Common use of Bankruptcy of the Customer Clause in Contracts

Bankruptcy of the Customer. [A] Protections for Vendors Under Bankruptcy Code section 365(c)(1), the debtor’s general right to assume and assign executory contracts (and to ignore contractual nonassignment provisions) does not apply when “applicable [non- bankruptcy] law” excuses the nondebtor party from “accepting per- formance from or rendering performance to” a new party. Therefore, since the federal (U.S.) common law is clear that the licensee position in a nonexclusive license cannot be assigned by the licensee without the consent of the licensor, this provision leads to preventing the customer from unilaterally assuming and assigning the agreement to a third party.

Bankruptcy of the Customer. [A] Protections for Vendors Under Bankruptcy Code section 365(c)(1), the debtordebtor ’s general right to assume and assign executory contracts (and to ignore contractual nonassignment provisions) does not apply when “applicable [non- bankruptcy] law” excuses the nondebtor party from “accepting per- formance from or rendering performance to” a new party. Therefore, since the federal (U.S.) common law is clear that the licensee position in a nonexclusive license cannot be assigned by the licensee without the consent of the licensor, this provision leads to preventing the customer from unilaterally assuming and assigning the agreement to a third party.