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What is an agreement to sell a business?
An agreement to sell a business is a legal document that records the sale terms between a business seller and a buyer, ensuring a smooth and clear transfer of ownership.
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Why is this agreement important?
It protects both parties by clearly stating what assets, liabilities, and responsibilities are being transferred, reducing future disputes.
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Can any business be sold using this agreement?
Yes, retail shops, restaurants, franchises, service companies, and even online businesses can be sold using a properly drafted agreement.
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Does the agreement include business assets?
Yes, it details assets such as machinery, stock, goodwill, licenses, and customer lists that are included in the sale.
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Is the payment schedule included in the agreement?
Yes, the agreement describes the sale consideration, installments, and method of payment to ensure clarity and compliance.
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Are business liabilities transferred too?
Only the liabilities that both parties agree to transfer are included; others remain with the seller unless specified in writing.
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Can this agreement include employee arrangements?
Yes, it can outline whether employees will continue under the new owner or be settled by the seller before transfer.
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Is due diligence required before signing?
Due diligence is recommended so the buyer can verify business performance, liabilities, and operational details before purchase.
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Does the agreement include warranties?
Yes, seller warranties ensure the buyer that the business is being sold in good faith without undisclosed liabilities.
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Can the agreement be cancelled after signing?
Cancellation depends on the terms. Some agreements allow termination under specific conditions mentioned in the contract.
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Is it mandatory to notarise the agreement?
Notarization is not mandatory, but stamping and proper execution as per state law is required for validity.
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Can the agreement include non-compete clauses?
Yes, the seller can be restricted from starting a competing business for a defined period to protect the buyer’s interests.
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Does the buyer need financial statements?
Yes, reviewing financial statements helps the buyer understand profitability, liabilities, and the true value of the business.
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Can the agreement include asset valuation?
Yes, asset valuation may be included to clarify the basis of the sale price and avoid disputes later.
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Is GST or tax liability included in the agreement?
The agreement can specify which party handles pending GST, tax dues, or any statutory liabilities related to the business.
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Can the seller train the buyer after sale?
Yes, a training or transition support clause can be added to ensure the buyer understands business operations.
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What happens to existing licenses?
The agreement may specify whether licenses are transferred, renewed, or reapplied depending on regulatory rules.
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Can the buyer verify debts before purchase?
Yes, verifying debts is part of due diligence and is strongly recommended before signing the agreement.
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Is stamp duty applicable to this agreement?
Yes, stamp duty applies based on state laws, and the amount varies depending on the nature of the business transfer.
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How does Ebizfiling assist in drafting this agreement?
Ebizfiling drafts clear and customized agreements to sell business, ensuring all essential clauses are included to protect both parties legally.