Business Sale: Contractual Obligations, Due Diligence & Actions

This assignment outlines the necessary actions and contractual obligations involved in the sale of a real estate business, Castlecrag Real Estate. It details specific tasks like business registration renewal, payment of the deposit, and the transfer of equipment, including office furniture and digital displays. The document addresses employee considerations, restraint of trade clauses, rent roll guarantees, and software license agreements. It also covers the handling of security interests, website and social media transfers, and training provisions. Additionally, the assignment specifies the need for books and records, special conditions protecting the vendor from agent claims, and the process for notifying landlords of the sale. The document serves as a practical guide to ensure a smooth and legally sound business transaction.

Particulars Action required Who to provide or
perform
Business Name
Castlecrag Real Estate
The registration is due for
renewal on 30th November
(next year). Our registration
number is AXV90987VX
Purchaser to do the
registration
Purchase Price- $880,000
This is the negotiated price
for the business and all
equipment.
Payment of the deposit
needs to be taken
We have asked Mario to pay
10% deposit
Equipment- There is some
office furniture, and shop
fitout and we replaced all
computers, printers and
digital display screens about
18 months ago. In addition,
we now have an onsite
server, a franking and
folding machine. Based on
the company’s last tax
return, the business
equipment and furniture has
a written down value of
$132,500.
Written down value
documents has to be
provided
To be provided to purchaser
Employees
Total 3
Discussion about taking
them on have to be carried
out by the purchaser and the
vendor cannot promise the
same
The purchaser to do so
Restraint of Trade The Restraint of Trade
clause must be reasonable.
The vendor must be allowed
to work as a florist
The purchaser needs to draft
the clause in a way which
does not conflict the rights
of the agent
Rent roll: Clause that we don’t
guarantee that any landlord
will continue to lease their
property through the agency.
The clause would ensure
that the vendor cannot make
any claim in relation to the
same in future
To be provided to purchaser
Licence
We have a software licence
agreement with 4 years
remaining with RentProp
which hosts our rent roll and
the associated lease and
accounts management
system included in the sale.
Fees for the license to be
paid on a monthly basis.
This needs to be notified to
the purchaser before the sale
To be paid by the purchaser
on a monthly basis
14708652173047821187.docx Page 1 of 3
© The College of Law Limited

It has a monthly licence and
maintenance fee of $250.00
Security interest
The company had
previously granted a security
interest to NewBank
Limited over all company
assets for a loan which has
been repaid
Certificate of loan clearance
and discharge of security
interest by NewBank
The documents are to be
provided to the
Website and social media:
We have set up a website
www.castlecragre.com.au
and social media account
with twitter @castlecragre
that we use to advertise our
listings. We are happy to
transfer the website and
Twitter account to the
purchaser.
Ownership of website to be
transferred to the purchaser
The purchaser to be
provided with ownership
documents
Training: Due to our
planned trip, we are unable
to offer Mario any training
post completion. That being
said, in the circumstances, I
don’t think that Mario will
need any training. Please
ensure the contract does not
require us to provide any
training after settlement.`
Clause for no training to be
provided to Mario after the
settlement must be added in
the contract The purchase is to be
notified about the clause
Books and records: Our
accountant, Justin Case can
provide the books and
records and any other
financial information you
require
books and records and any
other financial information
To be provided to the
purchaser
A special condition to
protect the vendor (our
client) from a claim by an
agent for commission
arising out of introducing
the purchaser to the
business. You will note that
John’s instructions are that
there is no agent involved in
the sale.
This special condition needs
to be added in the contract.
There has not been any
agent involved in relation to
the purchase.
The special condition must
be drafted for the contract to
sale of business
The information must also
be highlighted to avoid any
claims in future
The special condition needs
be made a part of the
contract by us and need to
be acknowledged by both
parties
A special condition that the
vendor does not make any
representation in respect of
the value of the rent roll of
Castlecrag Real Estate and a
This special condition needs
to be added in the contract.
The vendor does not make
any representation in respect
of the value of the rent roll
The special condition needs
be made a part of the
contract by us and need to
be acknowledged by both
parties
14708652173047821187.docx Page 2 of 3
© The College of Law Limited

process for notifying the
landlords of the sale of the
business
of Castlecrag Real Estate
and a process for notifying
the landlords of the sale of
the business The special
condition must be drafted
for the contract to sale of
business
14708652173047821187.docx Page 3 of 3
© The College of Law Limited