Legal Question in Business Law in California

With each sale of a business the buyer and sell are free to contract to accept old debt, or not accept old debt.

The prior answer is technically correct. However, it must also be said that the sale of a business does not make its debt vanish. The buyer and seller are free, within limits, to decide by contract which (buyer or seller) will pay the debt, but at least one of them remains liable.

In addition, Division 6 of the Commercial Code consists of laws governing so-called "bulk sales," which means sales of certain businesses or a substantial part of their assets. If the business is one of the kinds covered by the code, the sale must comply with the provisions of the code, which include notices to creditors and a definite plan for payment of debts.

Anyone selling a business, or its assets, should have a plan for the assumption or payment of its debts before the seller receives any proceeds of the sale. In particular, the parties should see if they fall under the bulk sales laws.