Business Sale Contract
The following is a sample of a good business sale contract:
This Contract made on ______ [date] between __________[name] doing business as______[name] of _______[address] (hereinafter referred to as "Seller") and ______[name] of ________[address] (hereinafter referred to as the "Buyer") (collectively "the Parties").
PURCHASE AND SALE
1.01. In consideration of the mutual promises and conditions contained in this Contract, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, on the terms, conditions, warranties and representations describe in this Contract:
(a) the business owned by Seller, being conducted under _________[his or her or its] name, located at ________________________________________________[address] ("the Business");
(b) all of the stock in trade, inventory, and merchandise of the Business as described in Attachment "A" attached to this Contract:
(c) all of the fixtures, equipment, and other tangible assets of the Business as shown on attached Attachment "B";
(d) any leasehold interest owned by Seller under the lease for the premises where the Business is located; and
(e) all the trade, business name, goodwill, and other tangible or intangible assets of the Business.
(f) All commercial real property and fixtures thereto.
ALLOCATION OF PURCHASE PRICE
2.01. The total purchase price to be paid by Buyer to Seller for all the properties, assets and rights of the Business described in this Contract ("Purchase Price") will be
2.02. The Purchase Price is allocated as follows:
$______________ Fixtures and Equipment
$______________ Goodwill, Trade Name(s) and Other Real Assets
$______________ Leasehold Improvements
$______________ Non-competition Provision
$_____________ Real Property
PURCHASE PRICE PAYMENT TERMS
3.01. The Purchase Price will be paid as follows:
(a) $_____ has already been paid to the Seller by the Buyer:
(b) the sum of $_____ in cash, cashier's check or the equivalent, will be paid at Closing, as defined in SECTION IV, below;
(c) the balance of the Purchase Price will be paid by delivery from the Buyer to the Seller by a promissory note executed in favor of the Seller by the Buyer in the form attached as Attachment "C" for $_____ that will bear interest from the date of its execution at _________ percent per year and be payable in monthly installments beginning on or before _________[date] in the monthly amount of $_____ each and the execution by Seller of all written instruments required by Buyer. This note will be secured by a Security interest upon the assets of the Business.
4.01. The closing of the sale of the Business ("the Closing") will take place at the law firm of _________, located at _________[address], on or before _________[date], or at another place and date as the Parties agree to in writing.
4.02. At the closing the Seller will:
(a) deliver clear and marketable title and ownership to Buyer of all the assets of the business subject to this Contract;
(b) execute the Bill of Sale attached as Attachment "D" to this Contract;
(c) execute the Assignment of Assumed Name Certificate attached as Attachment "E" to this Contract; and
(d) execute any other documents necessary to complete this Contract.
(e) have arranged for the closure of any needed escrow for the transfer of any commercial real property included in this transaction.
4.03. At the closing the Buyer will:
(a) pay all remaining moneys owed to Seller; and
(b) execute any other documents necessary to finalize this Contract.
REPRESENTATIONS, WARRANTIES, COVENANTS AND CONTRACTS BY SELLER
5.01. Seller agrees, warrants and represents to Buyer that:
(a) the financial records for the Business, previously inspected by Buyer, contain a complete record and account of the financial affairs of the Business and truthfully set forth all liabilities, assets and other affairs pertaining to the fiscal or financial condition of this Business through the date of inspection and furthermore, that there have been no material changes in the financial condition of this Business since that time except for transactions normal to this Business;
(b) Seller is the lawful owner of this Business and has the legal right and authorization to sell it. At the time of signing this Contract, Seller neither knows nor has reason to know of the existence of any outstanding claim or title, or interest, or lien in, to, or on this Business except as shown on the financial records of this Business inspected by Buyer;
(c) all fixtures and equipment sold pursuant to this Contract are free and clear of any lien (including UCC financing statements) and/or debt unless otherwise set forth in a written statement from Seller to Buyer;
(d) Seller owes no obligations and has Contracted no liabilities affecting this Business or which might affect the the purchase and sale of the business as described in this Contract that are not shown on the financial records inspected by Buyer and that have not been disclosed to Buyer;
(e) there are no taxes due and owing on account of Seller's operation of the Business for unemployment compensation, withholding tax, social security tax, sales tax, personal property tax, franchise tax, income tax, and other taxes except as shown on the financial records of this Business inspected by Buyer;
(f) any accounts payable due and owing as of the Closing will remain the responsibility of Seller and will be paid without delay as they become due and payable;
(g) no litigation, actions or proceedings, legal, administrative, through arbitration or otherwise, including but not limited to lawsuits, claims or disputes with employees, customers and vendors, etc., are pending or threatened that could affect this Business, the assets being purchased, or the consummation of the purchase and sale described in this Contract;
(h) Seller agrees to indemnify and hold Buyer harmless from any and all claims, causes of actions, damages, or debts, including legal fees, resulting from any actions, occurrences or issues occurring prior to the Closing;
(i) all mechanical equipment sold pursuant to this Contract is in good working condition; and
(j) Seller will provide to Buyer _________ weeks of full-time training in the operations of the Business.
