Do existing contracts get automatically transferred to the acquiring company? Company A and Company B have a business relationship lasting for years. All kinds of agreements are in place between them. License Agreements, Supply Agreements, Development Agreements and so on. Company A gets acquired by Company C. After closing, former Company A now operates as Company AC. What happens to all the existing contracts where Company A was a Party? Do they get automatically transferred? Having to assign all the existing contracts seems to be an "impossible" task, but i do not know the leagl basis for the transfer. Can anyone shed some light both in US and European jurisdictions?
Contracts are generally assignable, meaning that one company can assign their rights, duties and obligations under the contract. Assignment may be specifically barred by the contract, or it may have certain terms (prior written consent, etc.) attached, but if not, a contract is likely freely assignable. Though a contract is not necessarily "automatically transferred" the reason Company C buys Company A is for its ability to earn Company C over time, which includes the contract between A &amp; B. So unless the original contract has a "no assignments clause" or if an assignment is otherwise impossible or illegal, it is likely that A can freely assign the contract to C.
An arrangement like that (if successful) would be a fraudulent transfer in which creditors could gain access to the assets of the company's to which the assets were transferred, if pursued before the statute of limitations for doing so runs (typically four years from the date of transfer, or one year from discovery of the transfer, in the U.S.). In a bankruptcy, the bankruptcy trustee could exercise that right on behalf of all creditors. Also, the debt can't be transferred without the creditor's consent. To do the transaction, the assets would have to be transferred to a subsidiary, not the liabilities.
When an entity goes bankrupt, its affairs are subject to detailed court supervision and creditors rights with respect to the bankrupt entity are severely limited by an "automatic stay" that funnels all disputes between creditors and the entity to bankruptcy court. This process, in the case of a medium to large sized business, is very expensive. If lots of creditors of the consolidated group are creditors of an entity that doesn't have any assets, it may not be worth the trouble to go through that process, since those creditors will get nothing, or there may be other reasons that it needs to function as a non-bankrupt entity. The creditors of the non-bankrupt LLC could force an involuntary bankruptcy, if they suspect that some creditors are being unduly favored or if they want more transparency, but they might prefer a non-bankrupt company if it allowed them to pursue their creditor's rights outside of bankruptcy and it had some assets. There are some very tricky collective action problems involved in cases like these, that must be made with imperfect information. It could be that the parent company is looking for a quick reorganization that is insulated from the day to day affairs of the company and involves a restructuring of only long term debt and a subsidiary bankruptcy would complicate a simple, pre-packaged plan. Still, it is hard to know with limited information.
The entire purpose of the Entire Agreement clause is to say that this contract is the agreement, and anything previously negotiated is not part of the agreement. I don't know why they would fail to include that in the contract.
A contract need not say anything about the fact that the company could be sold. What matters is that the terms of the contract are not changed. Since there is no opt-out on transfer clause, you have to finish the term of the contract (or pay whatever fee is assessed if there is an early termination clause). So the question is how certain you are that you did not agree to the possibility of adding a "Universal Service Fund" charge. There may be subtle language which allows the company to add charges for specified purposes, and the new owners are availing themselves of that possibility. It may be difficult to determine just how this fee is legal (if it is), because customer service might just say "we are now charging this fee", or "we have to charge this fee", but you could try asking them where in the contract this new fee is allowed. You can hire an attorney to read over the contract to see where this possibility is mentioned; perhaps it is not, and then an exchange of letters between attorneys might be necessary. There is such a thing as the Universal Service Fund, which is a government operation to improve rural telecommunications. Telecomm companies have to pay a percent of their interstate revenues to this fund. If your bill has not increased since the acquisition, that suggests that you simply did not know that you had been paying into the fund, since the original company didn't give you a detailed invoice. If it has increased by this amount, that suggests that the earlier owner hadn't exercised an option to pass the cost on to the customer. It is likely that there is some clause in the contract that addresses charges required by law. That does not mean that you could not prevail in a suit against the company, but it would make the job harder (more expensive) for you. One company sort of explains how they are legally allowed to pass the cost on to the customer. Because it is allowed by federal regulation, it need not be mentioned in the contract.
Companies have a registry of their shareholders. Anyone with at least one share registered in their name is a shareholder of record. However, the vast majority of people who consider themselves &quot;shareholders&quot; aren't actually registered owners of a stock. Instead, almost all public stock in the US is held &quot;in street name.&quot; That means that the stock is formally held in the name of a brokerage. What an individual has is &quot;beneficial ownership:&quot; the brokerage passes dividends on to the beneficial owner, will vote how the beneficial owner tells it to vote, and requires agreement from the beneficial owner before it can sell the stock. To make stuff even more complicated, the broker itself generally holds the stock in street name. Almost all public stock in the US is really owned by the Depository Trust Corporation in the name of Cede and Company (a general partnership of a few DTC officers). The reason public stock is mostly held in street name is efficiency. Transferring the legal owner of a piece of stock is a nontrivial process; until recently, it involved physically shipping stock certificates to the new owner. Even now that stock ownership can typically be transferred electronically, it's much easier to tell Cede &amp; Co. &quot;the new beneficial owner is this person.&quot; Because beneficial ownership is just a contract, you can skip all the formalities of updating the company's official register of shareholders.
You would have to look at your contract with the company or the company's rules. Some companies have clauses that say they own things you develop while working for them and some don't. Without knowing your specific company's policy, it is impossible to say.
Bill and Jane are free to enter into a contract where, among other things, each provides valuable consideration; in this case Bill provides valuable lawn mowing services and Jane provides valuable money. In week No 1 they have negotiated the terms and the contract is complete when Bill mows the lawn and Jane pays the money. If Bill turns up next week without Jane's instruction then there is no contract and Jane does not have to pay anything; I don't think this is what you are asking but I include it for completeness. If it is understood that this arrangement continue week after week then either there is an ongoing contract or, more likely, a series of independent contracts. If there is an ongoing contract, then it can be renegotiated but it cannot be changed unilaterally by Bill. That is, he cannot unilaterally increase the price to $2. If there is a series of contracts then the terms of each of those contracts will be the same based on the course of dealing. Basically, the parties have accepted over a long period of time that the rate for a mow is $1 and Bill would have to get Jane to accept the revised rate before he mows the lawn. For your example, Jane owes Bill $1 but if she wants him back next week she will have to agree to Bill's rate.