In Business-in-a-Box, we have several templates that facilitate the handling of confidential information among various parties, be it your employees, another business, contractors, or other types of legal entities that might compromise your company through the release of key information.
A Transfer and Assignment Agreement template protects you from certain accidental or intentional disclosure of secret information, but to pass on every right of that information to another entity, usually because of a purchase.
The cases in which one might want to do this are further explained in the next section. In essence, you are looking to get some form of compensation, generally money, for any of your ideas that other businesses may find useful.
This type of agreement is to be written with utmost care, because such a transaction is mutually agreed on beforehand. If something goes wrong, it might not only cause a dispute between the two parties, but it will cause significant losses if the transfer of rights is not done correctly.
Our legal and business document templates are created by legal and industry members themselves. As such, our collection of over 2000 documents are sure to protect every aspect of your business with the correct clauses and measures for every situation.
Provided below is an example, or hypothetical case which may be helpful in describing the use of a transfer agreement template or assignment of contract template
Take company A, that may have some financial issues at the time, but holds a specific software developed by its own team which allows it to produce 20% more on average. Company B is not necessarily a competitor of company A, as it is in another continent, but it is working in the same industry as A.
In this case, as you might already be guessing, company A can look to sell this software to company B. A possible option here would be a business transfer agreement template.
Here, company A and B can also agree on a deal together with a Transfer and Assignment Agreement template. Company A can transfer the intellectual property rights, as well as the right to distribute, use, and commercialize to company B. This is essentially transferring ownership and assigning the rights of use to the other company. It is easy to infer that company A would be getting a substantially higher payment when transferring all of the rights, which is why it might prefer to engage in this agreement.
Essentially, the transfer and assignment agreement differ from the licensing in that it transfers the rights to another party, not only gives the right to use the intellectual property. Higher compensations rates are to be expected, as this template carries a bigger commitment from the original owner of the intellectual property.
Engaging in a transfer and assignment agreement is a big deal for both parties as one is giving up its intellectual property, and the other party is likely giving a higher compensation than it would be giving for a license. These agreements are not overly complex in nature, in that they closely resemble licensing agreements in their structure, while of course differing heavily in the rights to be transferred. Whether you are a buyer looking to get a good deal on intellectual property to grow your business, or if you see benefit in transferring rights of your confidential information to another party, we have your company covered on all ends for a smooth deal.
In the upcoming sections, we have some more information about the anatomy of this sort of agreement, and what are the key points that you should watch out for.
In the next section of this article, we will show and explain the particular sections and clauses of a transfer agreement template so that you can better understand the legal “ins and outs” of this very useful document.
Keep in mind that the whole purpose, summed up in quite simple terms, is just a contract similar to that issued to an employee, only that this is shorter term, and is pertinent to a very specific task. This sort of financial technical paperwork that involves debt, collaterals, liens, and other concepts can get a little complex, and you can quickly get stuck in the details if you do not have a template made for you beforehand.
It is also important to consider that part of the purpose of this agreement is to acquire rights to some sort of confidential information. In very niche cases, you can transfer only some of the rights to the information, in which case you are not purchasing or selling the intellectual property in the traditional sense, rather, the freedom to do a specific thing with it.
In the following section, we will explain the transfer and assignment agreement template sample parts in a detailed fashion, so that you understand the most important clauses and sections.
The first clause of most contracts, the definition clause, and as you can guess by the name, its main purpose is to keep the record straight when it comes to the terminology used throughout the agreement. A typical transfer and assignment agreement needs to clearly identify what constitutes as the “Assigned Property” as well as both parties involved, addressed in the following way.
It may seem trivial, but the amount of legal knowledge required to redact this clause is not to be underestimated, since it can make the difference between a great contract and another one full of loopholes.
This second part is the core of the transfer and assignment agreement template. It fulfills the main purpose of a transfer and assignment agreement of legally binding both parties into the transaction of the assigned property.
Here the assignor agrees to unconditionally assign all its rights to the assignee and, in case that it includes intellectual property, the assignor also forfeits any moral rights and all Personality Rights assigned to the property in question.
The following are a couple of sub clauses that should be addressed to avoid any complications.
2.1 Term of Assignment
It is of utmost importance to settle the term for the agreement. There are two kinds of agreements:
Normally, the assignee will seek perpetual contracts. By contrast, the assignor will usually argue for a fixed period to protect and recover the right to their property.
Note that not defining a term for the agreement does not automatically mean that the agreement in question is perpetual.
2.2 Territory of Assignment
Unlike the Term of Assignment clause, the Territory of Assignment section is more situational, useful in a large array of situations. However, if this section is not useful for your situation, you can skip it completely.
If applicable, and mostly used when as a part of the assigned property you have intellectual property, here the assignor can place further restrictions on the scope of the agreement in terms of territory. This is done by either assigning only the rights to a specific region in the world, or completely until the contract has expired.
2.3 Future Transfers
This is the final, and often most important, sub clause of the Assignment section. Rights can be complicated, and if transferred fully, there is little the owner can do to prevent their re-assignation once the contract has been signed, and that is precisely what this section is for. Usually, when we talk about perpetual contracts, the right to make future transfer is included. However, when we talk about fixed terms, the picture changes. In this clause, the assignor has two options, either prevent further transferal of the property by explicitly stating it, or simply assign the transfer right for the duration of the agreement and if any authorisation is needed.
The consideration clause simply outlines whether the assignee is legally required to pay a compensation fee to the assignor for the assignation of property. Other points to clarify include the method of payment as well as the consequences, should the assignee not fulfill the responsibility to which he has agreed upon.
If the assigned property were to include any trade secrets or any other thing deemed as confidential information, the assignor can outline the responsibility of the assignee to take precautions to maintain secrecy over the aforementioned “confidential business information”. This clause usually includes the extent of the reparations should the assignee cause a breach of these restrictions.
The severability clause is not brief and simple and is one of the few that is not specific to the transfer and assignment agreement but instead is usually included in most legally binding documents. What it does, is it states that each clause is separate from the whole and that if an external entity, usually a jury, deems a particular section invalid, that the rest of the contract, by this clause of severability, still stands functional and legally binding until the term is reached or if it is absolved in any other way. This section is not difficult to implement, but due to its importance, it must be professionally written and structured to ensure your legal security.
This last component is also optional but can also be especially useful. The jurisdiction section binds this agreement to a single state or country. This is commonly referred to as an exclusive jurisdiction clause, where both parties agree to choose their jurisdiction, most of the time due to preferred judicial system or the specific method of law enforcement.
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