When selling a business that heavily utilizes discount vouchers and coupons from the likes of Groupon, Spreets and Cudo, business brokers need to be careful to ensure the seller appreciates there are risks in not handling this aspect of the sale appropriately.

The seller is liable to honour that deal, even if they have sold their business. Therefore they must have the buyer agree to:

  1. honour any unredeemed deals after the business is sold; and
  2. reimburse the seller (with an indemnity) in case the customer receives poor services or defective goods from the new owner and pursues the seller.

From the buyer’s perspective, if they are going to be responsible for honouring the deals sold by the previous owner, they should:

  1. obtain reasonable compensation from the seller for honouring the deals;
  2. find out what is required to meet the coupon obligations so they don’t fall short.

The following is a sample special condition that can be inserted into the business sale contract to address these risks.

  1. Outstanding Vouchers
    1.  Definitions and Interpretations:
      1. Voucher means any voucher, coupon, gift certificate, token, stamp or other pre-paid facility for goods or services of the Business issued prior to Completion;
      2. Outstanding Vouchers means any Voucher not redeemed in full prior to Completion;
      3. A Voucher is not a Service Agreement for the purpose of Standard Condition 15 (REIQ Business Sale Contract) or a debt of liability of the Business for the purpose of Standard Condition 16 (REIQ Business Sale Contract).
    2. Upon Completion, the Buyer agrees to honour all Outstanding Vouchers.
    3. As soon as practicable prior to Completion, the Seller will provide the Buyer with the complete particulars and duplicates of all Outstanding Vouchers.
    4. The Seller must at the date of Completion deduct the monetary value (i.e. sale price) of all Outstanding Vouchers (inclusive of GST) from the purchase price.
    5. For Outstanding Vouchers that are partly redeemed, the Seller will determine (acting reasonably) the monetary value of the goods and services to be provided by the Buyer and such amount shall be deducted from the Purchase Price.
    6. The Buyer indemnifies the Seller against any loss or claim relating to Outstanding Vouchers.

Joe Kafrouni, Legal Practitioner Director, Kafrouni Lawyers

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