An asset purchase agreement template is a legal document that establishes the purchase of some of the assets from a company by a different company for a specific duration. There are two parties included in this contract- the buyer and the seller. The buyer buys some of the seller’s company’s assets for some price. These assets could include anything ranging from machinery, property, manufactured products, and intangible products. The buyer buys these assets to implement them in their own company to benefit from them. When a buyer wants to buy the assets of a company, first they have to approach them and inform them about their intention of wanting to buy their assets.
Purpose of Asset Purchase Agreement
The purpose of an asset purchase agreement is to make all the terms of the deal completely clear to both parties by writing them down on a paper. This paper is the foundation of the whole deal. It is the first step required to start trade between the two companies. It is the legal document that is used for proof in the case of any litigation. Mostly, there are two copies of the agreement, one for each party to keep as proof of the agreement.
Importance of Asset Purchase Agreement
Generally, the asset purchase agreement is made by the selling party and the buying party is required to agree to the terms and conditions written on the document. The agreement form should include all the focal points of the deal. For example, the assets that will be sold, their quantity, the amount, transactions details, and other aspects. This is done to make sure that both parties are made aware of their respective responsibilities; this way future disputes and misunderstandings can be avoided and the trade is carried out smoothly.
Content of Asset Purchase Agreement
Some of the basic elements to include in an asset purchase agreement are mentioned below:
1- The date on which the agreement will be made effective.
2- Basic introduction to both parties (name, address and contact information).
3- Purpose of the agreement.
4- The name and quantity of the assets that will be sold to the buyer.
5- The amount of each of the asset.
6- Transaction details and how the money will be processed by the seller.
7- The date on which the buyer agrees to give the total payment of the assets. In case of installments, how many installments they will be given and the date of payment of each installment.
8- The time duration of the agreement. After this date, the buyer can no longer use the company’s assets until they renew the agreement.
9- Confidentiality rights of both parties. In this it is made clear which parts of the agreement or contract can be disclosed to the public.
10- Proper measures to be taken in case of misinterpretation or disputes in the future. This is done to make sure that such cases are handled professionally by both the parties without casing much of a hassle.
11- The signature of both parties. This is the last step; it seals the contract and initiates the trade between both the parties.
Template for Asset Purchase Agreement
