This is Why We Make the Big Bucks! – More Boilerplate

Written by James Sanders

We are moving along these boilerplate provisions like a herd of turtles.  I hope at the very least you have better insight into what that last part of your agreement means and what to look for.  This week, we will look at the Assignment and Waiver Provisions.  I had originally wanted to put in Force Majeure, but that is a topic in and of itself that will be handled next week.  See below for brief overviews:

Assignment – This clause is one of the more straightforward provisions in an agreement.  Essentially, this section dictates whether a party can assign their rights, obligations and duties in the agreement to another party.  For example, if I am buying a business and negotiating with a seller, I may want to use a business entity to do the purchase.  However, I may not have the business entity created yet.  Therefore, I will want to add into this provision that I am allowed to assign the purchase agreement to a soon to be created entity.  Most times, this section prohibits assignment of the agreement without the other party’s approval.  However, there is typically a caveat that the party being asked to approve the assignment cannot unreasonably withhold or delay consent (i.e., they can’t just say no without a reason).

Waiver – This provision essentially says both parties retain their rights under the agreement even if certain obligations or provisions have been relaxed.  This provision is more commonly referred to as the “No Waiver” provision.  Sorry if this is confusing.  A common example is if a contractor is building a house for the owner and gets delayed in process.  The contractor may ask for changes to the construction schedule, which the owner may grant.  However, the owner will typically grant the changes and say that they are not waiving any other rights under the agreement (i.e., the ability to sue for breach of contract). 

I know these aren’t the most interesting parts of the agreement.  Nonetheless, they are important to the overall integrity of the obligations, duties and responsibilities of each party.  As always, your professional business advisors can provide more insight if you have questions.