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Ready to buy your dream business? Or ready to sell your business? It is essential that both parties interests are protected in a Business Sale Agreement, as it sets out the terms of sale clearly. This document will help you avoid any subsequent disputes as it makes the sale legally binding. A Business Sale Agreement is used to transfer the assets of a business from the seller to the buyer.
Use this Business Sale Agreement if:
You have negotiated the sale/purchase of a business, and want to set out the terms and conditions of the sale/purchase; and You are a small to medium sized business and need a concise sale document.
What does the Business Sale Agreement cover?
- Transfer of ownership of assets;
- Particular assets to be transferred;
- Relevant warranties; and
- Restraint clause
Other names for Business Sale Agreement include:
- Business Sale Contract;
- Sale of Business Agreement; and
- Sale of Business Contract.
What is the difference between a business sale agreement and a term sheet?
A Business Sale Agreement is used to transfer the assets of a business from the seller to the buyer. A term sheet is a document outlining the terms and conditions of a business agreement and differs from a business sale agreement as it does not aid in transferring assets, rather it aids in preparing for the final transaction of a deal. Once drafted, a term sheet helps establish the guidelines for the final agreement of a transaction, as opposed to a business sale agreement which facilitates the transfer of assets between the relevant parties.
What preparation is required before completing a business sale agreement?
Advice from a lawyer should be required before entering a business sale agreement. This advice will ensure that your company is well informed of the terms of the agreement, as well as the implications it may have on the business’ employees and property. The parties involved in the agreement should also sort out such things as the stock and existing partners the business has in trade, as well as other day-to-day business needs. Sorting out such necessities will ensuring the best possible transfer of ownership through a business sale agreement.
How much should I sell my business for?
When selling your business you should consider the amount of assets it contains, the profits earned each financial year and the potential your business has to grow. You will also have to consider a valuation method and whether or not it is worth seeking professional advice.
How do I make my business sale agreement legally binding?
In order to make your business sale agreement legally binding, there are a few technicalities that must be followed in the process of completing the agreement. Firstly, ensure that the document is signed by both of the parties involved in the agreement. In order to bind the signatures, there should be a witness present to oversee the signing and agreement of the contract. Note that the witness can not be the other party in matters such as this. The contract should also be dated. This date will be recognised as the commencement date for the agreement. If the agreement is signed at different times for each party, it is important to note that the contract will only come into effect when the final party has signed agreement. Once all these steps have been completed, a legally binding contract will be formed between both parties involved in the business sale agreement.
What laws does this agreement apply to?
The general principles of contract law are applicable to a business sale agreement. A business sale agreement can also involve the transferring of employees between the companies involved. Therefore, employment law may be applicable in instances where employees from one company are transferred to the purchasing company. Intellectual property law may also be applicable to this type of agreement. Instances like this can occur when the company being purchases may have a trademarked product that they have exclusive rights to.
Should this agreement be reviewed by a lawyer?
In most cases it is recommended that your business sale agreement be reviewed by a lawyer. There are various elements of a business sale agreement that can vary depending on what type of purchase it is. It is essential you hire a lawyer to analyse the conditions in order to clarify whether there may be legal ramifications if you breach a term that to terminate the agreement or misinterpret a condition of the sale. Hiring a lawyer will ensure that your business is aware of possible legal ramifications in regards to a business sale agreement. A lawyer will also advise you as to the best way to ensure that the agreement is performed, as well as protecting you in the instance of a termination or breach in the agreement.
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