The main advantage of using a standard form contract is efficiency. It allows the parties to execute the transaction quickly and at low cost. Intensive use of the contract means that both parties often have some understanding of the existing terms as well as what the contract covers and what it does not cover. The parties also have some certainty as to how the court will interpret certain provisions. The standard forms contract also has the advantage of containing most of the clauses you would expect from a purchase contract. If you are buying or selling a business in Victoria, you may have been asked or heard of the term ”Section 52 Declaration.” The section 52 statement provides due diligence advice to a buyer and describes the company`s financial performance over the past two years. From 20. May 2018, the statement must also include the financial performance from the current fiscal year to the last quarter. When drafting the contract, it is important to correctly list the parties involved in order to avoid confusion or allow a party to withdraw from the contract. For example, write a contract between Joseph A. Smith of Smith & Associates, LLC, 123 Main St., Anytown GA, 30066, and Deborah L. Jones, of Deb`s Floral Shop, 222 P. 50th St., Springfield, MA 00233.

The Fair Work Act 2009 (Cth) defines the claims and obligations relating to employees that must be transferred to the buyer, including company agreements. When the buyer assumes responsibility for employee claims, he wants the selling price to be adjusted in the invoicing to take into account these claims. For more information when you buy a business, check out our previous article on buying and selling businesses. This clause states that you only acquire ownership of the company and its assets after settlement. The clause also provides that you can terminate the contract if any of the company`s assets are damaged and this damage significantly and negatively affects the company. This is important because it gives you an ”out” when something important changes in the company between exchange and billing. The Victorian business sale contract is a standard contract with fixed clauses that describe in detail how the sale of a business should take place. It is important that you understand your rights and obligations under the contract and conduct a thorough due diligence of the company before purchasing. If you have any questions about the terms of your business sale agreement, contact LegalVision`s business acquisition lawyers at 1300 544 755 or fill out the form on this page.

When a buyer takes out a loan, mortgage or seller balance, he assumes responsibility for the business. Buyers may assume some, all or no of the liabilities that the Seller has incurred during the term of the Company. This clause allows you to view the company and its records. It is imperative that you exercise appropriate and thorough due diligence of the company`s records. These include: This right of avoidance only exists if the buyer has not already taken over the business and processed the sale. If the buyer does not retain your employees, you must properly notify your employees and pay your employees their severance rights and any accumulated claims they may have. For more information, check out our previous article on what happens to employees when you buy or sell a business. You must transfer each lease to the buyer. The buyer usually wants the purchase contract to depend on the owner`s agreement for the transfer of the lease. If you sell your business for $450,000.00 or less, you must provide the buyer with a declaration under section 52 of the Real Estate Agents Act, 1980 (Vic) (unless you have a liquor licence). The contract provides for a three-day cooling-off period.

This means that after signing the contract, you have three days to cancel the contract if you decide not to continue the sale. The seller must refund the money you paid. The only exception is if your business has an active license or permit under the Liquor Control Reform Act 1998 and cannot legally operate without such a permit. This means that bars and clubs are exempt from submitting a declaration under section 52. Small business owners may have problems buying or selling a business, both for what is not in the contract and for what is. The omission of important elements of a contract, including material and intangible assets and liabilities, can cause problems months after the sale. Payment terms are another essential aspect of a contract. When designing a contract for the sale of a business, make sure that both parties know exactly what they are receiving at the time of signing and in the future. The contract must clearly state what intellectual property you are selling as part of the business and what intellectual property you retain.

If there is intellectual property that needs to be assigned or transferred, this must be done as part of the sales process. A company may have multiple agreements with third parties. This clause requires the seller to take reasonable steps to transfer these agreements to you. Article 16 also allows you to adjust the purchase price or terminate the contract if the seller cannot transfer a significant third-party contract. This clause sets out the rules governing the treatment of the company`s assets at the time of settlement. Essentially, an inventory must take place. This will help you determine if the amount of inventory to sell you is in accordance with the agreements. A purchase contract must be used by anyone who wants to buy or sell a business. The agreement can help clarify the details of the sale, including the aspects of the business that are to be sold (i.e., assets or shares). The sale of a business is usually the sale of an ongoing business, so you usually don`t have to charge GST for the sale.

However, this must be documented in writing and you must confirm that the buyer is registered for GST. Take our survey on your company`s legal health and get 30 minutes of FREE legal advice! When you buy assets in a company, you are not buying the company itself, but only one aspect of it. It can be a product, a customer list, or a type of intellectual property. The corporation retains its name, obligations and tax returns. It is important that you have prepared a purchase agreement that covers all aspects of the sale. For many small business sales, the precedent of the Victoria Law Institute should be used. However, no two stores are the same, and so you need to have special conditions in the contract that are professionally designed and tailored to your particular business. Make a list of all the brokers or agents involved in the sale, as well as any financial companies that facilitate the transaction. Add a clause detailing where and how disputes are resolved. For example, specify the state in which a lawsuit is to be filed and/or whether you want disagreements to be handled by an arbitrator. Add a disclosure agreement that requires both parties to disclose all legal obligations, debts, lawsuits, fines, or other costs. This makes the seller liable for any undisclosed liability that the buyer discovers after the sale, or protects a seller who funds a sale of a buyer with undisclosed bad credit or partners.

Add a statement from both the buyer and seller stating that each is the legal owner of the business they represent and is authorized to make the purchase or sale. When you sell a business, you can include the key terms of your sale in an agreement with the buyer before a formal purchase agreement is prepared or concluded. Heads of agreement are useful when it will take some time to prepare a formal purchase contract or when certain terms have yet to be negotiated. They can be binding or non-binding. You don`t want to buy the company and then find out that the contract it has with a major customer expires in six months. For this reason, it is important to use this clause and thoroughly examine the company`s records. At Sharrock Pitman Legal, we have helped many clients sell their business. If you would like help selling a business or have any other questions, please contact Mitchell Zadow, Senior Director and Accredited Commercial Law Specialist, or call (03) 9560 2922 or fill out the form below.

It includes the terms of the sale, which may or may not be included in the sale price, as well as optional clauses and warranties to protect both the seller and the buyer once the transaction is complete. If the Declaration is false or inaccurate, or if the Declaration under Article 52 is not provided to the Buyer before signing a Purchase Contract or making a deposit, the Buyer has the right to cancel the Contract within three (3) months of signing. Avoiding means that all of the buyer`s money and deposit will be refunded and the contract will be terminated. When you buy shares of a company, you are buying part of all aspects of the business. If you buy all the shares of the company, you own all facets of the company. Make a list of the items that will be included in the sale. This includes all physical assets, business records, cash, company name, logos, goodwill, licenses, patents, licenses, licenses, royalties, trademarks, revenues, trade secrets, formulas, databases, inventory and any other items that the Company has used to conduct its business. If possible, list assets by item and number. When signing the contract, signatories should use their titles after their name to protect them from action….