Free Purchase of Business Agreement

Free Purchase of Business Agreement

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Purchase of Business Agreement

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Your Purchase of Business Agreement

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PURCHASE OF BUSINESS AGREEMENT

THIS PURCHASE OF BUSINESS AGREEMENT (the "Agreement") made and entered into this 21 October 2017 (the "Execution Date"),

BETWEEN:


____________________ of _________________________, _______________, ____________________ __________
(the "Seller")

OF THE FIRST PART

and


____________________ of _________________________, _______________, ____________________ __________
(the "Purchaser")

OF THE SECOND PART

BACKGROUND

  1. The Seller carries on the business of _________________________ at _________________________, _______________, ____________________ __________ in England (the "Business").
  2. The Seller owns the assets of the Business and desires to sell certain assets (the "Assets"), to the Purchaser, subject to any exclusions set out in this Agreement and the Purchaser desires to buy the Assets.

IN CONSIDERATION of the provisions contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the Parties agree as follows:

  1. Definitions
  2. The following definitions apply in the Agreement:
    1. The "Assets" to be included in this Agreement include all assets of the Business. There are no excluded assets. The Assets consist of the following:
    2. "Completion" means the completion of the purchase and sale of the Assets as described in this Agreement by the payment of agreed consideration, and the transfer of title to the Assets.
    3. "Parties" means both the Seller and the Purchaser and "Party" means any one of them.
    4. "VAT" means value added tax payable under the Value Added Tax Act 1994 and all related provisions, amendments, orders and regulations.
  3. Sale
  4. Subject to the terms and conditions of this Agreement, and in reliance on the representations, warranties, and conditions set out in this Agreement, the Seller agrees to sell the Assets to the Purchaser and the Purchaser agrees to purchase the Assets from the Seller.
  5. Purchase Price
  6. The Parties agree that the Purchase Price for the Assets will be allocated among the Assets as follows subject to required adjustments that are agreed upon by the Parties:

    Sub-Total

    £0.00

    VAT 0% (Reg. #:__________)

