This document is an optional clause which can be used in a business sale agreement.

Where the business being sold has provided credit via a financing contract to a third party, it is important for the vendor to provide warranties relating to those contracts. Specifically, the warranties should indicate that the contracts are enforceable and legal. 

Businesses that would enter into financing contracts would be, for example, finance companies and pawn shops.

Using this document

This document clause can be used in a sale of business agreement. It can also be inserted into the “Warranties” provisions of the separate documents “Business sale agreement – sale of assets (short form)” and “Business sale agreement – sale of shares (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 LexisNexis by Elise Margow, Principal, Legally Speaking.

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