Merger Legal Definition:

The absorption of one thing or legal right into another.

Related Terms: Amalgamation , Consolidation , Confusion

The term merger is used in the law of contracts, corporations, real property law and copyright law.

Merger in Contracts

At common law, when the qualities of debtor and creditor are united in the same person the debt is extinguished by merger, the equivalent to confusion in the civil law.

As Justice Jennings of the Supreme Court of Arizona stated in Clark v Compania Ganadera:

"Merger with respect to the law of contracts refers to the extinguishment of one contract by its absorption into another contract."

Merger in Corporations Law

The absorption of one company by and within another (a merger) is a form of amalgamation.

The other form is a consolidation.

In Kemos, Justice Roney of the United States Court of Appeals wrote:

"A consolidation is the union of two or more corporations into one corporate body, after which the constituent corporations cease to exist.

"A merger is the absorption of one corporation into another....

"[A]malgamation is ... used to designate a consolidation or merger."

Similarly, in Fordyce, this, from Justice Groner of the same court:

"[A] merger is said to take place when one of the corporations retains its existence and succeeds to the franchises and acquires the property and assets of the other....

"The merged corporation ceases to exist and the merging corporation alone survives."

Merger in Real Property Law

Merger occurs when a smaller piece of land is swallowed up within the creation of a larger piece of land. Many jurists1 simply defer to the definition of merger provided by William Blackstone almost 300 years ago, in his Commentaries:

"Whenever a greater estate and a less coincide and meet in one and the same person, without any intermediate estate, the less is immediately annihilated; or, in the law phrase, is said to be merged, that is, sunk or drowned, in the greater."

For example, this from Justice Dickson in Fraser-Reid:

"[I]n real estate law merger occurs when two estates coalesce through a vesting in the same person at the same time in the same right. For example, when a tenant for years acquires the reversion in fee simple the term of years is merged or, more colourfully phrased, it is annihilated or drowned."

In contract law, as it relates to real property, the doctrine of merger also forces the completion of an otherwise unfinished sales contract by the completion of the deed of sale. In Despault, Justice Cumming wrote, at ¶20:

"[T]he doctrine of merger ... asserts that the execution of a deed as required by an agreement for a sale of land results in the agreement being superceded by the deed, or merged in the deed. Such an agreement depends on the theory that the purchaser agrees to accept the conveyance in substitution for the rights under the agreement. However, ... merger depends upon the parties' actual intent in every case."2

Merger in Copyright Law

In the context of copyright law, Justice Morden noted these words in Delrina:

"If an idea can be expressed in only one or in a very limited number of ways, then copyright of that expression will be refused for it would give the originator of the idea a virtual monopoly on the idea. In such a case, it is said that the expression merges with the idea and thus is not copyrightable."

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