    £0.00

    Purchase Price

    £0.00

  7. The Parties agree to co-operate in making joint elections under any applicable tax legislation for submission to HM Revenue & Customs in order to give the required or desired effect to the allocation of the Purchase Price.
  8. The Seller and the Purchaser agree that the purchase and sale of the Business is a transfer of the Business as a going concern and should therefore not be considered as a supply of goods and services for the purposes of VAT according to Value Added Tax (Special Provisions) Order 1995 ("Article 5"). Both the Seller and the Purchaser will make all reasonable efforts to ensure that this Agreement conforms to this or any other VAT exemption to ensure that no amount of tax will be owing under VAT.
  9. Should HM Revenue and Customs determine that VAT is chargeable on the sale of the Assets, the Purchaser will pay to the Seller, within ten days of receiving written notice, the amount of VAT which HM Revenue and Customs determined was owing in exchange for a valid VAT invoice.
  10. Completion
  11. The Completion of the purchase and sale of the Assets will take place on 21 October 2017 (the "Completion Date") at the offices of the Seller or at such other time and place as the Parties mutually agree.
  12. At Completion and upon the Purchaser paying the Purchase Price in full to the Seller, the Seller will deliver the Assets to the Purchaser. The Seller will deliver to the Purchaser possession of the Assets, in the same condition as on the Execution Date, and free and clear of any liens, charges, rights of third parties, or any other encumbrances, except those attached as a result of the Purchaser's actions.
  13. At Completion and upon the Purchaser paying the Purchase Price in full to the Seller, the Seller will provide the Purchaser with duly executed forms and documents evidencing transfer of the Assets, where required including, but not limited to, bills of sale, assignments, assurances, and consents. The Seller will also co-operate with the Purchaser as needed in order to effect the required registration, recording, and filing with public authorities of the transfer of ownership of the Assets to the Purchaser.
  14. Payment
  15. The Purchase Price for the Assets will be paid by the Purchaser in one lump sum payment to the Seller in the form of a Banker's Draft or an electronic money or funds transfer. In the case of an electronic money or funds transfer, the Seller will give notice to the Purchaser of the bank account particulars at least 5 business days prior to the Completion Date.
  16. The Purchaser is responsible for paying all applicable taxes, including VAT, duties, and any other taxes or charges payable pursuant to the transfer of the Assets from the Seller to the Purchaser.
  17. Seller's Representations and Warranties
  18. The Seller warrants to the Purchaser that:
    1. The Seller has full legal authority to enter into and exercise its obligations under this Agreement.
    2. The Seller is the absolute beneficial owner of the Assets, with good and marketable title, free and clear of any liens, charges, encumbrances or rights of others. The Seller is exclusively entitled to possess and dispose of the Assets.
    3. To the best knowledge of the Seller there is no pending or anticipated claim against the Assets or against the Seller's ownership or title in the Assets or against the Seller's right to dispose of the Assets.
    4. No third party contract is outstanding that could result in a claim against or affecting the Assets in whole or in part either now or in the future.
    5. The Business does not have any outstanding contracts, agreements, or commitments of any kind, written or oral, with any third party regarding the Assets, except for any material contracts described in, and/or attached to this Agreement. The Seller warrants that no material default or breach exists with regard to any presently outstanding material contract.
    6. Execution of this Agreement will not hinder or unfairly disadvantage any pre-existing creditor.
    7. Except as otherwise provided in this Agreement, there has been no act or omission by the Seller that would give rise to any valid claim relating to a brokerage commission, finder's fee or other similar payment.
    8. The Business has withheld all amounts required to be withheld under income tax legislation and has paid all amounts owing to the proper authorities.
    9. Other than any requirement to make National Insurance contributions, the Business is not bound by any written or oral pension plan or collective bargaining agreement or obligated to make any contributions under any retirement income plan, deferred profit sharing plan or similar plan.
    10. The Business will not dismiss any current employees or hire any new employees, or substantially change the role or title of any existing employees, provide unscheduled or irregular increases in salary or benefits to employees, or institute any significant changes to the terms of any employee's employment, after signing this Agreement, unless the Purchaser provides written consent.
    11. There are no claims threatened or pending against the Business by any current or past employee relating to any matter arising from or relating to the employment of the employee.
    12. The Business has informed and consulted with the appropriate representatives of any affected employees as required by the Transfer of Undertakings (Protection of Employment) Regulations with respect to the specific transfer of business as described by this Agreement.
    13. The Assets, while owned by the Seller, have been maintained at all times in accordance with standard industry practice. The Seller further warrants that all tangible assets are in good working order.
    14. The Business is operating in accordance with all applicable laws, rules, and regulations of the jurisdictions in which it is carried on. In compliance with such laws, the Seller has duly licensed, registered, or qualified the Business with the appropriate authorities and agencies.
    15. The Business maintains insurance policies on the Assets and such policies are in full force and effect and of an adequate value as would be reasonable in its industry. The Business has neither defaulted under these insurance policies, whether as a result of failure to pay premiums or due to any other cause, nor has the Business failed to give notice or make a claim under these insurance policies in a timely manner.
    16. The conduct of the Business does not infringe on the patents, trademarks, trade names or copyrights, domestic or foreign of any other person, firm or corporation to the best knowledge of the officers of the Business.
    17. The Business owns or is licensed to use all necessary software and it can continue to use any and all computerised records, files and programs after the Completion Date in the same manner as before the Completion Date.
    18. The Business has submitted all tax reports and returns required in the operation of the Business and has paid all taxes owed to all taxing authorities, including foreign taxing authorities, except amounts that are being properly contested by the Seller, the details of this contest having been provided to the Purchaser.
    19. This Agreement has been duly executed and delivered by the Seller and constitutes a legal and binding obligation of the Seller, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy and insolvency, by other laws affecting the rights of creditors generally, and by equitable remedies granted by a court of competent jurisdiction.
