Assignment and Assumption Agreement
(Novation) (NC)

Summary

This assignment and assumption agreement template includes a novation agreement and may be used to transfer rights and delegate duties under a commercial agreement governed by North Carolina law from one party to another. This template includes practical guidance, drafting notes, and alternate and optional clauses. This template addresses an assignor's transfer of rights and delegation of duties under a contract governed by North Carolina law. Prior to using this template, counsel should confirm the transferability of the applicable agreement, as not all contracts are assignable. Sometimes anti-assignment clauses, legal concerns, and/or public policy issues, among other things, prevent assignment. North Carolina courts, however, generally favor the free transferability of all types of property, including contracts. See NC Gen. Stat. § 25-2-210; Restatement 2d of Contracts §§ 317–328; and Gulf States Creosoting Co. v. Loving, 120 F.2d 195 (1941). The novation extinguishes an assignor's liability under an assigned agreement once it is executed by the assignor, the assignee, and the non-assigning party. Upon, execution, the assignee is deemed substituted for the assignor. Without a novation, the assignor remains secondarily liable to the non-assigning party for the non-performance of delegated obligations. For more information, see Commercial Contract Assignment (NC) and Novation, Accord and Satisfaction, and Substituted Contracts. For a related template, see Novation Agreement (Short Form) (NC).