Asset Purchase Agreement Law and Legal Definition
Asset purchase Agreement is an agreement between a seller of business assets and a buyer. This Agreement sets the terms of such sale and includes provisions such as payment of purchase price. The seller desires to sell to buyer all of the business assets, fixtures, furnishings, equipments and the right to be the lease holder that the seller utilized in the company business.
Often, these agreements have effective dates (when the agreement becomes effective and comes into force) and closing dates, later dates (days or weeks, sometimes longer) at which time the deal closes and the parties sign and exchange documents. During the period in between, with the deal all but assured, the seller will make final its financing arrangements for the purchase.
Much of the asset purchase agreement is concerned with defining and controlling behavior. In the seller's representations and warranties, it represents, among a host of things, that it has the authority to sell its asset; that the assets are of a value equal to the purchase price; and that it is not in financial or legal trouble. In today's world, the representation on the environmental disposition of the assets is often a very important and lengthy provision. Meanwhile, the buyer represents that it has the authority to buy the assets and that has disclosed everything necessary to consummate the deal.