Legal Question in Business Law in California

We are a California Parent Teacher Organization that contracted with a Check Recovery Service in 2004. The original contract as signed contains the sentence �This agreement is not transferable".

In Feb. 2012, the original company owners retired, and a referral letter introduced us to a second company, but no documents or additional contracts were signed. In the last 14 months, we have not had any reason to interact with this second company, but recent events have forced us to evaluate our relationship.

My question is, could our contract been sold or assumed without our permission to this new company? Would there be a difference if the original company had been bought by the second company?


Asked on 3/21/13, 12:12 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Such provisions in contracts are generally enforceable; the exceptions are specified in a few statutes, and generally deal with collection or payment of money, with damages for breach, or other obligations that arise out of performance or non-performance of the basic terms of the agreement. However, I would note that the language "not transferable" is somewhat unusual. Well-drafted contracts usually speak in terms of assignment or delegation, not transfer. A lawyer would have to consider the context to tell you whether and how a court might enforce such a provision. Also, perhaps more important, the validity and enforceability of contracts is usually unaffected by an acquisition or merger of one of the parties thereto, which I'd think would not usually result in an assignment, delegation or transfer of the party's contracts.

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Answered on 3/21/13, 1:06 pm


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