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Successors and Assigns Clause

Makes the contract binding on permitted successors and assigns, including parties taking over through a merger or other transfer.

Reviewed by GC AI Solutions Team•Updated September 2026

Definition

A successors and assigns clause states that the agreement is binding upon and inures to the benefit of each party's successors and assigns. A successor is a person or entity that takes over a party's legal position by operation of law or corporate event, such as the surviving company in a merger, a statutory receiver, or the estate of an individual. An assign is a third party that receives a party's rights or obligations through a voluntary transfer. The distinction from a pure Assignment clause matters: a successors and assigns clause reaches successors automatically, whether or not any assignment ever happens, while an Assignment clause governs whether and how a party may voluntarily transfer its rights and duties in the first place. In practice the two work together, the Assignment clause controls the transfer, and the successors and assigns clause confirms who is bound once a transfer or a corporate succession occurs.

What It Does

The successors and assigns clause, sometimes titled “Binding Effect,” sits in the boilerplate and answers one question: after the ink dries, who is on the hook and who gets the benefit. It extends the contract past the two entities that signed it.

  • Binds a party's corporate successor, including the surviving entity in a merger or consolidation, so the deal does not evaporate when a counterparty reorganizes.

  • Carries the contract to a buyer of substantially all of a party's assets when the deal is structured to transfer that agreement.

  • Reaches an individual party's estate, legal representatives, and heirs, which matters in employment agreements, personal guarantees, and founder covenants.

  • Confirms that permitted assignees, the third parties allowed under the Assignment clause, receive the rights and assume the obligations.

  • Lets the non-transferring party enforce the contract against whoever now holds the counterparty's position, without renegotiating.

  • Preserves third-party beneficiary and indemnity rights through ownership changes when drafted to do so.

When You'll See It

A successors and assigns clause appears in the miscellaneous or general provisions section of nearly every commercial contract: master service agreements, credit and repurchase agreements, leases, employment agreements, equity plan award agreements, and asset purchase agreements. It is one line in a stack of boilerplate that most readers skim, and it is the line that decides whether a signed deal follows a company through a corporate event.

This clause matters most in M&A. When a target is acquired, the buyer's diligence team reads the target's key contracts to learn one thing: does this agreement survive the transaction automatically, or does it require the counterparty's consent. A binding successors and assigns clause paired with a permissive Assignment clause means the contract travels with the business in a stock deal or a merger without a consent scramble. A restrictive Assignment clause, or an anti-assignment provision that captures changes of control, can strand a valuable contract and reduce deal value or force a renegotiation before closing. Read the two clauses together, and read them against the Change of Control provision, before you price the deal.

Examples

G-III Apparel Group, Ltd.

Restricted Stock Unit Agreement (2023 Long-Term Incentive Plan)Short "Successors" boilerplateMutual2025
"Successors. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns."
Source

Rocket Mortgage, LLC / Citibank, N.A.

Amendment Number Six (Master Repurchase Agreement)"Binding Effect" labelMutual2025
"Binding Effect; Governing Law. This Amendment Number Six shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns."
Source

Dime Community Bancshares, Inc.

Employment AgreementFull successor language reaching mergers and estatesMutual2025
"Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Executive, his legal representatives and estate and intestate distributees, and the Company and the Bank, their successors and assigns, including any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of the Bank or the Company may be sold or otherwise transferred. Any such successor of the Bank or the Company shall be deemed to have assumed this Agreement."
Source

Walker & Dunlop, Inc.

Fifteenth Amendment (Warehousing Credit and Security Agreement)"Permitted successors and assigns" qualifierMutual2025
"Binding Effect. This Fifteenth Amendment shall be binding upon and inure to the benefit of Borrower, Parent, Lender, and their respective permitted successors and assigns."
Source

Aramark

Supplement No. 3 (Credit Agreement)Syndicated credit agreement supplementMutual2025
"[This Supplement] shall be binding upon the Additional Spanish Borrower and the Agent and their respective permitted successors and assigns, and shall inure to the benefit of the Additional Spanish Borrower, the Agent and the other Borrowers and their respective permitted successors and assigns."
Source

Red Flags

  • The clause binds “successors and assigns” with no “permitted” qualifier, letting a prohibited assignee become a bound party despite a restrictive Assignment clause.

