Excess stock (optional condition)

Excess stock (optional condition)

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This document is an optional clause which can be inserted into a business sale agreement.

The Purchaser may not wish to purchase all the stock of the business being purchased. In these circumstances, it is important to negotiate the identification of, and the process to deal with, the stock not purchased. This precedent clause provides an example of the identification of, and process to deal with, stock not purchased by the Purchaser.

There are various reasons why a purchaser may decide not to purchase stock, or a vendor may decide not to sell stock. Therefore, this precedent clause is a guide only and practitioners will have to take into account the agreement reached by the parties to a specific transaction, and then draft a clause relevant to that transaction.

Using this precedent

This precedent clause is a condition precedent which can be used in a sale of business agreement. It can also be added to the “Calculation of value of stock” provisions in the separate precedent “Business sale agreement – sale of assets (short form)”.

When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.

This document has been authored for Lexis Nexis by Elise Margow, Principal, Legally Speaking.

This document is prepared with the assistance of Specialist Editor Murray Landis, Partner, K&L Gates.