  19. The warranties given in this Agreement are the only warranties. No other representation or warranty, either expressed or implied, has been given by the Seller to the Purchaser, including, without limitation, any representations or warranties regarding the merchantability of the Assets or their fitness for a particular purpose.
  20. The Seller warrants to the Purchaser that each of the warranties made by it is accurate and not misleading at the Completion Date. The Seller acknowledges that the Purchaser is entering into this Agreement in reliance on each warranty.
  21. The Seller's warranties will survive the Completion Date of this Agreement.
  22. Where the Purchaser has a claim against the Seller relating to one or more warranties made by the Seller, the Seller will have no liability to the Purchaser unless the Purchaser provides notice in writing to the Seller containing full details of the claim on or before the third anniversary of the Completion Date.
  23. Where the Purchaser has a claim against the Seller relating to one or more warranties made by the Seller, and the Purchaser is entitled to recover damages from a third party then the amount of the claim against the Seller will be reduced by the recovered or recoverable amount less all reasonable costs incurred by the Purchaser in recovering the amount from the third party.
  24. Purchaser's Representations and Warranties
  25. The Purchaser warrants to the Seller the following:
    1. The Purchaser has full legal authority to enter into and exercise its obligations under this Agreement.
    2. The Purchaser has funds available to pay the full Purchase Price and any expenses accumulated by the Purchaser in connection with this Agreement and the Purchaser has not incurred any obligation, commitment, restriction, or liability of any kind, absolute or contingent, present or future, which would adversely affect its ability to perform its obligations under this Agreement.
    3. The Purchaser has not committed any act or omission that would give rise to any valid claim relating to a brokerage commission, finder's fee, or other similar payment.
    4. This Agreement has been duly executed by the Purchaser and constitutes a legal and binding obligation of the Purchaser, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy and insolvency, by other laws affecting the rights of creditors generally, and by equitable remedies granted by a court of competent jurisdiction.
    5. The Purchaser has no knowledge that any warranty given by the Seller in this Agreement is inaccurate or false.
  26. The warranties given in this Agreement are the only warranties. The Purchaser has given no other warranty, either expressed or implied, to the Seller.
  27. The Purchaser warrants to the Seller that each of the warranties made by it is accurate and not misleading at the date of Completion. The Purchaser acknowledges that the Seller is entering into this Agreement in reliance on each warranty.
  28. The Purchaser's warranties will survive the Completion Date of this Agreement.
  29. Where the Seller has a claim against the Purchaser relating to one or more warranties made by the Purchaser, the Purchaser will have no liability to the Seller unless the Seller provides notice in writing to the Purchaser containing full details of the claim on or before the third anniversary of the Completion Date.
  30. Where the Seller has a claim against the Purchaser relating to one or more warranties made by the Purchaser, and the Seller is entitled to recover damages from a third party then the amount of the claim against the Purchaser will be reduced by the recovered or recoverable amount less all reasonable costs incurred by the Seller in recovering the amount from the third party.
  31. Conditions Precedent to be Performed by the Purchaser
  32. The obligation of the Seller to complete the sale of the Assets under this Agreement is subject to the satisfaction of the following conditions precedent by the Purchaser, on or before the Completion Date, each of which is acknowledged to be for the exclusive benefit of the Seller and may be waived by the Seller entirely or in part:
    1. All of the warranties made by the Purchaser in this Agreement will be true and accurate in all material respects on the Completion Date.
    2. The Purchaser will obtain or complete all forms, documents, consents, approvals, registrations, declarations, orders, and authorisations from any person or any governmental or public body, required of the Purchaser in connection with the execution of this Agreement.
    3. The Purchaser will provide to the Seller a certificate from an officer of the Purchaser confirming to the best of their knowledge, information and belief (after due inquiry), the truth and correctness in all aspects of those warranties given by the Purchaser in this Agreement.
  33. Conditions Precedent to be Performed by the Seller
  34. The obligation of the Purchaser to complete the purchase of the Assets under this Agreement is subject to the satisfaction of the following conditions precedent by the Seller, on or before the Completion Date, each of which is acknowledged to be for the exclusive benefit of the Purchaser and may be waived by the Purchaser entirely or in part:
    1. All of the warranties made by the Seller in this Agreement will be true and accurate in all material respects on the Completion Date.
    2. The Seller will obtain and complete any and all forms, documents, consents, approvals, registrations, declarations, orders, and authorisations from any person or governmental or public body that are required of the Seller for the proper execution of this Agreement and transfer of the Assets to the Purchaser.
    3. No substantial damage to or alteration of the Assets that would adversely affect their value will occur between the date this Agreement is signed and the Completion Date.
    4. The Seller will have obtained any necessary consents for assigning any leases to the Purchaser as well as providing certificates from such owners or landlords that there are no arrears of rent, no breaches under such leases and the amount of the security deposits held by such third parties.
    5. The Seller will execute and deliver bills of sale for the Assets in favor of the Purchaser.
    6. The Seller will provide the Purchaser with complete information concerning the operation of the Business, in order to put the Purchaser in a position to carry on in the place of the Seller.
    7. The Seller will provide to the Purchaser: (a) a certificate from an officer of the Seller confirming to the best of their knowledge, information and belief (after due inquiry), the truth and correctness in all aspects of those warranties given by the Seller in this Agreement; and/or (b) a disclosure letter detailing any exceptions, qualifications or changes to the subject matter of the warranties given by the Seller in this Agreement.
  35. Conditions Precedent Not Satisfied
  36. If either Party fails to satisfy any of its conditions precedent as set out in this Agreement on or before the Completion Date and that condition precedent was not waived, then this Agreement will be null and void  and there will be no further liability as between the Parties.
  37. Disclosure
  38. Upon the reasonable request of the Purchaser, the Seller will, from time to time, allow the Purchaser and its agents, advisors, accountants, employees, or other representatives to have reasonable access to the premises of the Business and to all of the books, records, documents, and accounts of the Business, during normal business hours, between the date of this Agreement and the Completion Date, in order for the Purchaser to confirm the representations and warranties given by the Seller in this Agreement.
