What guarantee does a vendor get when he deals with a company on the purchase of their assets? It shall be a legally written asset purchase agreement. This agreement serves as written evidence that the company has agreed to sell a certain asset(s) at a particular cost.
So, what exactly is this agreement, and how to create it?
What Is an Asset Purchase Agreement?
An asset purchase agreement is a legal document between the vendor and the purchaser of the company’s assets. The purchaser regulates the terms and conditions of the purchase and sale of the assets.
It includes the complete details of the assets purchase, condition of the asset at the time of buying, purchase price, deal closing date, payment modes, and more. Moreover, the parties can include their terms that are best suited for their deal.
Who Is the Asset Purchase Agreement For?
Usually, in the case of mergers and acquisitions, this agreement is very useful . Here, the acquiring company acquires the company's assets or/and shares, the purchasers acquire the assets with the motive to expand their business or sell the assets to a third party.
In short, most mergers are structured as share or asset purchase and sale. However, the asset purchase agreement is different from a share purchase and sale agreement.
In a share sale, the investor acquires all the assets and liabilities of the business while in asset sale the purchaser has the option to choose which assets and liabilities to buy.
What Assets Are Being Purchased?
The following assets are included in the agreement:
The Tangible Personal Property
It includes all equipment, fixtures, machinery, office furniture, spare parts, instruments, vehicles, leasehold improvements, transfer of rights, and warranties of any vendor or manufacturer which are owned by the seller.
The Contractual Rights
They are like leases, and leasehold interest relating to the property used in the business operation. All the personal property leases to which the seller is a party shall be transferred to the buyer.
What Are Included in an Asset Purchase Agreement?
With respect to the foregoing premises, herein the parties agree to be legally bound to the following terms of asset purchase agreement:
- Payments: The agreement includes the total sum of the assets purchased by the buyer. This amount is to be paid by the buyer to the seller in a particular mode, date, and place.
- Assumptions of liabilities: The buyer shall only consider the mentioned liability of the seller. The seller will have the full obligation over the other liabilities. Also, the seller will not assume any responsibility for any liability arises from the buyer’s operation.
- Inspection: The buyer has the right to inspect and then decide whether to accept or reject the delivered assets. In case any asset doesn’t comply with the application, the seller shall notify the buyer beforehand.
- Excusable delay: Any delay in delivery or completion of a contractual obligation under any unreasonable control or without the fault of the seller, he is not held faulty and shall be excused for such delays.
- Cancellation: The asset purchase agreement shall be canceled in case of any petition filed against the seller under any state or federal law relating to bankruptcy, or any misconduct.
- Disputes: In case of any dispute not mutually resolved by the parties shall be adjudicated by any court of competent jurisdiction.
- Non-disclosure agreement: The buyer agrees to not use or disclose in front of the third party any critical seller’s information which is not permitted in the agreement. Breach of such provision shall lead to heavy penalties and/or termination of the agreement.
- Assignment: The parties shall not assign this order or any part of it without the advance, written consent of the other party. However, the consent shall be reasonably withheld.
It is essential to keep at least one signed copy of this agreement. However, there needs to be both the parties' signature stating that they have read and agreed upon all the mentioned terms of the agreement.
Instead of writing one by your own, you could customize your asset purchase agreement with CocoSign. This will allow you to save much time, effort, and money. Therefore, don’t forget to get your lawful asset purchase, and other agreements for free by today!
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