Business Purchase Contracts

Business purchase agreements document the terms of transfer of a business from seller to buyer. These terms include not just price and assets transferred, but many other important things that may not seem obvious at first glance.

 

Key elements of a business sales agreement typically include:

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Identification of the Parties:

This specifies the names and addresses of the buyer and seller involved in the transaction. This is an often overlooked but very important element in making a contract enforceable and collectable in case of a dispute.

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Description of the Business:

The agreement specifies the business being sold, including its name, location, and any other identification details to avoid ambiguity. This section may also include a general description of the business operations, products or services offered, and other relevant information.

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Price and Payment:

This important section specifies the agreed price for the business which may include details about the currency, how the purchase price should be applied, and any payment terms.

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Assets Included:

This section lists all assets included in the sale, such as any equipment, inventory, intellectual property rights, real estate, and any other tangible or intangible assets owned by the business.

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Liabilities:

This covers an agreement on which liabilities, if any, the buyer will assume as part of the business purchase (e.g., debts, contracts, or leases).

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Representations and Warranties:

Both parties provide assurances about their authority and the business. This might include:

• Seller assurances that the business is in compliance with legal regulations.

• Buyer assurances of the ability to complete the purchase.

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Transition Periods:

If the seller will help the buyer transition, details about training, support, or consulting services during the handover are often included.​

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Business purchase contracts contain many other important topics that are crucial to the success of the purchase because they provide a legal framework that protects both buyers and sellers. These clauses help to ensure that all parties understand their obligations and rights, which can help to prevent disputes and misunderstandings later on. 

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Ensuring that any business purchase contract is in written form is important for a business for several reasons:

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Clarity and Preciseness:

A written contract precisely documents the obligations and expectations of all parties involved, reducing potential confusion or misconceptions. A written contract keeps an official record of exactly what was agreed upon, including specific details which may be lost, overlooked, or misremembered in a verbal arrangement.

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Legal Enforceability:

In Oregon, certain types of sales contracts must be in writing to be legally enforceable. A sales contract provides clear evidence of the agreement's terms if a dispute arises and ends up in court.

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Risk Reduction:

A written sales contract can help to prevent misunderstandings and misinterpretations that could jeopardize a business's operations or financial well-being.

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Protection of Rights:

A written sales contract can be used to secure the rights of all parties involved. It details the conditions of the agreement, including terms of payment, delivery, product quality assurances, and dispute resolution mechanisms.

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Professionalism:

Providing a written sales contract demonstrates the business's commitment to professionalism and ethical conduct. It can also contribute to stronger, more trusted relationships with customers and partners.

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In sum, although drafting a written contract may require time and effort, it provides vital legal protection and clarity for a business's transactions, making it a fundamental requirement for any thorough business strategy.

Hiring INTELLEQUITY to draft or review your business purchase agreement is beneficial for several reasons:

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Experience and Expertise:

We are trained to understand contractual language and the potential implications of each clause. This expertise allows them to draft contracts that are precise, comprehensive, and clear, reducing the potential for misunderstandings.

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Tailored Contracts:

Each business transaction is unique. We can tailor the contract to your specific situation, and to your needs and goals, ensuring that the purchase suits you.

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Legal Compliance:

INTELLEQUITY can ensure that your sales contract is compliant with local, state, federal, or international laws and regulations.

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Risk Mitigation:

We can identify potential legal pitfalls and risks within the sales agreement. I can revise or draft provisions in the contract to minimize these risks.

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Protection of Rights and Interests:

INTELLEQUITY will ensure that your rights and interests are adequately protected. Whether it’s ensuring that all obligations are spelled out clearly, your liability is limited, or that payment terms are sufficient, I can suggest the best ways to protect your interests.

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Negotiation:

We can assist with negotiation of the terms of the agreement. I can advise you on what terms might be negotiated, what the norm is in your industry or what provisions are most important or work best for your business.

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Dispute Resolution:

We can determine the best dispute resolution clauses for your agreement, which can save time and money if there is a disagreement in the future.

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In short, hiring us to draft or review your business purchase contract can provide a layer of protection to you and your business, helping to prevent future disputes, comply with laws, and address potential shortcomings in your agreement. INTELLEQUITY can help you do all this and more. Feel free to call us for more information or book a consult today!