Buying a business and existing contracts of service

[riksung]

First post here today and I am looking for some advice.

If I was to setup a new LTD company to purchase an existing business trading as XYZ but owned by ABC LTD am I legally committed to continue the existing and "tied for x years" service contracts for waste/cleansing etc that were agreed by the owners of ABC LTD?

Or does the responsibilty for these existing contracts remain with the presumably soon-to-be non-trading company.

also if any agreements are signed by the company secretary. are the legally correct and above board if they have been signed by the company secretary

thanks in advance for your help and advice.

Rich

 

[DuaneJackson]

Hi Rich and welcome

I'm having trouble working out exactly what you are asking.

I think the answer to your first question would depend on what the contract itself says about the matter.

 

[Antonia @limeone.com]

First post here today and I am looking for some advice.

If I was to setup a new LTD company to purchase an existing business trading as XYZ but owned by ABC LTD am I legally committed to continue the existing and "tied for x years" service contracts for waste/cleansing etc that were agreed by the owners of ABC LTD?

This very much depends on what you agree in the sale of the business document. It may, for example, as a condition of sale be that the old business has to terminate its contracts or take responsibility for the payment to the supplier for these services for thr remainder of the contract.

Or does the responsibilty for these existing contracts remain with the presumably soon-to-be non-trading company.

See above, these details are resolved during the sale process, normally by the old business owners providing an indemnity to the new business or taking over the responsibility in full. in some cases a reduction in sale price is negotiated to take into account an unpalatable contractual obligation which is necessary for the new business to function.

also if any agreements are signed by the company secretary. are the legally correct and above board if they have been signed by the company secretary

You need to establish with the old company the rights in signing legal documents for the company secretary. Many company secretaries do undertake this role, but the legality of them doing so is the decision of the company directors and not in the role itself. This should again be referred to in the sale documentation.

I suggest you need to take detailed legal advice, if you have an interest in the old company and are 'selling' to your new venture then there are other aspects of a sale to consider which I have not covered above. We do this work for many businesses and advise as well as drawing up the documentation. Please email me either through here or via info@limeone,com if you have more queries.

 

[riksung]

thanks guys.