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Is an asset purchase agreement part of your business litigation?

On Behalf of | Apr 15, 2024 | Business Litigation |

There are many reasons that businesses in New York find themselves embroiled in litigation. Oftentimes, the heart of the matter is a breach of contract – which, in and of itself, may be due to a difference in interpretation of key contract terms. One common type of business contract is known as an asset purchase agreement.

Basics of asset purchase agreements

An asset purchase agreement doesn’t have to be complicated because, at its core, it is simply a contract that covers the terms of one party purchasing assets from another – hence the basic name of the agreement. However, we all know that any type of contract can get lengthy, with many more terms and conditions included beyond the so-called standard boilerplate contract language. An asset purchase agreement, for example, must define and describe exactly which assets are subject to the transaction at hand. Even the purchase price could get complicated if, for example, it is to be paid over time or is subject to financing.

Just because these types of agreements seemingly cover a simple purchase transaction doesn’t mean that trouble can’t brew well after the sale is supposedly completed. There could be certain representations and warranties included in the contract that live on well after the actual assets change hands. There could also be indemnification clauses that must be invoked down the line. Post-transfer obligations are not uncommon in asset purchase agreements.

So, as complicated as these agreements can get, it should be no surprise that litigation may result if such an agreement is not properly drafted and understood by all parties involved. If you are contemplating this type of agreement for your business or organization, be sure to get the right information about how to avoid trouble before it comes around.