Contract for Sale of Business
Generally, an intermediary draws up the sale contract (except in NSW where a solicitor does it). Most small business owners will ask a solicitor to review the contract, and the contract will also be checked by the buyer’s solicitor.
- all the relevant assets that are being transferred, including property, equipment, fixtures, fittings, stock, and any rights to use any names
- all the relevant liabilities, including creditors (people or businesses that your business owes money to) and the lease of the business premises
- responsibility for employees and employee entitlements, including whether employees are to be transferred with the sale (if the new owner isn’t an ‘associated entity’ – related to the old business in some way – they don’t have to recognise some entitlements)
- statements about what will happen if any issues arise (for example, the buyer decides not to proceed, inaccuracies are discovered in the contract, etc)
- any restrictions on trading in your profession after the sale (to prevent you from competing directly against the new owner).
Contract for Sale of Business; includes:
- Deferred consideration
- Post completion obligations
- Assignment of Contracts
- Restrictive covenants
- General provisions plus 5 Schedules:
- Schedule 1 – Warranties
- Schedule 2 – The Shareholders
- Schedule 3 – Apportionment of consideration
- Schedule 4 – Moveable assets
- Schedule 5 – The contracts
28 pages long.