Asset sale agreements

This important legal agreement outlines the terms of a sale ahead of a major purchase.

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Whether you're looking to sell off your assets or buy someone else's, it's crucial to have a documented and legally binding agreement in place first. An asset sale agreement works to formalise the negotiation process and keep things fair by letting you know exactly what you're getting or giving away.

Read on for more information on what an asset sale agreement entails and how you can create one. Plus, compare legal template providers who can further help you.

What is an asset sale agreement?

An asset sale agreement, also called an asset purchase agreement, is a legally binding contract between two parties that sets out the terms of a sale. The asset can be tangible goods or property, such as stock from a business or the business itself. It can also be intangible, like intellectual property, customer lists or even a business name.

The sale agreement covers all of the details regarding the buyer and seller, as well as the terms and conditions of the purchase and the agreed-upon price for the asset(s).

This type of agreement can be effective in making sure both parties honour their promises. Once both parties have signed the agreement, it's enforceable in a court of law.

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Most commonly, you'll use an asset sale agreement when you're buying or selling a business, stock or shares in a company. This agreement can also be used in a business-to-business context where one company agrees to sell or supply a product to another.

While asset sale agreements may be typically used in large commercial transactions, they can be effective in a range of other situations to cover the selling of goods or services of significant value.

Asset sale agreement vs bill of sale

The biggest difference between an asset sale agreement and a bill of sale is that the agreement comes before the actual transaction, while the bill of sale typically comes after the deal.

An asset sale agreement, as its name suggests, details all of the terms both parties have agreed to before the purchase happens. A bill of sale is similar to an invoice, as it indicates that the transaction has happened and details any warranties or obligations left for either party.

So when a sale occurs, you'll typically use both an asset sale agreement and a bill of sale during the process.

What does an asset sale agreement usually include?

An Asset Sale Agreement can be a fairly simple document with straightforward terms. It can also be structured on an instalment-basis, where the buyer pays a monthly or yearly instalments up until the full amount is covered before they can become the owner of the asset(s).

Typically included

  • Details of both parties
  • A thorough description of the assets being sold
  • Assets that aren't included in the deal, if necessary
  • Responsibilities and liabilities of both parties
  • Warranties on any of the assets, if necessary
  • The purchase price and how it will be paid
  • A timeline for when the full amount should be paid.

Do I need a lawyer to write up my agreement?

While a lawyer isn't strictly needed when you create an asset sale agreement, they can be very helpful if you need advice or want to ensure that everything is legally binding. Once the contract is signed, neither party can back out of their responsibilities without a legal entity getting involved. So, you might want to hire a lawyer to give everything a once-over before you agree to anything.

A legal template can help to kick-start your agreement and, to help you out, we've rounded up some of the best sites for legal templates you can access online.

How to write an asset sale agreement

The details of the agreement will depend heavily on the assets being sold, as well as your situation. For example, an agreement where the payments are going to be made in instalments will look different to an agreement where it's a one-off purchase. It might also be more complex depending on how big or complicated the sale is – for example, if it's an entire business that's being sold.

The general terms and clauses included in many asset sale agreements include as follows:

  • Details of both parties
  • A description of the assets being sold
  • The purchase price and method of payment
  • A timeline for when the full payment has to be made
  • A payment schedule if the assets are being paid off in instalments
  • Responsibilities and liabilities of both parties
  • The date the document is signed.
  • Lawpath. Lawpath is an online legal resource for small businesses and entrepreneurs, you can browse free samples on its website but must register an account to make changes to documents.
  • LegalVision. LegalVision offers an unlimited number of template downloads for a subscription of $199 per month. The Asset Sale Agreement template is free, but you still need to register an account.
  • LawDepot. Access a wide range of free document templates for download with LawDepot.
  • FindLegalForms. Buy its Sale Agreement template for a once-off price of $22.95.
  • Documatica. With Documatica, you can access all of its templates for a subscription of $12.80 for the first week and then $77 every three months thereafter.

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