Assignment and Assumption Agreement Template (Canada)

Assignment and assumption are not the same as novation

An assignment can transfer the benefit of a contract, receivable, licence or other right if the underlying contract and law allow it. An assumption covenant can make the assignee promise the assignor that it will perform stated obligations. That promise does not by itself release the assignor from obligations owed to the original counterparty.

The template therefore uses a mechanism selector: assignment only, assignment with assumption covenant, or novation with counterparty consent. The document text changes to avoid promising legal effects the selected mechanism cannot achieve.

Consent and anti-assignment clauses

Many Canadian contracts prohibit assignment, require prior written consent, restrict change of control, or limit assignment to affiliates or business-sale contexts. Software, leases, regulated licences, grants, public contracts and personal-service arrangements can be especially restrictive.

The worksheet requires a contract review, consent schedule, notice list and excluded-rights schedule. If the counterparty is not signing, the document should state that no release is given unless the contract or law clearly provides it.

Public contracts and Crown debts

CanadaBuys guidance on assignment of monies says payments to persons other than those named in a contract will only be made in limited cases, including bankruptcy, receivership or an assignment of debt under Part VII of the Financial Administration Act, and buyers should seek payment-processing instruction when receiving a notice of assignment.

The Financial Administration Act also states that, except as provided by that Act or another Act of Parliament, a Crown debt is not assignable and a transaction purporting to assign a Crown debt is ineffective. That is why public receivables and government contracts need separate review.

Receivables, PPSA, IP and privacy

Assignments of accounts receivable, equipment rights, intellectual property, leases, customer data and software licences may require notices, PPSA searches or registrations, releases, written IP assignments and privacy safeguards. The operational deliverables matter as much as the transfer wording.

Customer or employee records should transfer only where the buyer has a valid purpose and safeguards. If personal information is no longer needed, OPC guidance expects secure disposal or anonymization rather than indefinite retention.

Warranties, indemnities and completion

The assignor should warrant authority, ownership of assigned rights, disclosure of restrictions and no undisclosed defaults. The assignee should warrant authority and capacity to perform assumed obligations. The counterparty, if signing, should expressly release or preserve liabilities.

Completion deliverables include executed agreement, consents, notices, updated payment instructions, PPSA searches or releases, IP instruments, data-transfer records and evidence that the wider asset sale or financing documents align with the assignment.

Clause-by-clause guide

Transfer mechanism

Selects assignment only, assignment with assumption covenant or novation with counterparty consent.

Assigned rights

Identifies contracts, receivables, IP, licences or other benefits transferred.

Excluded rights

Carves out restricted, disputed, non-transferable or retained rights.

Assumed obligations

Records obligations the assignee promises to perform without overstating third-party release.

Counterparty consent

Lists required written approvals, releases and novation signatures.

Notices

Prepares notices to counterparties, account debtors, agencies and payment processors.

Warranties and indemnities

Covers authority, title, restrictions, performance and reimbursement.

Completion deliverables

Lists executed documents, notices, payment updates, PPSA items, IP instruments and data handover.

Canadian assignment checklist

• Do not overstate assignment

  An assumption covenant between assignor and assignee does not necessarily release the assignor from obligations owed to the counterparty.

• Check the underlying contract

  Anti-assignment, consent, notice, change-of-control, personal-service and confidentiality clauses can block or condition the transfer.

• Use novation where release is needed

  If the outgoing party needs to be replaced and released, get counterparty consent or use a tripartite novation.

• Handle government monies carefully

  CanadaBuys says assignment of monies under federal contracts is strictly regulated and payment redirection occurs only in limited cases.

  CanadaBuys - assignment of monies

• Check Crown debt limits

  The Financial Administration Act says a Crown debt is not assignable except as provided by statute.

  Financial Administration Act section 67

• Search PPSA and security interests

  Receivables, equipment and secured collateral may need PPSA searches, registrations or releases.

• Protect personal information

  Data handover should follow the identified purpose, safeguards and retention/disposal principles under Canadian privacy law.

  OPC - PIPEDA fair information principles

How to complete the agreement

1. Choose the mechanism. Select assignment only, assignment with assumption covenant or novation.
2. List rights and exclusions. Identify assigned rights, excluded rights, contracts, receivables, IP and records.
3. Check consent. Review contracts for anti-assignment clauses, notices, releases and novation signatures.
4. Prepare notices. Draft notices to counterparties, debtors, agencies and payment processors.
5. Complete and retain evidence. Sign, deliver notices, update payment instructions and keep consent evidence.

Frequently asked questions

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