Definition
A contract for the sale of a business is a binding legal agreement that will transfer ownership of a company to another party. These transactions usually encompass a wide range of assets such as intellectual property rights, real property interests, licences and contracts with suppliers, all of which add to the notorious complexity of these contracts.
Essential Characteristics
A contract for the sale of a business must consider the following:
- All the involved parties, identified with their full name, address and business affiliations
- A list of the included items in the sale of the contract, such as physical assets, client lists, intellectual property, copyrights, premises, assignment of leases and inventory
- Payment terms, how deposits will be made, any contingent conditions that may apply to a sale and whether any restraint on sellers will be enforced
- Ensuring that the mode of execution is by signature
- Including that there shall be no amendments to the original contract without the agreement of both parties.