfer it to the buyer, but the client’s approval and legal details make you nervous. Assigning a contract—transferring your rights and obligations to someone else—can be a legal and relational tightrope. Without proper steps, you risk disputes, breached terms, or liability for the new party’s failures.
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This guide walks you through how to assign a contract to someone else, offering a clear, actionable plan for a smooth, legal transfer. From reviewing assignment clauses to strengthening future contracts, we’ll cover five key steps, packed with real-world examples and practical “Pro Tips” to protect your interests. Whether you’re a freelancer, startup founder, or small business owner, let’s make your contract assignment seamless.
Assignment and Assumption Agreement
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Step 1: Review the Contract for Assignment Clauses
Before attempting to assign a contract, check its terms to understand the rules for transferring it. The assignment clause is your starting point.
Look for language allowing or restricting assignment, like “This contract may be assigned with written consent of the other party” or “No assignment permitted without approval.” Some contracts ban assignment outright, while others allow it under conditions, such as “assignee must be qualified in [industry].” Note any obligations you must fulfill, like completing a milestone before assigning. If there’s no assignment clause, state laws generally allow assignment, but consent is still wise to avoid disputes.
Document the contract’s details: parties, scope, value, and assignment terms. This ensures you follow the rules and know what to communicate to the other party. The Small Business Administration offers contract management tips to guide this review.
Example – Jane’s Freelance Sale: Checking Assignment Rules
Jane, a freelancer, sold her design business, including a $5,000 client contract. The contract allowed assignment with the client’s written consent. Jane confirmed she’d met all deliverables to date, making the assignment straightforward. Her review ensured she could transfer the contract legally, avoiding client objections.
Pro Tip – Summarize Assignment Terms
Create a one-page summary of the contract’s assignment rules in Google Docs: consent requirements, restrictions, and conditions. This quick reference helps you prepare your request and ensures you don’t miss critical terms when approaching the other party.
Step 2: Obtain Consent from the Other Party
Most contracts require the other party’s approval to assign, so securing their consent is crucial to a valid transfer. A clear request builds trust and minimizes pushback.
Contact the other party—client, vendor, or partner—via email or certified mail. Cite the assignment clause (e.g., “Per Section 6, assignment requires your consent”) and explain the reason, like selling your business or delegating workload. Introduce the assignee, highlighting their qualifications (e.g., “The new designer has 10 years’ experience”). Request written consent by a deadline, like 10 business days, and offer to discuss concerns.
Document their response. A signed consent form or email reply (e.g., “I approve the assignment to [assignee]”) is ideal. If they hesitate, address concerns, like ensuring the assignee’s reliability, to gain approval. This step prevents disputes and ensures compliance.
Example – Mike’s Consulting Transfer: Gaining Client Approval
Mike, a consultant, sold his firm and needed to assign a $7,000 client contract. The contract required client consent. Mike emailed the client, explaining the sale and introducing the new consultant with a resume link. He requested consent within 7 days. The client approved via email, and Mike’s clear request made the transfer smooth.
Pro Tip – Use a Consent Template
Use a simple consent form to formalize approval, stating “I, [client], consent to assign [contract] to [assignee] effective [date].” Find free templates on Rocket Lawyer or draft one in Google Docs. Have both parties sign to create a binding record, reducing the risk of disputes.
Step 3: Draft an Assignment Agreement
A formal assignment agreement transfers the contract legally and clarifies everyone’s responsibilities. This document protects you and the assignee.
Include key details: the original contract’s name and date, the assignee’s name, the effective assignment date, and the scope of transferred rights and obligations. Specify liability—will you remain responsible if the assignee fails? Most assignors seek full release, stating “Assignor is released from all obligations post-assignment.” Attach the original contract and the other party’s consent as exhibits. Use templates from PandaDoc ($19/month) or hire a lawyer ($200–$500) to ensure compliance with state laws.
