QUESTION
What do I need to have included in an asset purchase agreement?
Asked on Jan 28th, 2015 on Business Law - Massachusetts
More details to this question:
My wife is selling her half of a flower business to her sister. We agreed on a price and her husband (lawyer) wrote up an asset purchase agreement. We agreed on a price paid monthly equally over 2 years. I wanted to make sure before I sign that she is not liable for any back taxes, credit card debt, vendor debt or anything related to business after she signs. There is a statement saying that my wife will be held harmless for rent, taxes etc. is this enough wording to cover her? Also how do I guarentee we will get paid every month and if they miss payments what is my recourse?
1 ANSWER
If your wife is currently responsible for any debt to any third party, she will still be responsible for it, but can get repaid by her sister. For example, if your wife has guaranteed the lease, she is liable to the landlord, not your sister, and only the landlord can release her. If rent is not paid, she is obligated. If her sister agrees to hold her harmless, she can recover any money she pays the landlord from her sister, but if her sister doesn't have the money to pay her, she is out of luck. As far as what recourse you have if they miss a payment, you would sue for breach of contract. There are other remedies you can build into the contract as well, but frankly if you want to get the sophisticated you'll probably have to pay a MA lawyer.
Answered on Jan 28th, 2015 at 2:28 PM