If I have a contract with a company and that company is purchased by another company does my contract with original company automatically transfer?

UPDATED: Sep 30, 2022

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If I have a contract with a company and that company is purchased by another company does my contract with original company automatically transfer?

Contract with a company for pick up of waste, does that contract automatically
transfer to the new company even though contract does not address assignment?

Asked on August 23, 2016 under Business Law, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

It only automatically transfers if the first company was a corporation or LLC and the buyer bought the LLC or corporation--that is, bought, the entity with which you were contracted--in which case, while the contract does not technically "transfer," it remains with the company under its new ownership. As long as that company, even if now owned by someone new, is still in existence, the contract is with it and is enforceable as per its plain terms and duration.
But if the first company was not a corporation or an LLC, or if it was, but the buyer did not buy the entity (the corporation of LLC) but only the assets (e.g. good will, intellectual property, accounts, etc.), then the contract does not go to the new company unless it voluntarily and specifically "assumes," or takes it over. Rather it retains with the first company, even if that first company is now an empty shell, not doing anything, and so is usually effectively meaningless.
However, in the above case, if the first company had been a sole proprietorship and the proprietor personally had signed the contract, he or she may still be obligated under it, such as for any payment due you.

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