Successor Liability In Asset Purchase Under U.S. Laws

This paper reviews a particular area of law that is unique to the U.S.laws,successor liability rules in asset acquisitions.It aims to analyze this area of law,to discuss its theoretical controversies and through comparing Chinese laws and regulations,to further provide reference for China to further clarify and develop its own successor liability rules in asset acquisitions.In the first part,the paper reviews and analyzes the law by splitting it into three stages:the traditional stage where the law focuses on the protection of sellers' creditors,the second stage where the law develops for the protection of customers and victims to defective products,and the stage where the law,which originates from state law,emerges into federal law.Through analyzing state law cases,the author tries to present with readers the scenario where such law would apply,and concludes that:under the traditional successor liability rules,a buyer would typically not be held liable for a seller's liability if the buyer pays adequate cash consideration in the transaction;however,because of the policy requirement of strict product liability,courts will hold a buyer liable even when the buyer pays adequate consideration,for the protection of customers and defective products victims.Moreover,federal courts are more likely to expand the application of successor liability rules.Based on the first part,the second part aims to discuss the theoretical questions behind the law:how to balance legitimate predictability in the business world with the protection of the third party's rights,how to balance expanding protections with the increasing uncertainty of the law,how the "spreading the cost into the society" theory impacts product liability and successor liability rules,and finally where to set the boundary:the goodwill test.In the third part,this paper discusses the reference of successor liability rules in clarifying and developing China 's own rules.Through summarizing the relevant laws and regulations in Chinese laws,and compare them with successor liability rules,the author proposes that:China should further clarify the successor liability issue in asset acquisitions,and afford adequate remedy to the third parties who brings future or potential claims,and contemplate the successor liability issue under strict product liability,environmental liability and other laws.