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Home Q&A Trade and Commerce Buying Business and Existing Contracts

Q: If you take over a business, do you have to honour all existing contracts even if not economically feasible?

A:
It is difficult for us to comment without investigating the full nature of the contract. If one had only purchased the stock and not the registered trading name and company etc. then it is obvious that there is no need to honour the contracts as they are not related to the mere sale of the stock. However, if the entire running entity was sold and there was no clear exclusion of the outstanding contracts and debts then those contract that are not against the Shariah would have to be honored. One should ascertain such matters before the transaction so that one may structure the purchase in the most appropriate manner.

And Allah Ta'ala Knows Best

 
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