Business Purchase Agreement with Guarantee
This month a business purchase agreement with a guarantee has been added to the portfolio of business sale templates.
Business or asset sale agreements are where the buyer is acquiring the assets which make up the business and not the shares in a company. These assets can be both tangible (property, land, plant, equipment and stock) and intangible (intellectual property and goodwill). Guarantees are often given at the request of the buyer and are a way of adding extra comfort that the buyer is buying the assets or business that they expect.
The guarantor under this BPA guarantees:
· the due and punctual performance of the seller’s obligations;
· that every statement, warranty or disclosure is true and accurate; and
· that it will indemnify the buyer against all costs caused by the seller’s failure to comply with the term of the BPA.
Giving a guarantee is a potentially serious legal and financial obligation, however, as with any guarantee, it is only as good as the identity of the guarantor and it is important for the buyer to satisfy themselves as to this and the guarantor’s knowledge and association with the assets being sold and the seller. The guarantee in this template has been drafted to be limited in time and amount.
As with our standard BPA template, this template is a short form document designed for a relatively simple transaction, with short form warranties and no tax provisions (other than limited VAT provisions). It is essential that before embarking on a business sale, customers take all necessary legal, tax and financial advice.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.