Q&A: Do contracts transfer with the sale of a business?
Question by Pipe Guy: Do contracts transfer with the sale of a business?
I purchased a business and the bill of sale states that I bought all assets, the trade name, and any other incidentals to conduct business. Would this not also include all existing contracts with customers until changed be them of my self?
Best answer:
Answer by Gina
When you buy a business (in the US) you need to review the contracts to see if they will transfer. Some contracts terminate on a change of control automatically and will not transfer. Some contracts (like a real estate lease for example) usually can only be transferred with the written consent of the other party. Sometimes such a party may refuse to transfer unless you increase the rent or make other changes to the agreement. Other contracts have no restrictions on transfer and would be your contracts after the purchase. Usually your attorney in the deal will review all the agreements for you and let you know what you can and can’t transfer. The answer can also depend on how the deal was structured as a legal matter. Was it a merger or an asset sale? Some mergers are structured so they do not trigger change of control provisions. If I were you I would review my contracts first. If they need consent to transfer or automatically terminate then you should look more into the structure of the transaction and should probably consult your lawyer.
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