One must appreciate that there are various pertinent documents when buying and selling a business. The sale and purchase agreement is the most important document for the vendor and purchaser of a business. The agreement is normally quite long and essentially illustrates the sale procedure in addition to setting out what is actually being sold. Furthermore, it expressly states the obligations and liabilities of the parties that are connected to the sale.
When negotiating the sale and purchase of a business, it is imperative to first address the price. The purchaser should ideally appraise the business and figure out just how much they would be willing to pay before engaging with the vendor. The agreed price will be largely determined by commercial considerations, namely, market conditions, the bargaining power of the parties involved and the aftermath of any issues that have been highlighted by pre–contract due diligence.
If a warranty is breached, the aggrieved party may be entitled to damages. However, they must take reasonable steps to mitigate their loss. Alternatively, the contract could be rescinded and the purchase price would be repaid to the purchaser. This will only occur if there has been a fundamental breach and an award of damages would not be construed by the court as an appropriate remedy.Â