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Simple Asset Purchase Agreement Template for Canada

A Simple Asset Purchase Agreement is a legally binding contract used in Canadian jurisdictions for the transfer of assets from a seller to a buyer. This agreement outlines the terms and conditions of the asset sale, including the description of assets, purchase price, payment terms, representations and warranties, and closing conditions. It is drafted in compliance with Canadian federal and provincial laws, particularly the Sale of Goods Act and relevant tax legislation. The document provides a comprehensive framework for straightforward asset transfers while ensuring legal protection for both parties and clarity in the transaction process.

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What is a Simple Asset Purchase Agreement?

The Simple Asset Purchase Agreement is a fundamental commercial contract used in Canadian business transactions for the transfer of assets from one party to another. This document is particularly suitable for straightforward asset purchases where a comprehensive business purchase agreement would be unnecessarily complex. It is commonly used when acquiring specific equipment, inventory, intellectual property, or other isolated assets rather than an entire business. The agreement ensures compliance with Canadian federal and provincial regulations, including the Sale of Goods Act, tax laws, and property transfer requirements. It includes essential elements such as asset description, purchase price, payment terms, representations and warranties, and closing conditions, while remaining simpler and more focused than a full business purchase agreement. This document is designed to protect both parties' interests while facilitating efficient asset transfers in various commercial contexts.

What sections should be included in a Simple Asset Purchase Agreement?

1. Parties: Identifies and provides full legal names and addresses of the buyer and seller

2. Background: Provides context for the transaction and confirms the seller's ownership of the assets and buyer's desire to purchase

3. Definitions: Defines key terms used throughout the agreement

4. Purchase and Sale of Assets: Describes the assets being sold and confirms the transfer of title

5. Purchase Price and Payment: Specifies the purchase price, payment method, and payment terms

6. Closing: Sets out the closing date and closing deliverables

7. Representations and Warranties of the Seller: Seller's confirmations regarding ownership, condition of assets, and authority to sell

8. Representations and Warranties of the Buyer: Buyer's confirmations regarding authority and capacity to purchase

9. Conditions Precedent: Conditions that must be met before closing

10. Covenants: Ongoing obligations of the parties before and after closing

11. Termination: Circumstances under which the agreement may be terminated

12. General Provisions: Standard contractual provisions including governing law, notices, and amendment procedures

What sections are optional to include in a Simple Asset Purchase Agreement?

1. Tax Matters: Detailed tax provisions when the transaction has significant tax implications

2. Environmental Matters: Required when the assets include real property or equipment with environmental considerations

3. Employee Matters: Necessary when the assets include ongoing business operations with employees

4. Intellectual Property: Required when the assets include patents, trademarks, or other IP

5. Third Party Consents: Needed when asset transfer requires approval from third parties

6. Post-Closing Covenants: Used when parties have ongoing obligations after closing

7. Transition Services: Required when seller needs to provide temporary support post-closing

What schedules should be included in a Simple Asset Purchase Agreement?

1. Schedule A - Asset Description: Detailed list and description of all assets being purchased

2. Schedule B - Purchase Price Allocation: Breakdown of purchase price across different asset categories

3. Schedule C - Excluded Assets: List of assets specifically excluded from the sale

4. Schedule D - Assumed Liabilities: List of any liabilities being assumed by the buyer

5. Schedule E - Required Consents: List of third-party consents required for the transaction

6. Schedule F - Encumbrances: List of any existing liens or encumbrances on the assets

7. Schedule G - Form of Bill of Sale: Template for the bill of sale to be executed at closing

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Canada

Cost

Free to use

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