oboloo Articles

What Is a Legacy Contract? Definition

What Is a Legacy Contract? Definition

A legacy contract is an agreement between two companies or organizations in which one company agrees to provide goods or services to another company for a specified period of time. The term “legacy contract” can also refer to a situation in which a new company takes over the responsibility of providing goods or services from an existing contract. In many cases, legacy contracts are created when one company purchases another company. The new company may agree to continue providing the same products or services to the customers of the previous company under the same terms and conditions. Legacy contracts can also be created when two companies merge. There are several benefits that can come from entering into a legacy contract. For example, legacy contracts can help to ensure continuity of service for customers and can help to avoid disruptions in the supply chain. In addition, legacy contracts can create economies of scale that can result in cost savings for both parties. However, there are also some risks associated with legacy contracts. For example, if the terms of the contract are not favorable, it can create a financial burden for the new company. In addition, if the customer base is not loyal to the new company, it could lead to a loss of business.

What is a legacy contract?

In the business world, a legacy contract is an agreement that is no longer in effect but still imposes obligations on the parties involved. In other words, it’s a contract that has been replaced by a new contract, but the old contract’s terms and conditions still apply.

For example, let’s say you sign a five-year lease for an office space. After two years, you decide to move to a new location. You sign a new lease for the new space and give notice to your landlord that you’ll be vacating the old space at the end of the month. However, even though you’re no longer using the old office space, your legacy contract requires you to continue paying rent for the remaining three years of the lease.

Similarly, if you have a service agreement with a vendor that you no longer use, you may still be obligated to pay for the services under your legacy contract. In some cases, businesses are able to negotiate terms with their vendors to cancel or modify legacy contracts. However, in other cases businesses may be stuck paying for services they no longer use and no longer need.

When evaluating whether or not to enter into a new contract, it’s important to consider not only the current terms and conditions of the agreement, but also any potential legacy obligations that could arise down the road.

What are some examples of legacy contracts?

There are many examples of legacy contracts. One example is a contract between a company and its employees. This type of contract may be very old and no longer relevant to the current business environment, but it still exists and must be honoured. Another example is a contract between two companies that have been merged or acquired. The new company may not want to honour the terms of the contract, but they are legally obligated to do so.

Why do businesses sign legacy contracts?

There are a number of reasons businesses sign legacy contracts. In some cases, businesses may be legally required to honour existing contracts even if they no longer reflect the company’s current business model or operational needs. Other times, businesses may choose to sign legacy contracts in order to maintain good relationships with suppliers, customers, or other business partners. Additionally, some businesses may feel that signing a legacy contract is the best way to protect their interests in a particular situation.

Are there any benefits to signing a legacy contract?

A legacy contract is a type of insurance policy that offers benefits to the policyholder after death. The main benefit of signing a legacy contract is that it can provide financial security for your loved ones after you die. If you are the primary breadwinner in your family, a legacy contract can ensure that your family will not be left struggling financially if you suddenly pass away. In addition, a legacy contract can also help to cover final expenses such as funeral costs and any outstanding debts you may leave behind.

Are there any drawbacks to signing a legacy contract?

When a business signs a legacy contract, they are agreeing to continue using the same technology or product, even if it becomes outdated. This can be a problem if the company’s competitors are using newer, more efficient products. Additionally, legacy contracts often come with high costs for upgrades and maintenance.

How can businesses get out of a legacy contract?

There are a few ways that businesses can get out of a legacy contract:

-One way is to negotiate with the other party to try and come to an agreement that is beneficial for both sides. This can be difficult, but it may be possible to reach a compromise that works for everyone.

-Another way is to simply breach the contract. This means that the business would be in violation of the terms of the contract, which could lead to legal consequences. However, sometimes breaching a contract may be the only way to get out of it.

-Finally, businesses can also try to get out of legacy contracts through force majeure clauses. These clauses allow businesses to terminate contracts if certain unforeseen events occur, such as natural disasters or political unrest.


A legacy contract is a legal agreement between two parties that has been in existence for a long time and generally consists of complicated terms and conditions. In business, a legacy contract can be an obstacle to progress because it may be outdated or no longer reflect the needs of the company. For this reason, it is important to review your company’s legacy contracts on a regular basis to ensure they are still meeting your needs. Thanks for reading!

Want to find out more about oboloo?

Find out how oboloo contract management software can increase your contract visibility and reduce risk

Oboloo transparent

The smarter way to have full visibility & control of your suppliers


Feel free to contact us here. Our support team will get back to you as soon as possible

Oboloo transparent

The smarter way to have full visibility & control of your suppliers



Feel free to contact us here. Our support team will get back to you as soon as possible

© 2023 oboloo Limited. All rights reserved. Republication or redistribution of oboloo content, including by framing or similar means, is prohibited without the prior written consent of oboloo Limited. oboloo, Be Supplier Smart and the oboloo logo are registered trademarks of oboloo Limited and its affiliated companies. Trademark numbers: UK00003466421 & UK00003575938 Company Number 12420854. ICO Reference Number: ZA764971

Skip to toolbar