How Do I Sell Business Contracts?

legal contract

Selling a legally binding contract can be simple, or it can be a legal minefield. It is always best to approve what you are doing with the other parties involved to avoid any misunderstanding. You probably have the legal right to sell or assign a contract, unless the contracts language forbids assignment. You will also retain secondary legal responsibility that the party the contract is sold to will perform. If the party you sell or assign the contract to cannot fulfill the terms, be prepared to step in and complete the terms of the contract. This is especially true in real estate purchase contracts.

Instructions

1. Review the contract terms for any clauses relating to selling or assignment. If not forbidden in the body of the contract, you can normally sell the contract.

2. Inform the original party of the sell or assignment. While not always legally required, you retain secondary liability to perform the terms of the contract if the party you sell to cannot. It is best to avoid any negative feelings by keeping all parties informed. You may be able to negotiate with the other party to release you from this obligation.

3. Qualify the person or entity you are selling to. Make sure they are fully aware of all time lines and terms. Be confident they can meet all contract requirements before completing the sale. Investigate their background and history in business. Check the county records for any litigation or other red flags.

4. Position yourself to satisfy the contract if the purchaser defaults. If there will be financial obligations, such as in a real estate contract, have funds available until the contract is fulfilled. Make sure the contract has an arbitrage clause so terms are final when the contract is fulfilled and nothing survives to come back and trouble you later.

5. Monitor both parties until the contract is fulfilled.

References

• The Lectric Law Library

Resources

• Buying a Business Resources