A bulk sale is a sale of goods by a business which engages in selling items out of inventory, often in liquidating or selling a business, and is governed by Article 6 of the Uniform Commercial Code (UCC) which deals with bulk sales. Article 6 has been adopted at least in part in all states. If the parties do not comply with the notification process for a bulk sale, creditors of the seller may obtain a declaration that the sale was invalid against the creditors and the creditors may take possession of the goods or obtain judgment for any proceeds the buyer received from a subsequent sale.
UCC Section 6-104 specifies the duties of the bulk sales buyer, including determining the identity of the seller, and preparation of a list of claimants and a schedule of distribution. These duties are imposed on the buyer in order to give claimants the opportunity to learn of the bulk sale before the seller has been paid and disappeared with the money.
Delaware Provision in Bulk Sales Agreement Regarding Information to be Supplied by Seller The Delaware provision in a bulk sales agreement outlines the specific information that the seller must supply to the buyer during the transaction. This provision ensures transparency and protects the buyer from unforeseen liabilities or risks associated with the purchase of assets, such as inventory, equipment, or business operations. Key Information to be Supplied by Seller: 1. Inventory List: The seller must provide a detailed inventory list, including the description, quantity, and value of each item being sold. This ensures that the buyer is aware of all assets included in the transaction and can evaluate their potential value. 2. Accounts Receivable: The seller must disclose any outstanding accounts receivable, including the names of debtors and the amounts owed. This information is crucial as it allows the buyer to assess the collect ability of these outstanding payments. 3. Contracts and Agreements: The seller is required to provide copies of any contracts or agreements related to the assets being sold. This may include lease agreements, supplier contracts, customer contracts, or any other agreements that may affect the ongoing operations of the acquired business. 4. Liabilities and Obligations: The seller must disclose any outstanding liabilities or obligations associated with the assets being sold. This may include outstanding loans, pending lawsuits, warranty claims, or any other potential obligations that the buyer should be aware of. 5. Financial Statements: The seller should provide comprehensive financial statements, including income statements, balance sheets, and cash flow statements. These statements give the buyer an overview of the financial health of the business and help in evaluating the profitability and potential future performance of the acquired assets. 6. Tax Returns: The seller must supply copies of recent tax returns for the business being sold. This information helps the buyer to assess any potential tax liabilities or issues that may arise from the purchase of the assets. Types of Delaware Provision in Bulk Sales Agreement Regarding Information to be Supplied by Seller: 1. General Information Disclosure: This provision covers the basic information described above and serves as a standard requirement in the majority of bulk sales agreements in Delaware. 2. industry-specific provision: Certain industries may have additional information requirements that go beyond the general provision. For example, in the food industry, the seller may need to provide information related to food safety regulations and permits. 3. Confidentiality Provision: This provision ensures that the seller's sensitive or proprietary information shared during the transaction process remains confidential and is not exploited by the buyer or disclosed to third parties. 4. Representations and Warranties: This provision focuses on the accuracy and completeness of the information disclosed by the seller. It provides the buyer with certain assurances and legal remedies if any information provided is found to be inaccurate. By specifying the information that the seller must supply, the Delaware provision in bulk sales agreements protects buyers and promotes transparency in business transactions. It enables buyers to make informed decisions and minimizes the potential risks associated with asset acquisitions.
