Create an Asset Purchase Agreement in a Few Easy Steps

Standardized Legal Documents Create an Asset Purchase Agreement in a Few Easy Steps

All About the Asset Purchase Agreement

Any cooperation involving the purchase of tangible or intangible assets needs a specific legal document to get the essential terms regulated. It’s easier said than done, as writing a contract can be a complicated and time-consuming procedure

If you want to avoid dealing with lawyers whose services cost an arm and a leg, you can learn the essentials of an asset purchase contract in our useful guide. 

What Is an Asset Purchase Agreement?

An asset purchase agreement is a contract signed by a company or business selling its assets and an individual or company that wants to take them over. It covers the transfer of ownership from one party to another and regulates the terms of sale and transactions both entities agree upon. 

The term “assets” usually refers to valuable items a company possesses and uses for its business development, including:

  1. Premises
  2. Goodwill
  3. Know-how
  4. Various contracts
  5. Stocks and shares
  6. Real estate
  7. Plants and machinery
  8. Furnishings and inventory

This contract doesn’t apply to the assets that don’t exist yet or to any exchange. The parties usually sign it right before the end of the purchase procedure, treating it as a conclusion and final record. 

What Are the Benefits of Signing an Asset Purchase Agreement?

Like any other legal document that supports cooperation between two parties, an asset purchase contract brings many benefits. Here’s why you should consider creating a solid agreement if you are selling or buying your business assets:

  • The contract offers the overall protection of both entities’ rights—Both parties and their interests are equally important. By establishing the rules that work in everyone’s favor, all participants will feel safe while trading and won’t be afraid of fraud
  • The agreement prevents the parties from getting confused—Clear regulations promise cooperation without misunderstandings and arguments. The less ambiguity there is, the easier it is to avoid unnecessary tension and problems in interpreting written terms
  • Such a document reminds both sides what their responsibilities are—If you are unsure what you should do or how to act in certain situations, the contract will have all the answers you need. It will help you keep track of your duties and obligations

What Are the Essential Parts of an Asset Purchase Agreement?

Your asset purchase agreement should be specific. If you choose generic contract templates, you may create a so-called gray area. Ambiguities in the contract can help the other party take advantage of potential loopholes or vague terms that can be interpreted differently.

If you want to make sure your agreement contains all the relevant information, follow the structure from the table below while creating it:

SectionDetails

Introductory section

  • Personal information of both parties—names and addresses
  • Start and end date of the contract—it mustn't be the same day
  • Recitals—a summary of the deal and expectations of each party

Definitions

  • Explanation of all essential terms used in the agreement

Assets information

  • Assets type
  • Assets description—in as many details as possible
  • Business records
  • Liabilities to the seller
  • Liabilities transferred to the buyer

Price

  • Amount
  • Payment method
  • Installments
  • Transaction details
  • Debt negotiations

Closing

  • Closing conditions
  • Closing documentation
  • Potential changes and repairs
  • Price adjustments
  • Taxation handling

Other related clauses

  • Representation
  • Warranty information
  • Additional covenants
  • Indemnity clause
  • Applicable state laws
  • Choice of venue
  • Modifications and amendments of the contract

Can an Asset Purchase Agreement Be Modified?

Some asset purchase agreements contain a specific term that enables the parties to change some part of the contract, but this isn’t typical. 

Once both entities sign and notarize the document, there should be no modifications. The court is the only body that can introduce changes. This happens if there’s a dispute between parties or the contract contains vague or incomplete terms that cause confusion.

How Can DoNotPay Assist You With Creating Legal Documents?

If you don’t have experience composing contracts or legal documents, DoNotPay can do it in your stead! Our user-friendly app allows you to pick one of our standardized document templates and create a detailed and personalized contract.

Here are the steps you should follow:

  1. Log in to DoNotPay in your preferred web browser
  2. Pinpoint the desired document template
  3. Enter more agreement details

You can repeat this procedure as many times as you need—we don’t set limits to our service! Once you create all the documents you need, make sure to sign them and take them to a notary to make them valid.

If you find our article about the asset purchase agreement useful, you may also want to use our knowledge base to learn more about:

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