Attornment: Definition, Example and Related Terms
What is Attornment ?
Attornment is a legal term that, means agreeing to acknowledge a new boss after a transfer of rights. It often occurs in business scenarios, particularly in commercial contracts. For instance, if Company A sells its business to Company B, the employees of Company A might need to provide 'attornment' to Company B. This means they agree to accept Company B as their new employer. In a broader context, attornment can relate to accepting new authority or rights in any situation where control or ownership is transferred from one party to another.
Example(s)
Scenario Description Scenario 1: Company A, a software development firm, sells its operations to Company B. All the existing software licenses and contracts that Company A had with its clients are now under the control of Company B. In this situation, attornment would occur when the clients of Company A acknowledge and accept Company B as their new service provider. The clients would agree to honor the existing contracts and licenses under the new ownership of Company B. Scenario 2: A manufacturing company outsources its production to a third-party company. The employees who were involved in production are now under the management of the outsourced company. Attornment in this case would be the employees accepting the third-party company as their new employer. They would continue to perform their roles under the new management, adhering to the terms of their original employment contracts.