Business sale agreement

About this document

This is a comprehensive sale agreement, suitable for selling any type of business.

This type of agreement differs from a company sale agreement. Here, the assets and liabilities of the business (or business segment) are being sold, rather than shares. While this agreement might be used to sell the business of a company, it is more likely to be used to sell an unincorporated one, whether that of a sole trader or a partnership.

We have a number of business sale agreement templates that we have tailored to certain types of business. This agreement could be used to sell any of those, and also others, for example, those that operate in:

• building trades

• consumer service provision: whether personal services such as physiotherapy or hairdressing, or domestic services like window cleaning or house removals

• business service provision: whether businesses in traditional professions such as accounting or architecture, or those like marketing or graphic design

• retail of goods, both on-line and off-line

Usually, the buyer produces the sale agreement. That is because he or she bears the majority of the risk in the transaction and needs legal protection. However, there is no reason why the seller should not obtain an advantage by providing the first draft.

We provide a large menu of warranties. They are the principal means of protecting the buyer. The drafting notes contain a thorough explanation of how warranties work.

Complications can arise if the purchase money is not paid over to the seller at the same moment as other matters are finalised. We assume that most matters will be completed when the cash is paid. There are a few inevitable exceptions, particularly when relying on a third party to make changes to their records, such as a website hosting provider changing ownership of a domain name. If it is inevitable that some matters remain to be done later than the date of completion, you should use our drafting service to draw the fine points for you.

You can also read about other considerations when buying or selling a business.

The purchase price may be apportioned among the assets to assist in tax planning.

If there is a property or a lease, then the buyer is may be taking it over. We include provisions in this document to do that. To complete the freehold transfer, you may want to hire a conveyancer or firm of solicitors to complete the Land Registry transfer form for you.

Contents

• Interpretation
• Agreement for sale
• The purchase price
• Items to be delivered at completion
• Completion
• Stocks
• Debtors
• Creditors and liabilities
• Value Added Tax
• Warranties by the seller
• Future activities
• The guarantor
• Communications
• Miscellaneous matters
• Jurisdiction

Warranties covering

• Assets
• Stocks
• Accounts
• Employees
• Suppliers and customers
• Licences, consents and passwords
• Insurance
• Joint ventures and partnerships
• Statutory restrictions
• Litigation
• Seller’s activities
• Contracts
• Defective products and service liabilities
• Properties
• Leasehold properties
• Freehold properties
• Intellectual property
• Internet domain names