When a company uses trade name of other company, it shall bear liability of other company

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Recently, one of client ( Rich inc.) bought real estate via public auction (keibai = 競売).
This property is hotel.
This hotel was owned by Fail inc. and managed hotel there.
The name of hotel is “Japan Hotel”
When Rich inc. bought this property, Rich inc bought necessary articles of furniture.

Rich inc. has decided to use the same name of “Japan Hotel”.
In this case, we have to consider some points.

There were creditors toward Fail inc.
And even after assignment or succession of their business, the creditor will charge performance of debt to Rich inc.
Because, creditor will think that owner is still same company as before.

So, Rich inc. will have to repay Fail inc.’s debt.

In order to avoid such situation, there is Article 22 in Companies act.

When Rich inc. assigned Fail inc.’s business, Rich inc. has to register followings content in commercial registry.
“Though July 3rd in 2014, Rich inc. assigned Fail inc.’s business and their trade name (shogo=商号), name of store (屋号=yago), Rich inc. is not liable for performance of  Fail inc.’s debt.”

Article 22 (1) In the cases where any Company to which any business is assigned (hereinafter in this Chapter referred to as “Assignee Company”) continues to use the trade name of the Assignor Company, the Assignee Company shall also be liable for the performance of any obligations having arisen from the business of the Assignor Company.
(2) The provisions of the preceding paragraph shall not apply in the cases where the Assignee Company registers, at the location of its head office, without delay after it has accepted the assignment of the business, a statement to the effect that it will not be liable for the performance of the obligations of the Assignor Company. In the cases where the Assignee Company and Assignor Company give notice to the above effect to any third party without delay after the assignment of the business, the provisions of the immediately preceding sentence shall apply to the third party who receives such notice.
(3) In the cases where the Assignee Company is liable for the performance of the obligations of the Assignor Company pursuant to the provisions of paragraph (1), the liability of the Assignor Company shall be extinguished upon lapse of two years after the day of the assignment .

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