  39. Employees
  40. The Transfer of Undertakings (Protection of Employment) "TUPE" Regulations will apply to this Agreement so that the contracts of employment for all employees will have effect as from the Completion Date as if the contracts of employment had been made between the Purchaser and the employees.
  41. The Business has maintained complete and accurate records of employment for each of its employees in accordance with its statutory and regulatory requirements including, but not limited to, periods of employment, all payments including salary, sick pay and maternity pay, income tax and national insurance contributions, and any documentation relating to disciplinary issues, health and safety issues and termination of employment.
  42. The Seller will indemnify the Purchaser against any claim originating or relating to the employment of any of the employees during the period of employment up to and including the Completion Date including claims related to any failure on the part of the Seller to comply with the duties and obligations of the Transfer of Undertakings (Protection of Employment) Regulations.
  43. The Purchaser will indemnify the Seller against any claim originating or relating to the employment of any of the employees for the period of employment starting the day after the Completion Date including claims related to any failure on the part of the Purchaser to comply with the duties and obligations of the Transfer of Undertakings (Protection of Employment) Regulations.
  44. The Seller will be solely responsible for the following costs incurred or owed up to and including the Completion Date: any employee remuneration including all salaries, benefits, bonuses, statutory and regulatory contributions or other remuneration owed to employees. The Seller will be responsible for paying out all holidays, sick days, personal days and other compensated time off accrued by all employees up to and including the Completion Date.
  45. The Purchaser will be solely responsible for the following costs incurred or owed after the Completion Date: any employee remuneration including all salaries, benefits, bonuses, statutory and regulatory contributions or other remuneration owed to employees.
  46. To the best of the Seller's knowledge, information and belief no labour dispute or litigation is currently in progress, pending or threatened involving the employees of the Business that would interfere with the normal productivity or operation of the Business.
  47. VAT
  48. The Purchaser will have no liability and does not assume any duties or responsibilities for any claims or liability relating to unpaid VAT owing on any sales or services provided through the Business for the period up to and including the Completion Date. The Seller will indemnify the Purchaser against any such claims or liability.
  49. Rights of Third Parties
  50. A person who is not a party to this Agreement will have no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any of the terms of this Agreement.
  51. Non-Assumption of Liabilities
  52. It is understood and agreed between the Parties that the Purchaser is not assuming and will not be liable for any of the liabilities, debts or obligations of the Seller arising out of the ownership or operation of the Business prior to and including the Completion Date.
  53. The Seller will indemnify and save harmless the Purchaser, its officers, directors, employees, and agents from and against all costs, expenses, losses, claims, and liabilities, including reasonable legal fees and disbursements, or demands for income, sales, excise or other taxes, suffered or incurred by the Purchaser or any of the above mentioned persons arising out of the ownership or operation of the Business prior to and including the Completion Date.
  54. Transfer of Third Party Contracts
  55. This Agreement is not to be construed as an assignment of any third party contract from the Seller to the Purchaser if the assignment would be a breach of that third party contract.
  56. The Purchaser will be solely responsible for acquiring new contracts with third parties where the existing contracts are not legally assignable from the Seller to the Purchaser.
  57. Notwithstanding any other provision in this Agreement to the contrary, the Seller will not be liable for any losses, costs or damages of any kind including loss of revenue or decrease in value of the Business resulting from the failure of the Purchaser to acquire any third party contracts.
  58. Notices
  59. Any notices or deliveries required in the performance of this Agreement will be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the Parties at the addresses contained in this Agreement or as the Parties may later designate in writing.
  60. Expenses/Costs
  61. The Parties agree to pay all their own costs and expenses in connection with this Agreement.
  62. Severability
  63. The Parties acknowledge that this Agreement is reasonable, valid, and enforceable; however, if any part of this Agreement is held by a court of competent jurisdiction to be invalid, it is the intent of the Parties that such provision be reduced in scope only to the extent deemed necessary to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected or invalidated as a result.
  64. Where any provision in this Agreement is found to be unenforceable, the Purchaser and the Seller will then make reasonable efforts to replace the invalid or unenforceable provision with a valid and enforceable substitute provision, the effect of which is as close as possible to the intended effect of the original invalid or unenforceable provision.
  65. Governing Law
  66. This Agreement will be governed by and construed in accordance with the laws of England.
  67. The courts of England will have jurisdiction to decide and settle any dispute or claim arising out of or in connection with this Agreement.
  68. General Provisions
  69. This Agreement contains all terms and conditions agreed to by the Parties. Statements or representations which may have been made by any Party to this Agreement in the negotiation stages of this Agreement may in some way be inconsistent with this final written Agreement. All such statements are declared to be of no value to either Party. Only the written terms of this Agreement will bind the Parties.
  70. This Agreement may only be amended or modified by a written instrument executed by all of the Parties.
  71. A waiver by one Party of any right or benefit provided in this Agreement does not infer or permit a further waiver of that right or benefit, nor does it infer or permit a waiver of any other right or benefit provided in this Agreement.
  72. This Agreement will not be assigned either in whole or in part by any Party without the written consent of the other Party.
  73. This Agreement will pass to the benefit of and be binding upon the Parties' respective heirs, executors, administrators, successors, and permitted assigns.
  74. The clauses, paragraphs, and subparagraphs contained in this Agreement are intended to be read and construed independently of each other. If any part of this Agreement is held to be invalid, this invalidity will not affect the operation of any other part of this Agreement.
  75. All of the rights, remedies and benefits provided in this Agreement will be cumulative and will not be exclusive of any other such rights, remedies and benefits allowed by law or equity.
  76. Time is of the essence in this Agreement.
  77. This Agreement may be executed in counterpart.
  78. Headings are inserted for the convenience of the Parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.

