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Acquiring Contracts in the Purchase of a Business

By Rachelle Mezzarobba

When acquiring a business, often a key component is the contracts to which the company is a party to. Whether they are contracts with customers and the source of a company’s revenue, contracts with service providers or various licensing agreements that allow the company to operate, or a lease for a particularly favourable location or on particularly favourable terms, a company’s contracts are often an important part of a business, adding substantial value. Ensuring the transfer of any such contracts can significantly impact the structure and timing of the acquisition of a business. The following article outlines the rules and exceptions with respect to transferring contracts and the effects of such rules and exceptions in the context of the purchase and sale of a business.