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For example, if a building contract between A (employer) and B (contractor) is assigned to C (a third party), C has the right to sue B if the works are not constructed properly but the obligation to make payment under the contract remains with A.The rights assigned to C operate only from the date of the assignment and are not retrospective.It requires the consent of all parties involved (whereas an assignment would only involve A and C in the above example).
Standard form building contracts usually contain a prohibition on assignment without the contractor’s consent.
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E., Washington, DC 20002-2194, and Boeing Satellite Systems International, Inc.
formerly Hughes Space and Communications International, Inc.
E., Washington, DC 20002-2194, and XM Satellite Radio Holdings Inc.
("Assignee"), a Delaware corporation, having its principal place of business at 1500 Eckington Place, N.It is common within the construction industry for a developer or employer to transfer the rights or obligations under the construction documents to a third party.This is usually done in one of two ways: by assignment or by novation.ASSIGNMENT AND NOVATION AGREEMENT THIS ASSIGNMENT AND NOVATION AGREEMENT (this "Agreement") is made as of December 5, 2001 by and between XM Satellite Radio Inc.("Assignor"), a Delaware corporation and wholly-owned subsidiary of XM Satellite Radio Holdings Inc., having its principal place of business at 1500 Eckington Place, N.All of Assignor's rights, duties and obligations under the Satellite Purchase Contract not expressly assigned and assumed by Assignee hereunder shall be retained by Assignor.BSSI recognizes Assignee as Assignor's successor in interest in and to all of Assignor's rights, duties and obligations in, to and under the Assets. In consideration of the assignment of the Assets, Assignee is hereby (i) paying to Assignor an aggregate purchase price of Thirty-One Million Six Hundred Thousand Dollars (,600,000) in cash, by wire transfer to an account specified in writing by Assignor, or by such other means as may be agreed by Assignor and Assignee. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns, and matters herein with respect to the Satellite Purchase Contract shall inure to the benefit of BSSI and its successors and assigns from and after the Effective Date. The parties hereto agree that they will take those actions reasonably necessary to carry out the matters contemplated by this Agreement or any of its provisions. Assignor, Assignee and BSSI consent to all of the provisions of this Agreement. For purposes of this Agreement, "Ground Spare Satellite Bus" means the Ground Spare Satellite, except for the Ground Spare Satellite Payload.The terms of novation should be clear and failure to execute the document properly may result in the loss of one party’s rights.Key things to consider Will assignment be all you need or do you require novation? If it is intended from the outset that certain documents will require novating in the future, agree the form of the novation document at the outset and append this form to professional appointments and building contracts.Assignment also does not require the consent of the other party as only the benefit is being transferred therefore no obligations are being transferred to the third party.It is often therefore easier to arrange than a novation and is mostly used when a commercial development is finished and the new owner of the development wants to have the rights to sue under the building contract and other construction documents in case anything goes wrong in future. Novation is carried out using a tripartite agreement with the agreement of all three parties for example A (employer), B (contractor) and C (third party).