What are the obligations of defendant in a contract of employment where the employer is required to dispose of his business prior to the expiration of the contract?

With this understanding we can now examine the effect of the sale of the business on these obligations of defendant. ⁹ No one questions, of course, defendant's 'right to sell its business,' but the issue is whether defendant could do so without incurring any liability for breach of its contract with plaintiff. (Silva v. McCoy, 259 Cal.App.2d

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The governing principles are well stated in the leading case of Langenberg v. Guy, 77 Cal.App. 664, 668, 247 P. 621, 622: '. . . For of course it must be conceded that where a party to a contract of employment obligates himself by either an express or an implied agreement not to disable himself from continuing the employment for a stipulated time, he will make himself liable in damages for breach of contract if, by a sale of his business before the expiration of the stipulated period, he voluntarily puts it out of his power to continue the employment to the end of its term in the manner agreed to by him. It may also be conceded that, in the absence of some provision in a contract of employment which tends to negative the implication that the employment will continue uninterruptedly during a specified term, one who has bound himself to employ another during a definite time for a compensation, the amount whereof can be earned and determined only by an actual performance of the services over the whole of the stipulated period, will render himself liable for damages for breach of contract if he makes a disposition of his affairs which renders it impossible for him to receive the services in the manner contemplated by the contract. In every such case the question in the last analysis is simply this: Do the terms of the contract--and, if the [69 Cal.App.3d 973] contract is ambiguous, do the circumstances under which it was made--necessitate the implication that the employer had undertaken not to dispose of his business during a fixed period of time?' (Citations omitted.)