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Best practice: The business of timing

Every Issue

Cite as: December 2015 89 (12) LIJ, p.75

The LIV welcomes practitioner feedback on dealing with time lines in the new LIV Contract of Sale of Business. 

Tips
  • The general conditions can and should be amended to suit the needs of the transaction.
  • Failure to comply with some time lines, including the request for Personal Property Securities Act (PPSA) releases, have specific contractual consequences.
  • The LIV welcomes practitioner feedback.
  • The new LIV Contract of Sale of Business aims to be fair to both vendors and purchasers and to provide clear obligations and time frames.

    Most of the obligations in the general conditions are naturally due on settlement. However, there are some with fixed time lines to be aware of.

    At least 35 days before the due date for settlement

    The purchaser is to notify the vendor of any employees to whom the purchaser will offer employment.

    Within two business days after this notification, the purchaser must make the offer of employment to those employees.

    Up to 35 days before the due date for settlement*

    The vendor is to provide notice of termination of employment to each transferring employee in accordance with the Fair Work Act minimum notice periods or the employee’s employment contract, depending on which is the greater amount of time.

    *This time line may be changed by the employee’s employment contract or the National Employment Standards.

    At least 21 days before the due date for settlement

    The purchaser is to request the vendor’s date of birth for the purpose of a Personal Property Securities Register search.

    The purchaser is to advise the vendor of any security interests to be released, corrected or approved in accordance with the Personal Property Securities Act.

    The vendor is to notify the purchaser of any employee who is on a long-term absence for any reason as at the due date for settlement. The purchaser may request this information before this time, in which case the vendor must provide the notification within five business days of the request.

    At least 15 days before the due date for settlement

    If there is a dispute as to the value or items of stock, either party may approach the LIV to have a valuer appointed, providing that one has not been mutually appointed.

    At least seven days before the due date for settlement

    If the parties mark EFT in the appropriate box or boxes in the particulars of sale, then the vendor must ensure that its legal practitioner notifies the purchaser of its trust account particulars.

    Within three business days before the due date for settlement

    The purchaser may inspect the business and the premises at all reasonable times.

    Five business days after settlement

    If the parties have not agreed to a joint statement beforehand, either party may make a public announcement stating that the business has sold.

    Tegan Hall and Carlo Furletti are LIV Business Law and Corporate Law Committee members.

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