(k) That all commercial real property involved in this transaction is unencumbered, free of liens unless expressly named in writing to Buyer and that the title is free and clear.
REPRESENTATIONS, WARRANTIES AND CONTRACTS BY BUYER
6.01. Buyer agrees and warrants and represents to Seller that Buyer will duly notify all authorities, suppliers, creditors, and/or other entities that Buyer is to be responsible for all liabilities associated with the operation of the Business, including without limitation withholding taxes, social security taxes, unemployment contributions, wages, and purchases incurred after the Closing, and Buyer agrees to assume such liabilities as of the Closing.
COMPLIANCE WITH BULK SALES LAW
7.01. At the Closing, Seller will deliver to Buyer a sworn list of all existing creditors of the Business.
7.02. By reason of this list Seller and Buyer agree that notice to creditors under the Bulk Sales law of _________[state] will not be required and need not be given except in regard to any creditors named on this list.
7.03. Any such debt, unless otherwise provided for in this Contract, is to be paid solely by Seller, and Seller does indemnify and hold Buyer harmless from any and all loss, expense, damage or liability, including legal fees, that Buyer may incur or become subject to by reason of noncompliance with the Bulk Sales law.
TRADE NAME, TELEPHONE NUMBER AND POST OFFICE BOX
8.01. Seller assigns to Buyer the exclusive right to use the trade or business name and Seller agrees not to use, or authorize others to use, this name or a similar name in the State of _________. Any trademarks or service marks, whether registered with the United States Patent and Trademark office or simply owned by common law ownership as established by Federal or State law, will be transferred to the sole ownership of Buyer and Seller agrees to execute any needed documents to affect transfer of ownership. All other intellectual property relating to the business is also transferred to the sole ownership of the Buyer, including trade secrets, customer lists, business designs, business plans and all intellectual property of any nature.
8.02. Seller agrees to allow Buyer to assume the Business telephone number, current advertising arrangements, including "Yellow Pages Advertising," and the Post Office Box, if any, currently used by the Business for a mailing address.
DELIVERY OF BOOKS, DOCUMENTS AND RECORDS
9.01. All books, records, files, documents and papers, including customer lists and all records of the accounts of customers used in the operation of or relating to the Business will be transferred and delivered to Buyer at the Closing.
9.02. All of these books, records, files, documents and papers will be available to Seller at any reasonable time for any proper purpose, and Seller has the right to freely examine and to copy all such materials prior to closing.
NONASSUMPTION OF LIABILITIES
10.01. Unless otherwise expressly provided for in this Contract, the liabilities and obligations incurred by Seller prior to the Closing are not assumed by Buyer but continue as liabilities and obligations of Seller and will be paid by Seller.
10.02. In the event Buyer is required to pay after the Closing any valid lien, debt, or expense incurred by Seller prior to the Closing Date, Buyer will have the right to offset any such lien, debt, or expense actually paid by Buyer, which is the legal responsibility of the Seller, against any payment owed to Seller by Buyer.
INDEMNIFICATION OF SELLER
11.01. Buyer will indemnify and hold Seller and the property of Seller free and harmless from any and all claims, losses, damages, injuries and liabilities arising from or in connection with the operation of the Business after the Closing.
12.01. There will be prorated between Seller and Buyer on the basis of 30 days per month as of 12:01 a.m. Central Standard Time on the date of the Closing all property taxes, rent, insurance premiums, and utility bills, etc.
13.01. After execution of this Contract by the Parties, default will consist in the failure of either party to perform its respective obligations and duties and/or a breach of a warranty or covenant in this Contract.
13.02. In the event of default of either party, Seller or Buyer will have the right to sue for specific performance and/or sue for damages in addition to any other relief provided in this Contract or attached Exhibits. In a suit for default, reasonable attorney fees will be recoverable by the prevailing party.
COSTS AND EXPENSES
14.01. All costs and expenses incurred in finalizing the purchase and sale described in this Contract in the manner prescribed by this Contract will be paid by Buyer and Seller in the following manner:
(a) Buyer and Seller agree to jointly retain an attorney to prepare the Closing documents and be equally responsible for the attorney fees and expenses incurred in preparation of these documents. This sum will be due and payable at Closing. Should either party retain an additional attorney to review the documents necessary for the transfer of the Business, the attorney fees so incurred will be the responsibility of the party retaining the attorney.
