Dating the Contract
Usually the seller is the last party to sign the contract.
Often the last party to sign the contract will also date the contract and notify the other party. Legally, there is no binding contract until the other party is notified of the signing. Until then the other party can pull out by withdrawing their offer.
If the buyer of the business is a company it is good kosher to have a person, usually a director of shareholder, to guarantee the company’s performance under the contract. Having either a director or shareholder guarantee a company’s performance under a contract is especially important when the company purchasing the business is a shelf company.
Apportioning the Purchase Price
Because there are tax consequences depending on how the purchase can be apportioned it is important that the seller speaks to their own accountant about this.
Plant and Equipment
If there is plant and equipment being transferred as part of the sale, it is essential that a full and comprehensive list be prepared and detailed in the contract. It is also equally important where the seller is aware that some plant and equipment is faulty or malfunctioning that the buyer is made aware of this and such faulty or malfunctioning equipment is detailed in the contract.
This is a very important aspect that most parties overlook when negotiating and preparing a business contract. Because of the potential liabilities a party can incur it is important that legal advice be sought before entering into a contract about employees.
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