When a company changes its name, a contract remains valid. However, before they can discuss the validity of a contract after a company has changed its name, contractors should first understand contract law and requirements for contracting with other parties. If both parties agree to amend or terminate the contract, they must call it back in writing. In fact, there are several possible changes that could occur, including: (3) This amendment only changes the name of the company, and not all the rights and obligations of the government and the contractor under the contracts are affected by this amendment. Novation is a substitution, including the substitution of one party or obligation by another in a contract. Here`s how it works: Party A and Party B are the original signatories to the contract. Part A was purchased by Part C, Parts A and B must accept the innovation and sign a novation agreement stipulating that Part C has been replaced by Part A. Part A is excused from liability by the novation contract, and Part A relinquises all rights against Part B. In such situations, much depends on the text of the treaty.
Some contracts provide for the possibility of changes. If you think about it, it would be a good way to avoid debt by simply changing the name of the company. So, no, a change in name/entity type does not mean that a contract is invalid. But if the parties do not immediately change the contract, does that mean that the contract is non-applicable and unenforceable? No no. An example of this could be if a homeowner contracts with an electrical company to do work around the house. If the electrical company changes its name while the work is done on the house, it does not mean that the name change invalidates the contract. Indeed, both parties could simply agree to pursue the treaty as it is, without changing its name. Many business contracts contain sections dealing with what happens when business changes. Two principles of the treaty that could influence the need for treaty change are innovation and divestment. 1. The contracts covered by this agreement are amended by replacing the name “ABC Corporation” with “XYZ Corporation” wherever it is included in the contracts; and some business changes are small, such as offshoring, and some are significant, such as bankruptcy or a name change or one of the contracting parties purchased by another company.