Business Acquisition and Lease Obligations Explained

Obligations of the Buyer and Seller in Business Acquisitions

Delivery of the Business

The object of the contract must be an "operable enterprise or one capable of functioning." This requires:

• Asset Enumeration: The contract must explicitly list all different components and assets.
• Operational Guidance: The seller must advise the buyer on how the enterprise functions, including client management, patent proceedings, and know-how.
• Special Liability of the Seller: The seller must refrain from competing with the buyer to protect the transfer of the client base.

Transfer of Overall Obligations

• Contracts: Transfer requires the consent of the buyer, the seller, and the third party involved. Special rules apply to labor relationships.
• Credits: Per Article 347 of the Commercial Code (Ccom), consent from the debtor is not required; notification of the transfer is sufficient.
• Debts: Per Article 1205 of the Civil Code (CC), novation—replacing the original debtor with a new one—may occur without the former debtor's awareness, but requires the creditor's consent.

Price

The price is usually a forward price to protect the buyer against hidden liabilities.

Obligations of the Lessor and Lessee in Business Leases

Rights and Obligations of the Lessor and Lessee

The following obligations are defined under Articles 1554 and 1555 of the Civil Code (CC):

Obligations of the Lessor (Art. 1554 CC)

1. To deliver the business constituting the subject matter of the contract to the lessee.
2. To perform all necessary repairs during the lease to preserve the business in a condition suitable for its intended use.
3. To maintain the lessee in the peaceful enjoyment of the lease for the entire term of the contract.

Obligations of the Lessee (Art. 1555 CC)

1. To pay the lease price according to the agreed terms.
2. To use the leased property as an orderly entrepreneur, adhering to the agreed use or, in the absence of an agreement, the use inferred from the nature of the business and local custom.
3. To pay any expenses arising from raising the contract to a public deed.