Material contracts (optional clause)

Material contracts (optional clause)

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

It is common when negotiating business sale transactions for the purchaser to rely on the continuation of various contracts that are material to the business.

In these circumstances, it is important to include a provision in the “vendor warranties” section of the business sale agreement setting out appropriate terms relating to material contracts, and to include a schedule listing those contracts.

Using this document

This is a precedent clause which can be used in a sale of business agreement. It can also be inserted into the “Contracts” provisions of the separate precedent “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 Lexis Nexis by Elise Margow, Principal, Legally Speaking.

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