Reference no: EM131657586

Question: Perry sold its Auto Works Division to Northern Retail. Northern Retail's parent, Northern Pacific (later called NP Holding) agreed to assume Perry's debts and indemnify Perry for damages relating to Auto Works Division. After the contract was formed but before the closing, Northern Retail assigned the purchase contract to Auto Works, Inc. At the closing, Perry transferred the Auto Works Division to Auto Works, Inc. (not to Northern Retail), with the assumption instrument being executed by Auto Works, Inc., Later, Northern Retail sold Auto Works, Inc., to a third party, who put it into bankruptcy, thereby failing to pay rent due under leases that it had assumed from Perry. NP Holding dissolved. Northern Retail became CSKG (a subsidiary of CSK Auto), and then was dissolved, with a transfer of its assets to CSK Auto. Perry claimed that CSK and NP Holding were obligated to indemnify it for the leases. Perry argued that the sale of the Auto Works Division to Auto Works, Inc., did not release Northern Retail from its obligations and was not a novation. Was this a good argument?