Supply contract transfer: assignment or novation?
Ask whether the proposal transfers payment rights or replaces your supplier. Check the contract, record unfinished work and existing claims, and verify the incoming business and bank details before changing payments. Agree expressly who handles deposits, defects and refunds. Discuss the factory handover with Cambridge China Bridge.
Identify what is actually changing
Ask the existing supplier for a written explanation, the incoming business's legal name and company number, and the proposed transfer document. Is it changing the payee, replacing the seller, or moving order administration? Compare the proposal with the legal entity named on your accepted quote and contract.
Start with who you contract with. That guide explains seller and agent roles; this guide addresses the proposed handover. A UK counterparty does not by itself establish the contract's governing law. Ask your solicitor to review the transfer under the agreed law.
Separate assignment from novation
Assignment transfers the benefit of a contract to another party. For a buyer, that might concern the right to receive payment. Do not treat a payment-rights assignment as evidence that the incoming business has taken responsibility for production, delivery or defective goods.
Novation replaces the original contractual relationship with a new one. HMRC's debt-transfer guidance describes agreement between the creditor, outgoing debtor and incoming debtor. For a supplier replacement, ask for documented agreement involving you, the outgoing supplier and the incoming supplier. Have any existing substitution or advance-consent clause reviewed rather than assuming a fresh signature is always needed.
Record outstanding obligations before agreeing
Prepare an order-by-order handover schedule covering deposits already paid, unpaid invoices, goods in production, stock awaiting shipment, delivery commitments, tooling, approved samples and inspection records. Ask the incoming supplier to acknowledge each deposit as credited against the relevant order, rather than asking you to fund the same work again.
List existing defects, delays, refund requests and disputed charges separately. Ask the document to state who handles each claim, what responsibility the outgoing supplier retains, and whether any release affects past problems. Check for changes to price, warranties, liability limits and dispute terms using UK seller supply terms.
Verify the incoming business and payment request
Check the incoming business's identity, company records, financial position, trading contacts and capacity to finish your orders. Request evidence of access to the factory, order files and tooling. Shared directors, a familiar trading name or continued use of the same email address should not replace these checks.
Before changing bank details, confirm the old and new account details through a known telephone number, rather than a number supplied in the change request. Resolve any mismatch between the agreed payee and account name. Keep the verification record and obtain internal approval before updating your supplier record; use order and payment approval controls.
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Approve a workable handover
Read the transfer, consent, notice and variation clauses with your solicitor. Ask whether the proposal needs your consent, relies on consent already given, or concerns only assigned payment rights. Request the supporting document and clarify the effective date, affected orders and payment instructions before approving any change.
Keep the agreed document, handover schedule, account verification and approval together. Confirm who now instructs the factory, approves inspection results and authorises shipment. If checks remain unresolved, request clarification and agree how imminent invoices will be handled rather than simply missing a payment deadline. Cambridge China Bridge's staff in China can help check the practical factory handover.
Frequently asked questions
Can my supplier transfer my contract without asking me?
Check the transfer and consent clauses. Assigned payment rights and supplier replacement are different proposals. Ask your solicitor whether consent is needed or was already given, and request the supporting document.
Does assignment make the new company responsible for delivery?
Assignment transfers contractual benefits. Do not assume it establishes responsibility for delivery. Ask for the document that records who will complete your orders and handle defects.
What happens to my deposit when the supplier changes?
Ask for a written order schedule showing the deposit already paid and its credit against the remaining balance. Obtain the incoming supplier's acknowledgement before agreeing to further payment.
Should I pay a new bank account after a transfer email?
Verify the transfer document and payee first. Confirm old and new account details using a known telephone number, resolve discrepancies and record internal approval before changing payment instructions.