Getting the Contract Right When Buying A Business
Category : Business In General
Ask any professional advisor involved in buying businesses and they will tell you that the contract is of critical importance. Of course the size of the transaction means that you need to make sure that your interests are well represented in the formal expression of the deal. You also need to know that once you hand over your cash that you get the business that you are expecting to buy. More than that, you need the contract to enusre that as near as possible that the business will be as profitable in the future as it was in the past. Of course, how well the business is managed is the main factor that will decide future profits. Nevertheless, you need to ensure that the current owner is not selling the business at full price even though he knows that things will not be as rosy in the future.
For this reason, lawyers may use warrants in the purchase contract to bind the seller based on future performance. Not only do you need a good solicitor to decide what to include and when, but you need someone who does this regularly. It would be impossible to cover every aspect of company purchase contracts in a single posting, so instead we have this general guide to preparing business contracts by Nina Dobrynina.
Can anyone imagine a business life without having a number of contracts in the folder? As businesspeople, we are tied with producers, deliverers, advertisers, customers, logistics services, etc… the list can be long enough. What is the best document to control the whole process and all the commitments? No doubt – only a contract – a written agreement between Sellers and Buyers. Typical contracts on buying/selling a product usually include 16 general articles, although they can be less or more. Let’s take 16 steps and face questions at each of them.
1. Subject of the contract. What are the terms of buying/selling? Does the contract have any attachments?
2. Price and total value. What is the currency the price and the amount are fixed in? Does the price include the cost of tare, packing and marking? Who pay for the loading onto a ship, the stowage, the lighterage?
3. Quality of goods. What are the requirements? (the specification requirements, the international standards)
4. Guarantee of quality. How long does the period of guarantee last? What shall be done if the goods prove to be defective during this period?
5. Dates of delivery. How soon shall the shipment documents be submitted? Must the Buyers send a written consent? What date is considered as the date of delivery? (bill of lading, motor bill)
6. Delivery and acceptance of the goods. Is the quality proved by the Quality Certificate? Is the quantity proved by the Bill of Lading?
7. Notification of shipment. What is the time to notify the Buyers?
8. Packing and marking. What should the packing provide? (full security, no damage). How is each package to be marked?
9. Payment. How shall the payment be made? What bank?
10. Export license. Who will take care of and bear all the expenses?
11. Insurance. Who will take care and cover the expenses?
12. Claims. When can the claims as to the quality and quantity of goods be submitted?
13. Contingencies, force-majeure. What are the circumstances preventing the fulfillment of the commitments? How soon shall the party inform the counterpart? What authority shall confirm the facts?
14. Arbitration. What authority is to settle the disputes and differences?
15. Other conditions. What is important not mentioned above shall be included here?
16. Legal addresses of the parties.
So, be sure to consider and include these points into the contract.Learn how to write various business documents -http://www.ozon.ru/context/detail/id/5112655/- and be prepared for the other challenges of the business life from http://www.english-2days.narod.ru.
For more comprehensive business acquisition advice on you need to get in contact witha good commercial lawyer. The bigger the business, the more complex the contract will be. If a business operates in different countries, the legal obligations in the different jurisdictions and the different accounting norms will make the deal even more complex. If you are running something this big, you need to get the best help available.
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