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Tuesday, September 4, 2007

A Nice Case of Contract Assignability

Aab_2 Aaa There’s a good interpretation question bubbling up in world of stock car racing. Ordinarily a company that acquires another obtains all the contractual rights that the acquired company has. But not always.

AT&T, it seems, is suing NASCAR after the stock car racing group refused to allow it to replace the Cingular logo on driver Jeff Burton’s car with the AT&T logo following AT&T’s acquisition of Cingular.  AT&T changed Cingular's name to "AT&T" and is busy replacing the old Cingular logo.  It wants the right to continue sponsorship of Burton's No. 31 car, and it maintains a web site for fans.  (Left: Burton with his AT&T logo.)

The problem is that the NASCAR series Burton races in is called the "Nextel Cup" after a rival telecom company -- and only cellular companies whose logos were on cars before Nextel became the chief sponsor (it used to be the "Winston Cup") were subsequently allowed to have their logos on race cars. When AT&T acquired Cingular, it changed the company’s name, and NASCAR apparently argues that this means that AT&T no longer has the right to put a logo on the car. AT&T says that NASCAR never advised it of that particular restriction.

[Frank Snyder]

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