A business sale agreement is also known as a business purchase agreement. When two parties are getting involved in the transfer or sale of a business, it is crucial to have a business sale agreement template that is signed legally by both the parties.
Business sales are structured as an asset sale, however, the ownership and control of all the assets of the business are sold. The sale can also be structured as selling the shares of the business. However, to transfer the full control, all the shares of the business need to be sold.
What Is a Business Sale Agreement?
A legal document where the owner of a company sells the entire business to the chosen buyer by entering into legal terms. With the business sale agreement, the buyer and seller come under the terms and conditions of the business sale to memorialize the entire understanding.
The agreement includes the legally termed and mutually agreed provisions regarding the basic logistics of the sales like pricing and information required the liability allocation.
Once agreed and signed, both parties come into a constituted binding agreement. The parties shall then start to make arrangements for the handover of business assets.
To conclude the transactions full, the parties need to settle any special conditions too, if any. If not followed as per the terms in the agreement, one party or the other have total right to pull out of the agreement.
Who Should Use a Business Sale Agreement?
A business sale agreement shall be used by anyone who wants to sell or purchase a business. The agreement comes into the term between the seller of the business and the chosen buyer.
The agreement includes the specific details of the selling business, mentioning what assets and shares of the business are for sale.
What Are the Components of a Business Sale Agreement?
Several components need to be covered in the business sale agreement. Moreover, you can refer to a sample of an agreement to sell/purchase a business to look for the relevant points for the business under the agreement. Some of the essential ones are as follow:
- Description of Business: A detailed description of the business needs to be addressed in the agreement. From the name of the company to address, details of the owner to employees, assets of the business to its liability, everything about the business should be included.
- Terms & Conditions: The agreement describes some terms and conditions as per the business requirement which shall be mutually agreed by both the parties involved.
- Payment: The parties agree to a final payment amount which should be paid within a fixed deadline. However, if the buyer fails to adhere to the agreed payment term, the seller has the right to retain all deposits and consider liquidated damages.
- Closing: This shall include a fixed date when this sale will be closed with complete transactions. It should be no later than 10 days of both parties signing the agreement.
- Litigation: The owner needs to ensure in this term that no legal suits or actions are being conducted on the business property or assets which could be against the business sale agreement.
- Confidentiality: Neither party shall give out any crucial information that might be detrimental to the parties involved in the agreement. Information obtained through the business sales agreement shall be kept confidential.
- Dispute Resolution: Here, the parties agree to resolve the dispute about this agreement with mediation before seeking legal help.
- Insurance: The property insurance shall be maintained by the seller without changing the insured amount until the sales document is finalized. Concerning the final agreement, the buyer shall purchase the property insurance.
- Acceptance: To acknowledge the agreement, both parties need to sign in the declaration that they have read and understood all the terms and conditions of this agreement.
The parties can look into the general principles of contract law to refer to the common laws that apply to this agreement.
The other specific laws shall also be included depending on the industry the business operates. It is crucial to form a business sales agreement to come to mutual terms and save both parties from chaos.
Moreover, if you need to resolve any further doubts, contact CocoSign. They also provide the best and reliable business sale agreement template for free to create your agreement.
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