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Business Transfer Agreement

Last revision Last revision 16-02-2024
Formats FormatsWord and PDF
Size Size15 to 24 pages
4.5 - 22 votes
Fill out the template

Last revisionLast revision: 16-02-2024

FormatsAvailable formats: Word and PDF

SizeSize: 15 to 24 pages

Rating: 4.5 - 22 votes

Fill out the template

This Business Sale Agreement is for use when the owner of a business sells the business to a new owner. The Agreement addresses a variety of matters that may be relevant to a business sale, including:

  • assets to be transferred with the business
  • transfer of employees
  • conditions precedent (such as obtaining any approvals for transfer)
  • restraint of trade preventing the vendor of the business from opening competing businesses
  • confidentiality - so that the outgoing owner can provide sensitive information to the purchaser if required, and that information can be kept confidential
  • intellectual property (such as logos and designs) which are also to be transferred with the business including possibly a transfer of any business name
  • vendor warranties namely some representations made by the vendor regarding the business
  • indemnities from each party - so that the purchaser has some protection from liability for events that happened when the vendor owned the business and vice versa
  • whether the vendor is required to assist the purchaser with a business handover, after completion

Once completed and signed by all parties, this Business Transfer Agreement constitutes a binding agreement between the parties, enabling them to start making arrangements for the business to be handed over.

If any conditions are included in the agreement, then those conditions will also need to be met in order for the transaction to go ahead. If they are not, then one party or the other (or in some cases, both parties) may have the right to pull out of the agreement.


How to use this document

This document can be used when a Vendor and Purchaser are getting ready to enter into a new contract for the purchase of the business.

In this document, the form filler will be able to enter pertinent identifying details, such as whether the parties are individuals or businesses, and their respective addresses and contact information. The form filler will also input the most important characteristics of the agreement between the parties, including dispute resolution and governing law, and of course, any pertinent details about the business transfer.

The Business Transfer Agreement will be legally binding when it has been printed on non-judicial stamp paper or e-stamp paper and signed by both the Vendor and the Purchaser and has been dated. The value of the stamp paper would depend on the state in which it is executed. Each state in India has provisions in respect of the amount of stamp duty payable on such agreements. Information regarding the stamp duty payable can be found on the State government websites. For instance, the website of the state of Karnataka provides details of stamp duty payable on agreements as does the website of Delhi.

Both parties may keep a signed copy of the Business Transfer Agreement. In order to do this, two different copies can be signed, or if only one copy is signed, it can be photocopied and then distributed between the parties.


Applicable law

Business Transfer Agreements in India are subject to the Indian Contract Act, 1872 which covers general contract principles like formation and mutual understanding and the Sale of Goods Act, 1930 which deals with title to goods and warranties. General principles of contract law, as provided by the common law, will apply to this Agreement.

Depending on the industry within which the business operates, other bodies of law, specific to that industry, may also apply.

If employees are being transferred with the business, then elements of employment law may apply.

If intellectual property is being transferred with the business, then elements of intellectual property law can apply, such as the Trade Marks Act, 1999 or the Copyright Act 1957.


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