Asset Purchase Agreements: Checklist of Terms
Asset purchase agreements are some of the most varied business contracts you are likely to use. These contracts are complex, and no two are ever the same.
While there is plenty of variety, there will still be certain elements that will show up in most, if not all, asset purchase agreements. Some have also created short form asset purchase agreements to try and make them less dense.
To keep it simple, below are the key elements the majority of these contracts should have. . Here is also a write-up on Inc.com regarding these agreements.
The Parties of the Agreement
Without at least two parties, there is no agreement. Start out by identifying who these people are and the roles they play regarding the contract. Make certain this is worded in clear language so there is never any confusion. Note, if you are the seller, potentially ask for a seller friendly asset purchase agreements.
The Assets Being Purchased
This sounds straightforward, but this is where most court cases involving purchase agreements arise. As any contract lawyer would tell you, you must be specific about the full scope of the asset. For example, let’s say the asset being purchased is a restaurant.
But what is included in that? Is it just the building and the land? Will it also include the stoves, walk-in refrigerators, and freezers? How about the tables and decorations? Or even the name and branding? Outline everything included in the purchase, otherwise there will be someone who is very disappointed.
Here, you need to specify the purchase price of the asset. However, that isn’t all. It should also be made clear how this will be paid and by when. This is especially critical if payment will come in installments. The goal here is to ensure there can be no conflict related to payment.
Conditions for Closing
What must happen before the agreement is considered to be finished? It is easy to assume that it is just a matter of exchanging funds and signing papers, and maybe it is, but the specifics should still be clarified here. Some conditions for closing that might need to be considered include the delivery of the assets, repairs to a property, or removal of materials.
Work With a Vetted Contract Lawyer Near You
Contract lawyers are those who understand the ins and outs of all the agreements you need for your business. Contracts Counsel is a boutique marketplace that puts you in contact with vetted contract attorneys who understand your state and local laws, as well as the quirks of your industry. Protect your company by working with ContractsCounsel.com.