Contract Glossary
Change of Control
Definition
A provision triggered when ownership or management of a party to the contract materially changes — typically through a merger, acquisition, sale of majority shares, or change in board composition. Change of control clauses protect the non-changing party from being locked into a deal with a new owner they didn't agree to work with.
In Practice
You signed a 5-year IT services contract with a vendor because of their specialized expertise and team. The vendor gets acquired by a larger company that consolidates operations and reassigns your account to a generic support desk. A change of control clause gives you the right to terminate the contract or renegotiate terms when the acquisition happens — rather than being stuck with a vendor who no longer delivers the service you signed up for.
Example Clause
In the event of a Change of Control of either Party, the other Party shall have the right to terminate this Agreement upon thirty (30) days' written notice given within ninety (90) days of receiving notice of such Change of Control. 'Change of Control' means (a) a merger, consolidation, or reorganization; (b) the sale or transfer of more than fifty percent (50%) of the outstanding voting securities; or (c) the sale of substantially all assets of the Party.
Common in these contract types
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Frequently asked questions about change of control
Because without one, your contract automatically transfers to the new owner under the 'successors and assigns' language that most contracts include. If your vendor gets acquired by a competitor, or your landlord sells the building to a management company with different policies, you want the option to exit or renegotiate. Change of control clauses give you that leverage.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.