IN WITNESS WHEREOF the Parties have duly affixed their signatures under hand and seal on this 21 October 2017.

 



_______________________________
__________________________(Seller)

 



_______________________________
__________________________(Purchaser)

Purchase of Business Agreement Information

A Purchase of Business Agreement is a document used to transact the sale of a business between two parties (a buyer and a seller).

Depending on the type of business and the type of transaction, this document could serve as a:

  • Business Sale Agreement
  • Share Purchase Agreement
  • Asset Purchase Agreement
  • Business Transfer Agreement

LawDepot's Purchase of Business Agreement may be used in England, Wales, Northern Ireland, and Scotland.

Who needs a Purchase of Business Agreement?

You may need a business sale agreement if you:

  • Own a business and will be selling assets or shares
  • Are purchasing an existing business
  • Are purchasing certain assets of a business
  • Are transacting a merger and acquisition

What information is in a Purchase of Business Agreement?

A Purchase of Business Agreement includes information such as:

  • Buyer and seller details
  • Property specifications
  • Payment terms and options
  • Clauses and warranties
  • Assumed liabilities
  • Representations and warranties
  • Conditions precedent
  • Dispute resolution, and more

When creating your Purchase of Business Agreement, you can customise it by only selecting the options that are relevant to you and your business acquisition.

What are business assets and shares?

When transacting the purchase of a business, you will need to determine if you are purchasing or selling shares or assets.

Shares in a business are percentages of the whole. Shares entitle you to a portion of the profit of the business, but don't necessarily allow you to have authority over the business itself. If you have controlling shares in a company, such as 51% or higher, you have the ability to make decisions for the company.

Assets include inventory, resources, property, and contracts. You can choose to purchase all assets, or exclude those that you do not wish to purchase. When purchasing assets, they do not give you control over the business.

How can a Purchase of Business be paid off?

After deciding upon a price for the business, payment terms will need to be negotiated.

If the balance will not be paid in full on the date that the contract is signed, you will need to determine a closing date, and choose whether or not a deposit will be required. It is recommended that, if the balance will be paid at a later date, you use a promissory note to document the amount owing and the due date.

Payment options include:

  • Lump sum payment of outstanding amount. This means that the balance will be paid in full on the closing date.
  • Lump sum plus promissory note for the outstanding amount. This means that the buyer will put a deposit down on the balance, and will owe the rest as per the terms of a promissory note.
  • Promissory note for outstanding amount. This means that no deposit will be made and the balance will be paid as per the terms of a promissory note.

Documents Related to a Purchase of Business Agreement:

  • Promissory Note: a document used to detail a balance owing between a buyer and a seller
  • Partnership Agreement: used to specify the responsibilities of each partner in a for-profit business relationship

Frequently Asked Questions:

Purchase and Sale of Business FAQ
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