The 5 contractual clauses every seller must absolutely negotiate

1. The warranty of assets and liabilities

The warranty of assets and liabilities protects the buyer against hidden liabilities discovered after signing. In return, it engages your financial liability post-sale. This is the most critical clause to negotiate in any sale and purchase agreement.

Why negotiate it: A poorly framed warranty can expose you to claims for years. Without clear limits, you remain financially vulnerable long after the transfer.

Essential points to demand:

• Limited warranty cap (generally 10-30% of the sale price)
• Reasonable duration (3 years for tax liabilities, 5 years maximum for others)
• Deductible or threshold to avoid small claims
• Precise exclusions of elements already disclosed in the data room

Consult our detailed guide on the warranty of assets and liabilities to understand all the protection mechanisms.

2. The non-compete clause

The non-compete clause prohibits you from creating or joining a competing business after the sale. It protects the buyer, but can become a straitjacket that limits your professional future.

Why negotiate it: An overly broad clause can prevent you from working in your area of expertise for years. Some buyers request excessive restrictions that go far beyond the legitimate protection of their investment.

Points to negotiate absolutely:

• Duration limited to 2-3 years maximum (beyond that, often deemed excessive)
• Geographical scope restricted to the actual operating territory of the business
• Precise definition of "competition" (exact sector, not the entire industry)
• Adequate financial compensation in exchange for this restriction

Without these limits, you risk compromising your future professional reorientation.

3. The earn-out clause (price supplement)

The earn-out ties part of the sale price to the future performance of the business. This clause may seem advantageous, but it often creates conflicts if poorly defined.

Why negotiate it: You no longer control the business after the sale, but your remuneration depends on it. The buyer can make decisions that compromise the earn-out targets, without you being able to intervene.

Essential points to demand:

• Objective and measurable criteria (turnover, audited EBITDA)
• Limited period (1 to 3 years maximum)
• Maintenance of your operational control during the period, or clear definition of responsibilities
• Transparent calculation methods with access to accounting data
• Protection clause against decisions that would harm the objectives

A poorly structured earn-out turns your exit into a legal nightmare.

4. The seller's representations and warranties

The representations and warranties are your statements about the actual state of the business: financial situation, ongoing litigation, regulatory compliance, validity of contracts. Each false or incomplete statement engages your liability.

Why limit them: The buyer often seeks to obtain very broad warranties. The more you warrant, the more you're exposed to future claims, even on elements you couldn't have known about.

Points to negotiate firmly:

• Limit to elements known and verifiable by you
• Qualify with "to the seller's knowledge" or "except as disclosed in the data room"
• Explicitly exclude what has been disclosed in the due diligence documents
• Clearly define the scope and duration of each warranty

Never sign absolute warranties on aspects outside your direct control.

5. The conditions precedent

The conditions precedent are events that must occur to finalise the sale: obtaining financing by the buyer, regulatory authorisations, creditor approval, transfer of licences.

Why frame them: Too many conditions give the buyer easy exit routes. You can find yourself stuck for months, with no certainty that the transaction will complete.

Points to negotiate:

• Limit the number of conditions to the strictly necessary
• Set precise deadlines for their fulfilment (e.g. 60 days for financing)
• Impose an obligation of means on the buyer (active steps to obtain financing)
• Define clear consequences if conditions are not met
• Provide for a break fee if the buyer doesn't make the necessary efforts

Vague conditions = a transaction that drags on indefinitely.

The importance of legal support

A sale and purchase agreement for a business is a complex legal document. Each clause has significant financial and legal implications. Never sign without the advice of a lawyer specialising in business law.

Leez gives you access to a network of legal experts specialising in business transactions. These professionals know the common pitfalls and can negotiate balanced clauses that protect your interests.

Why it's essential: Each situation is unique. A standard contract never fits perfectly. The financial stakes of poor negotiation can represent hundreds of thousands of francs.

Investing in quality legal support means securing your assets and your future. The savings made by negotiating alone can cost very dearly after signing.

Negotiating a sale and purchase agreement cannot be improvised. The five clauses presented, warranty of assets and liabilities, non-compete, earn-out, representations and warranties, conditions precedent, structure the balance between seller protection and buyer security. Each addresses specific issues and deserves particular attention during discussions.

A well-negotiated contract protects your financial interests, limits your future liability and facilitates a smooth transition. But given the legal complexity of a sale, expert support remains essential. A specialised lawyer or M&A adviser helps you identify points of vigilance, formulate clauses adapted to your situation and avoid common pitfalls.

If you're preparing to sell your business, our network of experts can support you in contractual negotiation. And to give visibility to your project, discover how to list your business on Leez.