Sale and Purchase Agreements - what are they and why they should be checked by a lawyer

If you want to sell, or buy a business you’ll have to come across a Sales and Purchase Agreement (SPA) at one point or another and make sure that you are across every single part of it. So before we figure out when and what you’ll need your lawyer for, lets go through exactly what a SPA is. A SPA is a legal contract which outlines the conditions between the buyer and seller of the property and/or business. The SPA is the main document in the selling process, outlining the agreed elements of the deal, the important protections and all of the other legal framework involved in a sale.

In list form a SPA covers the following:

 Transfer and ownership of assets

 Particular assets to be transferred

 Confidentiality

 Employees

 Relevant warranties

 Restraint clause

 And more

On occasion the SPA can be confused with a ‘Term Sheet’. A Term Sheet merely outlines the terms and conditions of an upcoming business agreement, but does not help you at all in regard to the transfer of assets. Often you would use a Term Sheet to create the outline to draw up the SPA. It is integral that you do not head into or sign a SPA without seeking legal advice from your lawyer. A lawyer’s advice will ensure that you are prepared and informed on what could happen to the business’ employees, properties and so on, once an agreement and thus sale, occurs. You should also ensure that you have your SPA reviewed by your lawyer. This is because there are numerous items within a SPA which can vary dependent on any number of factors. Because of this it is vitally important that you have a lawyer review your SPA. This will help make sure that you are aware of any possible legal consequences that could occur should you go against any of the agreed terms in the SPA or if you were to misunderstand a condition of the agreed SPA. A lawyer can also provide you with help should you end up breaching part of your agreement and incur the due legal consequences.

With our years of handling Sales and Purchase Agreements, Wollerman Shacklock Lawyers should be your first port of call for advice if you are selling your business, or looking to purchase a business. To get in contact with our skilled team of lawyers you can send us an email at: admin@wslegal.com.au or give us a call on 9707 1155.