Full question:
I have a business to business service agreement with Brinks Security for a cash pick up/safe rental service. We have used the service for about 2.5 years. I want out of the contract. They want a hefty termination fee.The agreement was signed in our DBA name. We currently are no longer operating under that DBA name. The contract was also signed prior to our LLC even being established by law. I signed the agreement prior to becoming a legal member of the LLC. The 100% member at the time did not sign. Would the contract be null and void based on the above conditions?
- Category: Contracts
- Subcategory: Recission
- Date:
- State: Arizona
Answer:
The contract terms will determine whether the contract is binding on you or not. For example, you will have to honor the contract if it contains a successor clause similar to the following:
“The rights and obligations of the parties to this agreement will be binding on, and will be of benefit to, each of the parties’ successors, assigns, heirs and estates.”
or
"This agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, executors, heirs, administrators, successors and assigns"
In that case, you may be able to negotiate with the lessees to terminate the contract. We suggest you read the lease terms carefully to determine your rights and obligations in regard to terminating the contract, as well as those of the other party.
Some courts apply a broad definition of successors in interest, namely the "substantial continuity of operations test." The standard corporate law definition from Black’s Law Dictionary is:
In order to be a "successor in interest", a party must
continue to retain the same rights as original owner
without change in ownership and there must be change
in form only and not in substance, and transferee is not a
"successor in interest." ... In case of corporations, the
term ordinarily indicates statutory succession as, for
instance, when corporation changes its name but retains
same property.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
