COVID-19 has substantially increased the legal and business risks involved
in any sale taking place during the pandemic. This month two new business
purchase agreements (BPAs) have been added been to the business sale
templates, which both include additional warranties to cover the business
fallout and uncertainty created by the pandemic.
Based on our standard form BPA and BPA with a guarantee, these
templates include additional warranties that consider the important changes
COVID-19 has introduced to employment law and health and safety regulation
as well as including enhanced warranties to cover customer contracts,
supply chains and business continuity amongst other things. A buyer may
expect the seller (and guarantor) at the very least to be able to warrant
these additional matters, for example whether the seller has made use of
the furlough scheme for relevant employees and that
customer contracts have not been affected by COVID-19. To the extent that a
seller (or guarantor) is unable to, they will need to disclose against the
relevant warranties in a disclosure letter.
Business sales can be complex and the extent to which a business may be
affected by the pandemic will vary from business to business, but these new
templates are designed as a starting point which customers may need to add
to depending on the business concerned.
The new versions of the BPA are short form templates and designed for
relatively simple transactions.
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