Legal Comment by Mark Illidge

March 2008

Following on from my article a fortnight ago, which addressed preparing your business for sale, we now look at the contractual requirements.

To be included in the sale contract are:

• Names and addresses of the parties to the contract and their solicitors (and ideally their accountants also);
• Details of all of the seller's intellectual property (registered business name, trademarks etc);
• Business communication details including phone, fax, e-mail address and website domain name;
• An estimated and maximum stock figure if the business is not sold on a walk-in walk-out basis;
• The purchase price and (if advised by your accountant) an apportionment of the price between goodwill, plant and equipment, stock and any other business assets;
• Details of any of the plant and equipment noting those items which are leased or encumbered;
• Copies of all licences and permits held by the seller in relation to the business;
• If the parties agree that the seller will not compete with the buyer after settlement, details of the geographical restraint area and timeframe;
• If applicable, full names, job descriptions, commencement dates, salaries and entitlements for all employees;
• Details of any agreed training/tuition arrangements prior to and after settlement, if applicable; and lastly
• Details of any special conditions agreed between the parties, to ensure that the contract reflects the intention of the parties.

 If the premises are leased and the lease is being transferred, a copy of the lease and any associated lease documents will need to be provided. From a seller's point of view, it may be advisable for the buyer to enter into a new lease. You should discuss this with your solicitor.

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