Reviewing an assignment and subcontracting clause

An assignment clause decides whether a party can transfer the contract to a buyer of its business, to a finance company, or to a group company, and a subcontracting clause decides whether it can get someone else to perform. Both are drafted as prohibitions with the other party's consent as the exception, and both matter when the business is sold, refinanced or restructured, or when a supplier wants to use a sub-contractor the customer has not approved. I review the clause from whichever side instructs me and return it marked up with a written explanation of what can be transferred, what the statute overrides, and the changes the other side will accept, for a fixed fee of £495 in three working days.

Who this is for

Suppliers, contractors and service providers in England and Wales that may sell, restructure, refinance or subcontract, and customers that want to choose who they deal with and who performs the work, in supply, services, construction, software, outsourcing or public sector contracts. Both parties are businesses.

What to look for in an assignment and subcontracting clause

Assignment, novation and what each transfers

An assignment transfers the benefit of a contract, the right to be paid and to enforce, but not the burden, the obligation to perform; a novation replaces one party with another for both, with the other party's agreement. A legal assignment must be in writing and notified to the other party under section 136 of the Law of Property Act 1925. The review checks whether the clause prohibits assignment, novation, charging and declaring a trust, whether it addresses assignment by operation of law, and whether a transfer of the business as a going concern is possible without every counterparty's consent.

Receivables: the ban the statute overrides

A clause prohibiting assignment of the right to be paid stops a supplier using invoice finance, and under the Business Contract Terms (Assignment of Receivables) Regulations 2018 a term in a business contract that prohibits or restricts the assignment of a receivable, or imposes conditions on it, has no effect, subject to exceptions for certain contracts and for large enterprises. The review checks whether the contract falls within the Regulations, drafts the supplier's assignment clause to preserve its freedom to finance its receivables, and, for a customer, checks what confidentiality protection it can keep around the invoices.

Consent: withheld, conditioned or deemed

Where assignment or subcontracting requires consent, the clause should say whether consent may be withheld at discretion, must not be unreasonably withheld or delayed, or is deemed given if not refused within a period. The review asks for the reasonableness standard and a response period, for consent to be given in advance for group companies and for a buyer of the business that assumes the obligations, and, for a customer, for conditions that protect it: the assignee's covenant to perform, financial standing, and the assignor's continuing liability.

Subcontracting: delegation without losing responsibility

A supplier that subcontracts remains liable for the sub-contractor's performance unless the contract says otherwise, and the clause should say so, with the supplier's obligation to flow down the relevant terms. The review checks whether subcontracting requires consent, whether named sub-contractors are pre-approved, whether the customer may require removal of a sub-contractor, and the interaction with the processor terms required by Article 28 of the UK GDPR and the Data Protection Act 2018, under which sub-processors need the controller's authorisation. Where staff are dedicated to the work, subcontracting can be a service provision change under regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Public sector contracts and the sub-contracting rules

In a public contract the contracting authority's rules on sub-contracting apply alongside the clause: under section 72 of the Procurement Act 2023 the authority may set requirements on sub-contracting and under section 73 payment terms are implied into public sub-contracts. The review checks that the supplier's subcontracting arrangements comply with what the authority requires and that the supplier's own sub-contracts carry the flow-down and payment terms the Act implies.

Group transfers, the sale of the business and third parties

For a business that may be sold, the review drafts a right to assign or novate to a buyer of the business and to group companies without consent, on notice, and checks that the buyer can rely on the contract under section 1 of the Contracts (Rights of Third Parties) Act 1999 where the contract's third-party rights clause has not excluded it. For a customer, it drafts an assignment to a buyer conditional on the buyer's covenant and on the assignor remaining liable, and keeps the right to terminate on assignment to a competitor. Interest on sums due to an assignee runs under the Late Payment of Commercial Debts (Interest) Act 1998.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

Our contracts prohibit assignment. Can we still use invoice finance?

In most business contracts, yes: the Business Contract Terms (Assignment of Receivables) Regulations 2018 make a ban on assigning receivables ineffective, subject to exceptions. The review checks whether your contracts fall within the Regulations and drafts your terms to preserve the freedom in any case.

We are selling the business. Do we need every customer's consent to transfer the contracts?

Where the contracts prohibit assignment without consent, a share sale avoids the point but a change of control clause may not, and an asset sale needs consent or novation for each contract. The review reads the clauses against the structure and identifies which consents are needed.

Can we stop our supplier subcontracting the work?

You can require consent, pre-approve named sub-contractors, and require removal of one that underperforms, while keeping the supplier liable for whoever performs. The review drafts the clause and checks the data protection and TUPE consequences of the subcontracting you allow.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a change of control clause
• Reviewing a subcontract under a government contract

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.