What is an Agreement to Sell Business?
An Agreement to Sell Business is a type of sales contract. It is a legally binding, and thorough contract that outlines the agreed-upon conditions of the buyer and the seller. It is part of the main legal document of every sales process, whether it is in real estate, business deals, or the exchange of goods. The Agreement to Sell Business, also known as a business purchase agreement, provides a thorough list of the agreed elements of the deal, including several important protections to all parties involved. In this case, the buyer and the seller. It also provides the legal framework to complete the sale, making it an important document to the parties involved.
Agreement to Sell Business is created to properly and more elaborately spell out the details of the transaction so that both the buyer and the seller will share the same understanding. Essentially, the terms included in the document are the purchase price, the deadline, the amount of money the buyer must submit as a deposit, the modes and terms of payments, and the list of items that are not included in the transaction.
Business Purchase Agreements hold one of the most important details during a business transaction. Therefore, the parties involved should review it carefully and with the guidance of a legal expert.
Who needs to use an Agreement to Sell Business?
Agreement to Sell Businesses are used by business owners, who refer to this form as the seller, to agree on what terms must be followed, including, but not limited to the following:
- Parties to the agreement
- Agreement to sell and purchase
- Restrictive covenants
- Warranties and indemnities
- Conditions precedent
- Post Completion
How to fill out an Agreement to Sell Business?
An Agreement to Sell Business or Purchase of Business Agreements is a form that is easy and simple to fill out. However, no matter how easy it is to fill out, it is still highly advisable that both the buyer and the seller review the stipulated terms carefully to ensure that the transaction will be smooth. Both parties could also hire legal advisers to ensure that all terms are fair and reasonable. Lastly, notaries may also be contacted to ensure that the agreement will be legally binding.
Complete the Preamble by filling out the Introductory Statement of the agreement. Provide the date of the agreement (day, month, year), the names of the parties involved (the buyer and the seller).
Item 1: Terms
Enter the agreed-upon amount to be paid for the total purchase of all fixtures, furnishings, and equipment that is payable in different terms such as
A: Amount Paid in Cash
Enter the agreed-upon amount to be paid in cash, certified bank checks, as a deposit. Enter the name of the person to hold the deposit.
B: Additional Amount to be Paid
Enter the agreed-upon additional amount to be paid in cash or certified bank checks at the time of passing papers.
C: Amount to be paid by a note of the Buyer to the Seller and the Interest rate
Enter the agreed-upon amount to be paid by a note of the Buyer to the Seller and the interest rate per annum with an option to repay the outstanding obligation without penalty. This section also states that the note shall be secured by a chattel mortgage and financing statement that covers the property to be sold together with all properties acquired during the term of the said note. Lastly, enter the location where the said note will be stored and placed.
Item 2: Property Sold
This item states that the property to be sold will be conveyed by a standard Bill of Sale which is duly executed by the seller.
Item 3: Title
This item states that the Seller promises and agrees to convey a clear and marketable title to all the property being sold. It also assures the buyer that the property is clear of all liens and encumbrances and that the property will be delivered in the same condition that it is during the agreement.
Item 4: Consummation of the Sale
Enter the date where the buyer would be obligated to hand over his down payment where the seller, on his part, binds himself to deliver the Bill of Sale or vice versa.
Item 5: Seller’s Use of Purchase Money
This item states that the seller may use the purchase money, or any portion of it to clear any encumbrances on the property being sold. Likewise, it states that if the documents that reflect discharge of said encumbrances are not yet available at the time of sale, the money needed to effectuate such discharges shall be held by the lawyer of the buyer and the seller as a bond for the pending charges.
Item 6: Noise
This item states that upon until the delivery of the Bill of Sale, the Seller should maintain insurance on said property in the same amount that it is presently insured.
Item 7: Operating Expenses
Enter the operating expenses of the property being sold including, but not limited to taxes, payroll, water, electricity, and rent. This section states that operating expenses shall be apportioned as of the date of passing of papers and the net amount thereof shall be added to, or deducted from, the proceeds due from the buyer once the Bill of Sale has been delivered by the Seller.
Item 8: Failure to Fulfill Obligations
This section states that if the buyer fails to fulfill his obligations, all deposits made by the buyer shall be retained by the seller as part of liquidated damages.
Item 9: Conditions
This item states that the seller agrees and promises not to engage in the same type of business as the one being sold for. Enter the type of business and the years the bond will take effect, as well as the radius that the bond covers.
Item 10: Broker’s Fee
Enter the professional fee that will be given by the seller and the name of the broker the seller will be giving the fee to if the papers pass.
Item 11: Agreement Conditions
This section states that the seller agrees that this agreement is contingent on the following:
- The buyer should obtain a lease on the said premises or that the existing lease is assigned to the buyer in writing.
- The buyer would obtain the approval from the proper authorities of the transfer of all necessary licenses to the buyer; and
- The premises shall be in the same condition as they are currently in on the date of passing. However, reasonable wear and tear may be expected and allowed.
Item 12: Binding
This section states that all the terms, representation, and warranties shall survive the closing and that it shall bind and take effect to the benefit of the Seller and the Buyer, their respective heirs, executors, administrators, successors, and assigns.
Item 13: Application Against Public Policy
This section states that if the agreement contains any term or provision that is against public policy, then the remainder of the Agreement shall not be affected and shall remain in full force and effect.
Enter the full and legal name of the seller.
Have the seller affix his or her signature.
Enter the full and legal name of the buyer.
Have the buyer affix his or her signature.
Enter the full and legal name of the broker.
Have the broker affix his or her signature.