Sale of business

Sale of business

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I am selling a small playschool. I run it from a chapel on an informal lease and and operate as a sole trader. I am therefore selling the goodwill. The agreed sales price is only £15,000 and I do not wish to engage a lawyer as this will be costly.
I have therefore had a sales agreement drawn up by my accountant for all parties to sign and which I will get witnessed. My question is will this agreement be binding in the unlikely event that the buyers refuse to pay but do indeed take over the business on the agreed date. This is very unlikely as it is a very amicable agreement at present.
Jo

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By Richard Willis
30th May 2007 11:38

Why not get your plumber to do it?!
Hi Jo

Lawyers do not make loads of money by drawing up simple sale agreements, they do it by sorting out the mess when flawed ones go pear shaped. Even the most amicable of agreements can go sour.

What, for instance, would happen if the chapel owners decided that they did not like the new owner, or that now would be a good time to double the rent? You say that the lease is informal, so I guess that the new owner may, then, try to wriggle out of some or all of their responsibilities to you.

On a £15,000 deal, I would get a lawyer.

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By User deleted
30th May 2007 13:21

Why give credit?
Why are you even thinking about not getting paid before you transfer the asset? Would you sell a car that way?

Get the money (cleared funds) at the time the transaction takes place.

Then if there are problems later it si up to the buyer to show that he/she did not get what they bought............

and then you may need a lawyer.

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By User deleted
30th May 2007 15:13

Thanks Patrick I think by doing as you suggest will avoid the legal costs and furthermore as the sale agreement is being independantly witnessed I think all parties should be comfortable with the credibility of the agreement.
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By martinfoley07
31st May 2007 12:41

shome slight confusion shurley?
Jo, it almost seems that you believe an agreement has to be drawn up by a lawyer to be legally binding on the parties?
Absolutely not.
Indeed, a verbal understanding reached in the pub could be a legally binding contract.

So that aspect is just not an issue at all.

However
(i) obviously it is much, much better and safer to have a written agreement in place
(ii) I assume your accountant gave a written (NOT verbal !!) caveat that in drafting something for you he was not purporting to give legal advice and spelt out in writing that he was not qualified / competent to give legal advice. It is CRITICAL that any accountant "doing a favour" for a client does this in spades.
(iii) the "credibility" of the agreement is irrelevant, to be honest, other than perhaps persuading someone to sign it !!
(iv) it is certainly 100% irrelevant to believe witnesses adding credibility. They are witnessing the fact that X signed a piece of paper, nothing more. This aspect of your comments concerns me more than anything else. Why does the fact that someone (who need have no knowledge, competence, intelligence or ability whatever) has seen someone else put their mark on a piece of paper, and sign to say so, add one jot of credibility (other than help indicate that the signatures are less likely to be forgeries)? It makes no sense.
(v) whilst lawyers are inexcusably expensive and often bad value, you could indeed give thought to using one for a pre-haggled and modest fixed fee where £15k is involved. I'm not saying you should use a lawyer ; that is a cost-benefit analysis for you to assess.

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