Whenever you are negotiating a commercial contract, each piece is important. Each clause included or excluded may change the overall context of the agreement, either for the better or the worse. With that in mind, then, it is important to understand exactly what certain clauses can, and cannot, do for you (or against you.) As you go through that process, it pays to have on your side the voice of experience and legal knowledge from a skilled South Florida business attorney.
This legal knowledge can be vital because sometimes what a clause can or cannot do is not always obvious on its face. A recent corporate asset transfer case from Miami-Dade County is a good example.
In 2014, two parties agreed to a transfer of the corporate assets of a company that specialized in transporting the elderly and people with disabilities. The contract governing that transfer of assets contained an assignment clause, which allowed for an assignment of the purchaser’s rights and obligations, but only allowed such an assignment if the company consented.
In March 2016, the purchaser assigned all his rights to an assignee but did not obtain the company’s consent to the assignment. The assignee later sued the company, and the company moved to dismiss. The company’s argument was that the assignment was invalid because it lacked the required element of the company’s consent and, because the assignment was invalid, that meant the assignee did not have the required legal standing to sue the company.
On the surface and based on the terms of the asset transfer agreement, the company might seem to have a fairly strong argument, mightn’t it? Nevertheless, the company lost its motion for summary judgment. It lost, not because of the provision in the contract, but a provision in Florida law.
Florida law allows parties to insert anti-assignment provisions into contracts, but the law in this state interprets those clauses as barring “only the assignment of the right to seek performance.” So, the purchaser was only required to seek the company’s consent if it was assigning its right to demand performance. It was not required to seek consent if it was assigning its right to pursue a claim for damages in the court system based upon an alleged breach of the contract.
In the transportation company’s situation, the purchaser had only assigned its right to sue for damages, not the right to seek performance. That meant the assignment was valid even without the company’s consent, and, despite the language in the agreement, the lack of consent did nothing to deny the assignee standing to pursue the lawsuit that was filed against the company.
You may think you have certain rights based on the terms you negotiated in your contract, but it is important to be vigilant and aware that the law may enhance or restrict those rights beyond just what is put down in “black and white” in the agreement. Whether you are negotiating an agreement yet to be executed or litigating a dispute over an existing commercial contract, turn to the skilled South Florida business attorneys at Stok Kon + Braverman. Our lawyers have been providing diligent advocacy and creative solutions to our Florida business clients for many years.
Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.