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.
The Hawaii Provision in a Bulk Sales Agreement Regarding Information to be Supplied by Seller is a clause specific to the state of Hawaii that outlines the necessary disclosures and documentation that a seller must provide when selling a business or assets in bulk. This provision aims to protect buyers from unknown liabilities and potential legal issues that may arise from the purchase. Under the Hawaii Provision, the seller is required to provide detailed information and documentation regarding the business, its assets, and liabilities to the buyer. This includes, but is not limited to, financial statements, tax returns, permits, licenses, customer lists, contracts, leases, and any other relevant information regarding the operation and ownership of the business. The purpose of providing this information is to allow the buyer to conduct their due diligence and evaluate the risks associated with the purchase. By disclosing all relevant information upfront, the seller ensures that the buyer is fully aware of any potential financial, legal, or operational risks that they may be assuming through the acquisition. Different types of Hawaii Provisions in a Bulk Sales Agreement Regarding Information to be Supplied by Seller may include: 1. Financial Information: This type of provision requires the seller to disclose detailed financial statements, including balance sheets, income statements, and cash flow statements, for a specified period. This information helps the buyer assess the financial health and profitability of the business. 2. Tax Information: This provision requires the seller to provide copies of their tax returns for a specified period. The buyer can review these returns to confirm that the seller has been compliant with tax obligations and to understand any potential tax liabilities that may transfer to them. 3. Contractual Obligations: This provision focuses on disclosing information about existing contracts, agreements, or leases related to the business. This includes customer contracts, vendor agreements, lease agreements, and any other contractual obligations that the buyer may inherit. 4. Licenses and Permits: The seller must disclose any licenses, permits, or certifications required to operate the business. This provision ensures that the buyer is aware of any legal requirements and can assess the risk associated with obtaining or transferring these licenses. 5. Liabilities and Litigation: This provision requires the seller to disclose any pending or potential legal actions, disputes, or liabilities associated with the business. This information is crucial for the buyer to assess the potential risks and costs that may arise after the acquisition. Overall, the Hawaii Provision in a Bulk Sales Agreement Regarding Information to be Supplied by Seller serves to promote transparency and protect the interests of both parties involved in the transaction. The specific requirements and types of provisions may vary, but the fundamental goal remains the same — ensuring that the buyer has access to all necessary information for a well-informed decision.
