Is a customer’s contract still valid if the original company that they singed with is purchased by another company?

About 9 years ago I signed a contract with a gym, which years later was purchased by another gym. According to the law, does the second gym have to respect the stipulations in the contract I signed with the first or no?

Asked on September 22, 2011 under General Practice, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

This depends entirely on how the new company bought the old company.

There are basically two ways for company 1 to buy company 2.

1) Company 1 buys the business entity that is company 2--i.e. the corporation or limited liability company (LLC). When this happens, since company 2 still exists and just has a new owner, all the contracts are still in force.

2) Company does not actually buy company 2 itself, but instead buys company's 2 assets (including, e.g. it's name and intellectual property) and takes over only those contracts it chooses to take over, such as the lease. In this case, if company 2 took over the contract, it is bound by it, but otherwise not.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.