Kirkland Said WHAT About the “Successors and Assigns” Provision?

Here’s how a recent Kirland M&A Update (here; another version is here) begins:

Most commercial and corporate contracts provide that the agreement is binding on a party’s “successor and assigns”. This boilerplate clause, coupled with the legal consequences of a stock purchase or merger, covers most corporate transaction scenarios and ensures that the agreement remains with, and binding on, the business that signed the contract.

But the current popularity of corporate “separation” transactions highlights that this simple clause may be insufficient to properly address the consequences of spin-offs and other separation transactions.

As I explain in this article, “this simple clause” is insufficient to accomplish anything: it serves no useful function. It follows that I’m puzzled by the suggestion that in a given context it might not be helpful.

If anyone thinks I’m missing something, let me know.

Categories M&A

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.