More details to this question:
I have a contract with a third party. How do I ensure that the third party cannot sell its assets without bringing the contract to the attention of the purchaser and requiring novation as a requirement for asset purchase. If purchase is done without novation do I have any redress a) if both third party and purchaser were aware of the requirement; or b) if the third party failed to disclose the contract.
1 ANSWER
There were various ways you could better have protected yourself in the contract with the third party, for example providing that any sale of assets outside the normal course of business would be considered a breach of the contract and entitle you to an enjoin the sale, or granting you a security interest in the assets of the third party. If, however, you already have a contract, the third party has no obligation to change the contract to restrict its rights to sell its assets. Nor, as a general rule, is the purchaser of assets of any entity (assuming that the third party is an entity), as opposed to a purchaser of the entity itself (by buying the stock, for example) responsible for the seller's obligations.
Answered on Oct 15th, 2015 at 11:35 AM