Have all parties—assignor, assignee, and the other party—sign the agreement. File it with your records and provide copies to everyone involved. This formalizes the transfer and minimizes misunderstandings.
Example – Laura’s Vendor Contract: A Clear Assignment
Laura, a retailer, sold her store and assigned a $4,000 vendor contract to the buyer. Her agreement stated the contract’s details, the buyer’s name, and that Laura was released from liability after the assignment date. The vendor’s consent was attached. A lawyer reviewed it for $300, and all parties signed, ensuring a clean transfer.
Pro Tip – Clarify Liability in the Agreement
Explicitly state whether you’re released from liability post-assignment, like “Assignor has no further obligations after [date].” Discuss this with the assignee and the other party upfront. If the contract doesn’t allow full release, negotiate a cap on your liability (e.g., “limited to $1,000”) to reduce risk.
Step 4: Notify All Relevant Parties
After assigning the contract, inform everyone connected to it to ensure a smooth transition and avoid operational hiccups.
Notify banks if payments are tied to the contract, providing the assignment agreement and assignee’s details. Update payment platforms like PayPal or Stripe to redirect funds to the assignee. Inform other stakeholders—vendors, clients, or employees—who interact with the contract’s deliverables. Provide the assignee with all contract documents, including the original agreement, correspondence, and performance records.
Confirm the assignment’s effective date with all parties via email, ensuring everyone’s on the same page. This prevents confusion, like payments sent to the wrong party or unfulfilled obligations.
Example – Tom’s Retail Sale: Completing the Transfer
Tom sold his retail business, assigning a $6,000 supplier contract to the buyer. He emailed the supplier with the signed assignment agreement, updated his bank to redirect payments, and gave the buyer all contract emails and invoices. Tom confirmed the transfer date, ensuring no missed deliveries. His thorough notifications finalized the process.
Pro Tip – Create a Notification Checklist
List all parties to notify—banks, payment platforms, vendors, clients—in a Google Sheets checklist. Include contact info, what to send (e.g., assignment agreement), and deadlines. This ensures you don’t miss anyone, preventing delays or disputes during the transition.
Step 5: Strengthen Future Contracts for Assignment
A complex assignment highlights the need for better contract terms. Flexible assignment clauses and careful partner vetting make future transfers easier.
Add clear assignment clauses, like “This contract may be assigned with written consent, not to be unreasonably withheld.” Specify conditions, such as “assignee must have [industry] experience.” Include liability terms, like “Assignor is released from obligations upon assignment.” Have a lawyer review the contract ($200–$500) to ensure it complies with state laws.
Vet partners before signing. Ask if they’re open to assignments, especially for business sales or workload shifts. Check their reliability via references or online reviews to ensure they’ll cooperate with future transfers. Discuss assignment scenarios upfront to set expectations.
Example – Emma’s Freelance Business: Flexible Terms
Emma, a freelancer, struggled to assign a $3,000 client contract during a business sale due to a restrictive “no assignment” clause. She updated future contracts with “assignment allowed with client consent” and a liability release. She started asking clients about assignment flexibility before signing. Her next transfer went smoothly, saving time and stress.
Pro Tip – Include Assignment in Initial Talks
Discuss assignment possibilities when negotiating contracts, asking, “Are you open to assigning this contract if my business changes?” This gauges their flexibility and builds trust. Note their response in Google Docs and reflect it in the contract, ensuring future assignments are hassle-free.
Conclusion
Assigning a contract to someone else is a strategic move that requires careful execution to stay legal and maintain relationships. By reviewing assignment clauses, obtaining consent, drafting an agreement, notifying parties, and strengthening future contracts, you’ll transfer contracts smoothly and protect your business. Start today by checking your contracts for assignment terms—knowing the rules is your first step.
Have you assigned a contract or plan to? Share your story in the comments or reach out with questions. Your business deserves seamless transitions—let’s make them happen.
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