Summit Business Brokers

The Purchase and Sale Contract for your Business defines and controls the relationship between the Buyer and the Seller.  Your agreement is what is drafted and signed by the parties, not what is discussed or verbally agreed to.   

 

All contracts of substance will have a provision that the contract, and only the contract, reflects the agreement between the parties and that there are no outside written or verbal agreements between the parties except as set forth in the Agreement.  The contract becomes the definitive agreement between the parties.   Because the agreement is so important, who should draft the Contract?   

 

Generally, contracts for significant purchases will be co-drafted by the Buyer and Seller or deemed co-drafted by the parties.  

 

The Purchase and Sale Agreement will usually contain a provision such as the following:

 

Joint Drafting - No Strict Construction. Each of the parties confirms that it has reviewed, negotiated and adopted this Agreement as the joint agreement and understanding of the parties, and the language used in this Agreement shall be deemed to be the language chosen by the parties thereto to express their mutual intent, and no rule of strict construction shall be applied against any person.  The Contract is deemed to be jointly drafted.   

This provision is required so that one party does not claim any unfair surprise or assert that they just signed the agreement without reading or understanding it.  Without a provision that the contract is co-drafted one side could try and have any ambiguities construed against the party that drafted the Agreement.    

 

Notwithstanding that the Contract will usually be deemed as Co-Drafted between the parties, someone takes the lead.  It can be the Buyer or the Seller that starts the drafting.  At Summit Business Brokers we try to control the process of drafting because in drafting the Contract many times you are able to frame the debate and discussion of what will end up in the final Agreement.   In other words when a provision starts out in an agreement it will often end up in the final version.  In our experience many times a party will just react and respond to what is in the Agreement rather than go through the more difficult process of deciding what should be in the Agreement. 

 

Contracts between parties, in the final analysis, are about Money & Control.  What are the financial provisions, how are those provisions determined, how do they change and how are they enforced.     Each deal will have different pressure points and matters of importance.  Recognizing the key points of a deal and making sure the contract reflects and protects those interests is the focus of our contracting.