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Page 54
How To Investigate Any Business Opportunity
chase price at the time of closing.
5. Buyer's assumption of contracts and liabilities. In the event this agreement to sell is in fact closed
and the business is transferred by the Seller to the Buyer, the Buyer shall be bound by and does hereby
assume the terms of the following contracts:
Lease of business premises dated January 1, XXX6. The Buyer shall indemnify the Seller against any
liability or expense arising out of any breach of such contracts occurring after the closing.
(Since a going business is being sold, the most realistic approach to the problem of outstanding liabili-
ties may be for the buyer to assume all liabilities shown in an attached balance sheet and also liabilities
that arise in the ordinary course of business after contracting but before closing. Such an agreement
provides recourse by the seller against the buyer if the buyer defaults, but does not discharge the liability
of the seller to the third party.)
6. Seller's warranties. The Seller warrants and represents the following :
(a) He is the owner of and has good and marketable title to all the assets specifically enumerated in
Schedule A, free from all debts and encumbrances.
(b) The financial statements which are attached hereto as Schedule B have been prepared in conformity
with generally accepted accounting principles and present a true and correct statement of the financial
condition of said business as of their respective dates.
(c) There are no business liabilities or obligations of any nature, whether absolute, accrued, contingent
or otherwise, except as and to the extent reflected in the balance sheet of January 31, XXX6.
(d) No litigation, governmental proceeding or investigation is pending, or to the knowledge of the Seller
threatened or in prospect, against or relating to said business.
(e) The Seller has no knowledge of any developments or threatened developments of a nature that
would be materially adverse to said business.
(f) The statements made and information given by the Seller to the Buyer concerning said business, and
upon which the Buyer has relied in agreeing to purchase said business, are true and accurate and no
material fact has been withheld from the Buyer.
(Paragraph 6 is intended to protect the buyer from the unknown - title defects, undisclosed liens, false or
fraudulent information, undisclosed or potential liabilities. If the buyer is becoming liable for all business
liabilities through assumption or purchase of stock, he will require more extensive warranties than
these.)
7. Seller's obligation pending closing. The Seller covenants and agrees with the Buyer as follows:
( a ) The Seller shall conduct the business up to the date of closing in a regular and normal manner and