  • The successors and assigns language and the Assignment clause conflict, one permits free transfer while the other forbids it, creating ambiguity a court will resolve unpredictably.

  • The clause runs the benefit to any successor by merger or asset sale, with no carve-out for competitors or for a party you specifically did not agree to do business with.

  • No requirement that a successor assume the obligations in writing, so you inherit a counterparty's rights without a clear commitment to its duties.

  • The provision is silent on an individual party's estate or legal representatives in an agreement, such as a guarantee or employment contract, where personal succession is the whole point.

  • The clause purports to bind successors but the underlying Assignment or anti-assignment provision makes the contract non-transferable, so the “successor” who takes over by merger may not hold enforceable rights.

Successors and Assigns Clause FAQs

What does a successors and assigns clause mean?
A successors and assigns clause means the contract binds and benefits not only the parties who signed it but also anyone who later takes over their legal position, such as a merger survivor, a corporate successor, an estate, or a permitted assignee. It keeps the agreement enforceable through ownership changes and corporate reorganizations. The clause usually sits in the boilerplate under a heading like 'Successors and Assigns' or 'Binding Effect'.
What is the difference between a successors and assigns clause and an assignment clause?
An Assignment clause governs whether and how a party may voluntarily transfer its rights and obligations to a third party. A successors and assigns clause states who is bound once a transfer or a corporate succession occurs, and it reaches successors such as merger survivors automatically, whether or not any assignment ever happens. The Assignment clause is the gate on voluntary transfers, and the successors and assigns clause confirms who is on the hook after a transfer or a change in corporate form.
Does a successors and assigns clause allow assignment of the contract?
No. A successors and assigns clause does not by itself grant a right to assign. It describes who is bound if an assignment permitted under the Assignment clause takes place, or if a party is succeeded by operation of law. Whether a party may assign at all is controlled by the separate Assignment or anti-assignment provision, which is why many drafters bind only 'permitted successors and assigns' to keep the two clauses aligned.
Who counts as a successor under a successors and assigns clause?
A successor is typically the surviving entity in a merger or consolidation, a buyer of substantially all of a party's assets when the deal transfers the contract, a statutory receiver, or, for an individual party, the person's estate, heirs, or legal representatives. Well-drafted clauses spell this out, as one Dime Community Bancshares employment agreement did by naming successors 'by merger or consolidation' and any entity to which 'all or substantially all of the assets and business' are sold or transferred.
Is a successors and assigns clause enforceable?
Yes. Courts routinely enforce successors and assigns clauses because they clarify the parties' intent about who is bound after a corporate event. The clause is most effective when it is consistent with the contract's Assignment and Change of Control provisions. Conflicts between binding-effect language that permits succession and an anti-assignment clause that forbids transfer create ambiguity that can weaken enforcement.
Do you need a successors and assigns clause if you already have an assignment clause?
Yes, because the two clauses do different jobs. The Assignment clause controls voluntary transfers, and the successors and assigns clause confirms that the contract binds successors who arrive by operation of law, such as a merger survivor or an estate, even when no voluntary assignment occurs. Keeping both, and drafting them to reference each other, closes the gap between who can transfer and who is bound.
What's the best AI to review a successors and assigns clause in M&A diligence?
For diligence-scale contract review, the useful test is whether an AI platform can apply the same check consistently across every target contract: does this agreement survive the deal, or does it require consent. GC AI's Playbooks run that check as a repeatable workflow across a contract set, flagging the successors and assigns, Assignment, and Change of Control language together, and Exact Quote attaches a character-level citation to every flag so the reviewing attorney can verify the source language before it goes into a diligence memo.

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This content is for informational purposes only and does not constitute legal advice.