BUSINESS CONTRACT

[E-tee]

If a business was operated in a legal entity eg. ABC Products CC t/a Inspirational Shoes and the/one of the members of that close corporation sells the business with (only equipment, office furniture and machinery and some old lay-buy contracts) (not the business with name as such), may that member sell it in his personal capacity only - i.e. the Sale Agreement is only drawn up in his own personal name and nowhere in this contract is the cc or "trading as" name mentioned at all. However the Trading name clearly appears on all existing lay-buy contracts "sold" in this sale agreement. How valid is this agreement? Is it legal to do it this way?

[E-tee]

Not sure if this thread has been posted correctly - I had no reply to it since it was posted a week ago?

[pmbguy]

Hi E-tee

You posted your question here in the meet and greet section, rather post it in the General Business Form, I am sure you will get a reply

[flaker]

Unless some member posts to the contrary, my understanding is as follows: The CC & its member are two separate "persons" or entities. That which belongs to the CC can only be sold by the CC & never by the member in his personal capacity.

Perhaps,& just perhaps it could happen that the member might have had a separate agreement (which you are not aware of) where the CC might just have sold some assets to this member which then would entitle the member to dispose of his purchases in any way he deems fit, which he has now doing.

[Dave A]

In broad terms I agree with flaker's assessment. However, there's this thorny contractual problem in the mix too, which makes things a bit trickier than usual.

However the Trading name clearly appears on all existing lay-buy contracts "sold" in this sale agreement. How valid is this agreement? Is it legal to do it this way?

There is little doubt that the new owner is going to have to be able to prove their right of ownership of the contracts to the satisfaction of the client. If the new owner hasn't been provided with a clear passage of ownership in their purchase of the contracts, there would seem to be a problem.

p.s Moving this thread to general business.

[Blurock]

I can not see how a member can sell the assets of a CC. If there is more than one member, the other members will be disadvantaged and will end up with an empty shell. The only explanation is where the CC (with the consent of all the members) sells its assets to an individual who may then dispose of it. (as explained by flaker)