Question 1

What happens to my contract if the other company gets acquired?

Accepted Answer

If the contract includes a successors and assigns clause, the acquiring company inherits the contract's obligations. They must honor the existing terms. Without this clause, you may need to negotiate a new agreement with the buyer — and they have no obligation to match the original terms.

Question 2

Does 'successors and assigns' mean anyone can take over the contract?

Accepted Answer

Not necessarily. Most contracts pair this clause with an anti-assignment provision — meaning the contract transfers automatically in a merger or acquisition, but one party can't freely assign it to a random third party without consent. The two clauses work together.

Question 3

What's the difference between a successor and an assign?

Accepted Answer

A successor takes over by operation of law — through a merger, acquisition, or inheritance. An assign takes over through a voluntary transfer — one party deliberately transfers their rights to someone else. The clause covers both scenarios to prevent gaps.

Question 4

Can I remove the successors and assigns clause?

Accepted Answer

You can negotiate to remove or modify it, but think carefully. Without it, the contract might not survive a change in ownership on either side. If the other party's business is sold, you could lose the benefit of the contract entirely.

Question 5

Does this clause survive bankruptcy?

Accepted Answer

Bankruptcy adds complexity. A trustee can choose to assume or reject contracts in bankruptcy proceedings. The successors and assigns clause helps, but it doesn't override bankruptcy law. If the bankrupt party's assets are sold, the buyer typically assumes the contracts that come with those assets.

Successors and Assigns

Definition

In Practice

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