(b) Any other Closing costs and expenses will be paid at the Closing by the Parties, Buyer and Seller, in equal proportions.
15.01. The Seller expressly agrees that for a period of _________ years following the execution of this Contract, he will not, directly or indirectly, as an employee, agent, proprietor, partner, stockholder, officer, director, or otherwise, render any services to, or on he own behalf engage in or own a part or all of any business which is the same as, similar to, or competitive with the Business, which is being sold to Buyer, anywhere within a _________-mile radius from the current location of the Business that is being sold without the prior written consent of the Buyer.
15.02. The Seller will not for a period of _________ years immediately following the execution of this Contract, regardless of any reasons or cause, either directly or indirectly:
(a) make known to any person, firm or corporation the names and addresses of any of the customers of the Seller or Buyer or any other information pertaining to them; or
(b) call on, solicit, or take away, or attempt to call on, solicit, or take away any of the customers of the Seller on whom the Seller called or with whom he became acquainted during ownership of this Business either for Seller or for any other person, firm or corporation.
15.03. Should Seller violate any paragraph of this SECTION, any remaining amounts now due, or which will become due, from Buyer to Seller will be considered paid in full as liquidated damages.
GENERAL AND ADMINISTRATIVE PROVISIONS
16.01. Parties Bound. This Contract will be binding upon and inure to the benefit of the Parties to this Contract and their respective heirs, executors, administrators, legal representatives, successors and assigns.
16.02. Assignment. The Seller will have no right to transfer or assign _________[his or her] interest in this Contract without the prior written consent of the Buyer.
16.03. Corporate Authority. If any party to this Contract is a legal entity (partnership, corporation, limited liability company and/or trust), such party represents to the other that this Contract, the transaction contemplated in this Contract, and the execution and delivery hereof, have been duly authorized by all necessary partnership, corporate, LLC or trust proceedings and actions, including without limitation the action on the part of the directors, if the party is a corporation, or members or managers, if the party is a LLC. Certified copies of such corporate or other resolutions authorizing this transaction will upon request be delivered at the Closing.
16.04. Use of Pronouns. The use of the neuter singular pronoun to refer to the Parties described in this Contract will be deemed a proper reference even though the Parties may be an individual, a partnership, a corporation, a LLC, or group of two or more individuals, partnerships, corporations or LLCs. The necessary grammatical changes required to make the provisions of this Contract apply in the plural sense where there is more then one party to this Contract, and to either corporations, LLCs, partnerships or individuals, males or females, will in all instances be assumed as though in each case fully expressed.
16.05. _________[State] Law. This Contract will be subject to and governed by the laws of the State of _________ applicable to Contracts made and performed entirely therein. Any and all obligations or payments are due and payable in _________[city], _________[county], _________[state].
16.06. Severability. If any provision of this Contract should, for any reason, be held in violation of any applicable law, and so much of this Contract be held unenforceable, then the invalidity of such a specific provision in this Contract will not be held to invalidate any other provisions in this Contract, which other provisions will remain in full force and effect unless removal of the invalid provisions destroys the legitimate purposes of this Contract, in which event this Contract will be canceled.
16.07. Entire Contract. This Contract represents the entire understanding of the Parties hereto. There are no oral Contracts, understandings, or representations made by any party to this Contract that are outside of this Contract and are not expressly stated in it.
16.08. Notices. All notices or other communications required or permitted to be given pursuant to this Contract will be in writing and will be considered as properly given if mailed from within the United States by first class mail, postage prepaid, and addressed as follows:
A party may change the address for notice by giving of such change to the other party in writing.
SIGNED, ACCEPTED, AND AGREED TO on _________[date] by the undersigned Parties, who acknowledge that they have read and understand this Contract and the Attachments and Schedules to it and they execute this legal document voluntarily and of their own free will.
Seller’s Signature: ____________________________________
Buyer’s Signature: ____________________________________
State of ________________________
County of ______________________
This instrument was acknowledged before me on _________________________[date],
by _______________________________________[name of person giving the
Notary Public's Signature: ______________________________
[Notary's typed or printed name]
NOTARY PUBLIC FOR THE STATE OF ____________________
(Seal) My commission expires: _______________________
List all of the stock in trade, inventory, and merchandise of the Business and name
Attach Attachment "A" to this Contract.
List all of the fixtures, equipment, and other tangible assets of the Business and name
Attach Attachment "B" to this Contract.
If a promissory note is executed, name Attachment "C"
Attach Attachment "C" to this Contract.
Attach bill of sale to this Contract as Attachment "D"