Contractsovername
Contract Takeover
Contract assignment is the transfer of an entire contract whereby a third party assumes the rights and obligations of a contracting party.
A contract takeover entails a third party assuming the entire contractual position of an original party, including all rights and obligations. This requires, in principle, the consent of the counterparty to be legally valid.
The provision is set out in Article 6:159 BW and obviates the need for the parties to conclude a fresh agreement. It provides an efficient means of transferring subsisting contracts, for instance in connection with business acquisitions or the sale of immovable property.
In practice, contract takeovers are commonly used to ensure continuity upon the transfer of undertakings, the counterparty consenting to the incoming contractual partner.
“Upon the sale of the business, the existing supply contracts were assumed with the consent of the customers.”
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