Business Law: Evaluating Environmental Risks in Land Acquisition Deal

This case study analyzes a sale proposal where U.S. Parts is considering purchasing land previously used by International Paint Company. It highlights the critical importance of assessing the land's environmental condition due to potential toxic waste contamination from the paint manufacturing processes. The study emphasizes that U.S. Parts must be aware of potential cleanup costs, environmental liabilities, and community impacts associated with the land. Recommended steps include reviewing EPA records, inserting liability clauses in the purchase agreement, engaging with local communities, and conducting an Environmental Impact Study (EIS) to ensure regulatory compliance and project feasibility. The overall goal is to protect the buyer's interests, avoid unforeseen costs, and ensure the intended land use is environmentally sustainable and legally sound.

BUSINESS LAW
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Importance of knowing environmental condition
The given sale proposal needs to be analysed in the wake of the given scenario. It is
known that the land under sale has various facilities belonging to the International Paint
Company. The nature of the paint business is such that a significant amount of toxic wastes
are generated which need to be disposed off in accordance with the applicable environmental
laws. This is necessary so as to avoid adverse consequences on the surrounding environment.
As a result, such companies tend to incur significant clean up costs at periodic intervals
related to disposal of toxic wastes (Eccleston 65-67).
In the light of the above background, it is imperative that the buyer (U.S. Parts) must
be aware of the environmental condition of the land as it is highly likely there may be
presence of some toxic wastes which are by-products of paint manufacturing. If this is indeed
the case, then the same would need to be cleaned by the new buyer through the services of a
certified waste disposal agency. Incremental costs would be incurred in this cleaning
operation and the same needs to be adjusted in the price. This is essential so that this liability
is not borne by the new buyer without International Paint Company paying the price for the
same.
Also, there is a possibility where the paint company may not have disposed the toxic
waste generated in the requisite manner owing to which it is possible that the nearby
environmental resources (such as air, land & water) may have been polluted and would have
adversely impacted the local communities that may be residing in the vicinity of the land. In
this case, the new owner would not only would have to incur the necessary clean up costs in
order to control further damage from being caused but would also have goodwill loss within
the community (Murthy 134-137). This would potentially lead to a higher cost of business
and the same needs to be adjusted in the price paid for the acquisition of the land. Further, it

is possible that the current land use may be driven by the environmental condition and hence
information with regards to the same is pivotal. This is especially the case where the intended
use of the land by US Parts is dependent on the natural resources possessed by the land and
the surrounding area (Mainers, Ringleb & Edwards 123-125).
Steps before buying the land
One of the key steps that need to be carried out in the wake of the given business of
the seller is the reviewing of current EPA records with regards to business along with waste
disposal. This is imperative to understand whether the company’s operations and functioning
has been compliant with the applicable –provisions of the EPA. Additionally, it is imperative
that as part of the purchase agreement, the clause should be inserted whereby for any
environmental damage caused on account of the toxic wastes and operations of the paint
company, the liability would be assumed by the seller (i.e. paint company) and no liability in
this regards would be borne by the buyer. This is pivotal so as to protect the interests of the
buyer and ensuring that liability of the actions of the paint company are not borne by US
Parts (Mainers, Ringleb & Edwards 67-70)
Further, in order to understand if the local community is facing any potential issues, it
is imperative to have an interaction with the nearby communities before buying the land so as
to ensure that any looming crisis does not exist. This is imperative as this could become a
major issue for the buyer and also result in bad publicity (Murthy 187). As a result,
independent verifications through consultation with communities is recommended.
Additionally, the buyer (i.e. US Parts) must conduct an EIS (Environmental Impact Study)
with regards to the intended use on the land and the same should be submitted to the EPA
(Environmental Protection Agency). This is imperative as if based on EIS permission to go

ahead with the intended project is not granted by the EPA, then the land could potentially be
of no use to the buyer (Eccleston 145-146). In such a scenario, the liquidation of land might
need to be done which can result in losses. In order to avoid such a situation, it makes sense
to obtain the regulatory environmental approvals from the EPA with regards to the feasibility
of the project. Once the above steps have been carried out, then US parts can go ahead with
the purchase of the land and decide on the suitable price.

References
Eccleston, Charles, The EIS Book, New York: CRC Press, 2014, Print
Mainers, Roger, Ringleb, Al. and Edwards, Frances. The Legal Environment of Business,
New York: Cengage Learning, 2015, Print
Murthy, Keshava, National Environmental Policy (NEPA) Process, New York: CRC Press,
2018, Print