The DeWitt Law Firm guides its clients beginning with the negotiation stage of a commercial transaction through its execution and post execution stages. We can help beginning with the formation of business entities through advising our clients on the many aspects of commercial transactions.
There are many forms of commercial or financial transactions. Types of commercial transactions include:
• The sale of a business
• The sale of real or personal property
• The sale or exchange of services
• The formation of joint ventures
• The formation of business entities
• The formation of new business relationships
• Shareholder and buy-sell agreements
The Sale of a Business
There are many aspects to the purchase or sale of a business. If you are a buyer, you want to make sure that the business is going to be profitable, that it is worth what you are paying for it, that its books and records are correct and complete, that all employee and payroll taxes have been paid, that all vendors’ payments are current, that the business has no unknown debts, and that the lease can be assigned. There may also be other concerns that you have. For example, you may want the seller to sign a non-compete agreement. You should discuss all of your concerns with your attorney. The contract for purchase and sale should address these concerns and should contain representations that if found to be untrue could form the basis of a subsequent lawsuit.
If you are a seller, you want to protect yourself as much as possible from a subsequent lawsuit. You may want the contract to have a provisions that says that the buyer is not relying on any representations made by you and has had an opportunity to conduct a full and complete due diligence of the business. You may also want a waiver or hold harmless provision. Again, you should work with an attorney to structure to contract to your benefit.
There are also different ways to purchase a business. If it is a corporation, for example, you could purchase its stock or you could purchase its assets. Again, a consult with your attorney and also perhaps with your accountant is advisable.
The Sale of Real or Personal Property
Businesses often sell real or personal property. Real property is real estate. Personal property consists of the tangible assets of the business, like computers, desks, etc. Whenever you purchase either real or personal property, you should make sure there are no liens or encumbrances that could attach to the property you are purchasing. With personal property, you should always obtain a bill of sale.
If you are selling real or personal property, you must have clear title to the property you are selling. If you don’t then you must disclose to the buyer the precise nature of the interest you are selling. Otherwise you leave yourself open to a lawsuit down the road.
Sale or Exchange of Services
This is an area where many people are likely to be lax. Services are often exchanged based on a handshake or gentleman’s agreement. However, if there is nothing in writing, then there is nothing to document the parties’ understanding and nothing to refer to should a dispute arise. This, even the sale or exchange of services should be in writing.
More Commercial Law Information:
DeWitt Law Review on Commercial Law Issues: