4 ms·

Does this argument apply if there was a signed contract with years remaining?

flukus 8y ago
It really depends on the circumstances but often a contract makes no difference. If the service provider disappears (bankruptcy, acquisition, natural disaster) and there is no one to sue then the contract is irrelevant. If it's core functionality and you go out of business then being able to sue but having no money to makes the contract irrelevant. If the provider can absorb the cost of a lawsuit because you're their only customer and it's cheaper to drop you then a contract could be irrelevant. If the provider want's to launch a competing service and breaching the contract is just a cost of doing business then the contract is irrelevant. Contracts can be valuable but often they are over valued.
- tinus_hn 8y ago
  Contracts don’t disappear on acquisition, of course. The new owner takes on the responsibilities of the acquired company, as well as its assets. Companies also are not physical items that can disappear due to natural disasters. The only ways they can disappear is by closing down, and that does mean honoring contracts, and by going bankrupt and that means using all leftover assets to satisfy all the parties whose contracts you’re breaking. And no, you can’t just transfer all assets away and leave a shell to go bankrupt because that is fraud and the judge can nullify the transfers.
PeterisP 8y ago
Evaluating the business viability and solvency of any important suppliers is something that you should be doing yourself even if you have a years-long contract. Also, such risks can be insured. Also, such risks can be mitigated in various ways - I recall having a contract where the source code of any product version delivered to us would be held in escrow at a third party, and in case the supplier went out of business or a bunch of other conditions, we'd get their code and legal rights to use/modify/maintain it ourselves or through some contractor. A contract is between you and some entity - if you want to protect yourself against that entity "dying", then that can be done by a contract with someone else (e.g. insurer, escrow, etc) who can make you whole even if that entity is dead.
__flo 8y ago
The existance of a contract does not prevent actions like this. A contract will get you compensated later, but if the provider cuts you out, nothing can prevent it. The outage will be there wether it is legal or not.

It really depends on the circumstances but often a contract makes no difference. If the service provider disappears (bankruptcy, acquisition, natural disaster) and there is no one to sue then the contract is irrelevant. If it's core functionality and you go out of business then being able to sue but having no money to makes the contract irrelevant. If the provider can absorb the cost of a lawsuit because you're their only customer and it's cheaper to drop you then a contract could be irrelevant. If the provider want's to launch a competing service and breaching the contract is just a cost of doing business then the contract is irrelevant. Contracts can be valuable but often they are over valued.

tinus_hn 8y ago
Contracts don’t disappear on acquisition, of course. The new owner takes on the responsibilities of the acquired company, as well as its assets. Companies also are not physical items that can disappear due to natural disasters. The only ways they can disappear is by closing down, and that does mean honoring contracts, and by going bankrupt and that means using all leftover assets to satisfy all the parties whose contracts you’re breaking. And no, you can’t just transfer all assets away and leave a shell to go bankrupt because that is fraud and the judge can nullify the transfers.

PeterisP 8y ago

Evaluating the business viability and solvency of any important suppliers is something that you should be doing yourself even if you have a years-long contract. Also, such risks can be insured. Also, such risks can be mitigated in various ways - I recall having a contract where the source code of any product version delivered to us would be held in escrow at a third party, and in case the supplier went out of business or a bunch of other conditions, we'd get their code and legal rights to use/modify/maintain it ourselves or through some contractor. A contract is between you and some entity - if you want to protect yourself against that entity "dying", then that can be done by a contract with someone else (e.g. insurer, escrow, etc) who can make you whole even if that entity is dead.

__flo 8y ago

The existance of a contract does not prevent actions like this. A contract will get you compensated later, but if the provider cuts you out, nothing can prevent it. The outage will be there wether it is legal or not.