UCLBS News

December 16, 2020

Sale And Purchase Agreement Representations And Warranties

Filed under: Uncategorized — Administrator @ 8:39 am

A sales contract is sometimes signed that conditions the completion of certain milestones, such as obtaining authorizations, awarding contracts or executing certain transactions in advance (sale of land or corresponding legalization in the corresponding register). The buyer provides the seller with representatives and guarantees regarding their ability to conclude the agreement, such as. B proof of money or funding. The seller prepares the disclosure plans. It contains various facts, exceptions or clarifications on representations and guarantees. In the event of an asset sale, the relevant assets that enter the transaction and the transferred commitments must be accurately described. Similarly, it is defined whether all goods that the seller usually uses, such as a vehicle.B. a vehicle, a parking lot or even their home, are excluded from the transaction. As a result, the representations and guarantees that determine certain qualifications of the target company, such as the target company. B, are well established, has the necessary authorizations and licences to carry out its activities, has the right to use the assets necessary to maintain its activities in accordance with the law and it carries out its activities in accordance with the law and are included in the stock sales contracts. 2. Tax control issues: Tax control ensures that the business put up for sale has never been on the radar of the IRS (or any other appropriate tax service) for breach of income and deduction data. Once the Memorandum of Understanding is signed by both parties, the next step is usually to develop and negotiate the final asset purchase agreement, share purchase agreement or merger agreement (depending on the structure of the transactions) that we commonly refer to as a “sales contract” in this article.

The purpose of the sales contract is to finalize all the terms of the purchase transaction, which should be in accordance with the MOU, but contains important legal considerations that are not included in the MOU. While declarations of intent are usually 1-3 pages long, sales contracts are usually 50-100 pages long. As a general rule, the contract defines a minimum of liability that can be the subject of a debate on the seller`s liability, so that the parties exclude the possibility of minor issues. For each transaction, depending on the size, the amount of the being in which the parties feel comfortable in structuring the agreement. In addition to defining the types of representations to be included in the sales contract, another important area of negotiation focuses on limiting the scope of representations and insertion of qualifications. For example, representation may be qualified on the seller`s knowledge or on assets that do not have a significant negative effect on the target company (i.e., the seller does not violate the agreement if the misrepresentation is not negligible).

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