eSignature Lawfulness for Business Purchase Agreement in Canada

How to eSign a document: e-signature lawfulness for Business purchase agreement in Canada

this is a look at purchase agreements for businesses or business assets hi this is tony corty in a group and today we're going to go through the business purchase agreement process drafting a purchase agreement and all the elements that are involved in it thanks okay a couple things before we start number one i am not an attorney and it is highly advised that you consult the services of an attorney when working with business contracts such as a purchase agreement and number two i'm using for the purposes of this video the business purchase agreement and joint escrow instructions form although i do want to be clear there are many other options out there the first element of this particular agreement is the offer who it's from whether it's a legal entity or an individual what the offer is for location of that business what the purchase price is whether inventory is being purchased or not what the proposed close of escrow date is the second element is the agency who the agents are representing either the buyer and or the seller the next paragraph breaks down the elements of the purchase price what the deposit will be if there will be an increase in the deposit whether it's an all-cash offer or not or if there's a loan involved and whether that loan is a contingency of the deal itself if there is a loan contingency all of the terms and conditions of the loan need to be spelled out and how the contingency will be removed paragraph four addresses escrow who the escrow holder will be and who will pay for the costs of this typically it's a 50 50 split between buyer and seller although that's totally between the parties and paragraph 5 addresses closing and possession usually it's at the close of escrow but it can also be set as a agreement between the buyer and seller paragraphs six through eight of the or as it's known cover what assets are transferred what liabilities are transferred and what inventory will be included or not and when paragraph nine is important because it sets the stage for what items will have to be disclosed by the seller and this is important because later on we'll see that one of the key contingencies in these forms is the buyer's inspection and it's relevant related to the inspection of these particular items paragraphs 10 and 11 are additional terms of the transaction paragraph 10 specifically addresses consulting and training and whether the buyer is requesting any from the seller paragraph 11 addresses an agreement not to compete in other words the buyer is requesting the seller not compete within a certain distance from the location hands down one of the most important contingencies is the lease contingency it's the ability of the buyer to either get a reassignment of the existing lease or to in fact secure a new lease or some combination thereof many times deals may fall apart at this stage because it's difficult to get a meeting of the minds between the buyer and the landlord for the space if there is a landlord involved paragraph 13 covers the purchase of real property and paragraph 14 covers another set of contingencies related to licenses so for example if it's a bar or restaurant there may be a contingency on the transfer of the beer and wine license or liquor license other licenses may include the seller's permit business licenses and so on paragraph 15 covers franchises paragraph 16 goes to sales and use tax a buyer will typically have to pay a sales tax for any assets that are required paragraph 17 addresses prorations it's important that if it's a mid-month close of escrow that the seller get credited for any rents that have been paid or any other expenses that have come out related to this transaction paragraph 18 goes to tax clearances and this is critical it's imperative that the buyer get clearances from the employment development department for payroll tax the board of equalization for sales tax and the franchise tax board for any franchise taxes with the state of california any violations that the seller may have had need to be disclosed in paragraph 19 while paragraphs 20 and 21 cover the bulk transfer notice essentially notifying creditors of a sale of assets and any liens encumbrances or restrictions all of those need to be worked out and settled or resolved in some way through the escrow process paragraph 22 covers the operation of the business during escrow presumably it'll stay open though again this is between the two parties and how they want to do this seller's representations are covered in paragraph 23 and they catch all for any other terms and conditions of the deal whatever they may be are covered in paragraph 24 of this particular form paragraph 25 is a key one regarding time periods in the removal of contingencies any cancellation notices so all of the conditions that need to be met with respect to any other contingencies that haven't already been covered specifically the buyer's inspection anything related with the seller any any conditions around the the seller's right to cancel or the buyer's right to cancels notice to perform all of that is covered in paragraph 25. paragraph 26 covers the brokers how they're compensated and what the scope of their work is paragraphs twenty seven twenty eight help the escrow officer establish representation rights who's representing the company for the buyer side same for the seller side also it spells out in paragraph 28 how the business purchase agreement will be used to set the foundation for the escrow instructions the escrow holder will take those instructions and abide by them when it comes to the meeting of terms and conditions etc before the seo can actually be closed sometimes things just don't go the way a buyer or seller thinks they should in these types of agreements and if the buyer happens to breach there's a paragraph 29 that covers remedies for this breach oftentimes it may be liquidated damages and oftentimes those liquidated damages are limited to the amount of money that's been deposited into the escrow of course this can be something that's worked out between the buyer and seller in advance on what happens in the event that the the buyer breaches or wants to withdraw or some other situation occurs for years now these purchase agreements have allowed for dispute resolution in ways outside of the courts through mediations or arbitrations this is spelled out in paragraph 30 of the moving on environmental hazard consultation is discussed in paragraph 31 americans with disabilities act is covered in paragraph 32 selection of service providers in paragraph 33 so of course brokers or the buyers and sellers can determine who to use for different services paragraph 34 covers whether the mls will be used or not and paragraph 35 is the attorney's fees clause in the event of a dispute that goes through the legal process whether attorney's fees will be covered or not if in the event of a victory for one side assignment successors and assigns copies risk of loss damage or destruction equal opportunity all those items are covered in paragraphs 36 through 41. paragraphs 42 through 44 somewhat boilerplate covering the terms and conditions of the offer uh as part of this agreement time being of the essence and that this is the entire contract rules for making any changes and then finally definitions again that's paragraphs 34 42-44 and paragraph 45 sets a timeline on the expiration of the offer finally we get to the signature page the acceptance of the offer signed by the seller if this is the case otherwise of course a counteroffer would be made potentially and then the signature box if you will for the agents the agent for the buyer and the agent for the seller so that's it that's the business purchase agreement as you can see it covers a wide range of items and concerns they're fairly comprehensive i happen to show the here there are many other forms that can be used but this is essentially it in a nutshell thanks for watching