Business Transfer and Debt Liability: Commentary on Order No. 10902 of 2024

The recent Order No. 10902 of April 23, 2024, issued by the Court of Cassation, addressed a highly relevant issue in commercial law: liability for debts incurred following a business transfer. This ruling clarifies the rights and duties of the buyer and seller, providing useful guidance for those operating in the sector and for legal professionals assisting parties in such transactions.

The Principle of Liability in Business Transfers

The order in question clearly establishes that, in the event of a business transfer, the buyer is solely liable for debts arising from continuous or periodic performances executed after the transfer. This is due to their statutory succession to ongoing contracts, as provided by Article 2560 of the Civil Code. The seller, on the other hand, is liable only for debts remaining from contracts where the third-party contractor had already fulfilled their performance before the transfer.

Business - Transfer - Ongoing continuous and periodic performance contracts - Debts subsequent to contractual succession related by law to business transfer - Buyer's liability - Basis - Case concerning supply. In the event of a business transfer, the buyer alone is liable for debts concerning continuous or periodic performances executed after the transfer, due to their statutory succession to reciprocal contracts not yet fully performed by either party. Conversely, pursuant to Article 2560 of the Civil Code, the seller is liable only for debts remaining from contracts where the third-party contractor had already fulfilled their performance before the transfer. (In application of the stated principle, the Supreme Court rejected the appeal against the judgment upholding the opposition to an order for payment against the seller of the business for the cost of electricity supplied after the transfer).

Practical Implications of the Ruling

This ruling has significant consequences for businesses and professionals in the sector, as it clarifies the lines of responsibility in the event of a business transfer. It is crucial for both parties involved to understand the legal implications of such transactions.

• For the buyer: it is essential to assess existing contracts and associated debts before proceeding with the purchase.
• For the seller: it is fundamental to ensure that contracts have been honored and that there are no outstanding debts for which they may be held liable.

Conclusions

In conclusion, Order No. 10902 of 2024 offers an important clarification on the buyer's liability in the event of a business transfer. Parties involved in a transfer must pay particular attention to ongoing contracts and the resulting obligations to avoid future legal disputes. It is advisable to seek the advice of an experienced legal professional to navigate the complexities of these commercial transactions.