Is a contract still valid if the company closes its doors?
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Is a contract still valid if the company closes its doors?
A gallery held an exhibition of a selection of my artworks. I signed a contract
that stated that if I sell any of those works 6 weeks after the exhibition the
gallery still gets a cut of the sale. The gallery informed me it was closing its
doors after the contract was signed and closed once my exhibition ended. If I
sell an artwork during that 6 weeks after the xhibition do I still have to give
the gallery the cut of the sale even though the business has shut down?
Asked on February 1, 2017 under Business Law, Alaska
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
If the business legally still exists--e.g. it was a sole proprietorship or partnership, so you'd owe the money to the proprietor or partner; or it was an LLC or corporation which has not been dissolved--then yes: even if the business is not doing business, since the legal "person" or entity being the business still exists, youd have to pay.
If the gallery were an LLC or corporation which has been actually, officially dissolved, then no--there is no entity existing to pay the money to.
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