Chapter 3. Sale of a business
Section 1. General Provisions
Art. 150 - Civil Code applicable.
Without prejudice to the provisions of this Chapter, the provisions of Art. 2266-2367 of the Civil Code shall apply to the sale of a business.
Art. 151. - Scope of application of this Chapter.
1. The provisions of this Chapter regarding the sale of a business shall apply:
a. to any sale or assignment, even under a disguised form;
b. to any sale by auction at the request of joint owners.
c. to any distribution accompanied by compensation, where such sale, assignment or distribution relates to a business or its goodwill or to a branch or agency assigned without the principal business being assigned or the goodwill of such branch or agency.
2. The provisions of this Chapter shall not apply to the sale of individual parts of a business other than the goodwill, unless such sale entails or conceals the sale of the business or of the goodwill of a business.
Sections 2. Formalities
Art. 152. - Sale to be in writing.
The sale of a business shall be null and void unless evidenced in writing.
Art. 153. - Particulars in the contract of sale.
The contract of sale shall specify:
1. the turnover and profits made during the last three financial years or since the business was created or acquired by the seller, where such creation or acquisition took place less than three years before the sale;
2. Where the business is carried on in premises let out for hire, the date on which the contract of lease was made and is to expire and the same and address of the lessor;
3. The mortgages on the business, if any.
Art. 154. - Cancellation of the contract.
1. The court may cancel the contract of sale on the applicatit1n of the buyer where it is of opinion that the buyer was injured by the failure to comply with any of the requirements provided in Art. 153.
2. The court may cancel the contract of sale or reduce the price of the sale on the application of the buyer where it is of opinion that the buyer was injured by any inaccurate statement made under Art. 153.
3. Proceedings under sub-art. (1) and (2) shall be instituted during the year within which the contract was made.
Section 3. Duties of the Seller
Art. 155. - Duty to hand over.
1. The seller shall hand over the business to the buyer.
2. Unless otherwise agreed, the sale of a business implies the sale of all the conhtituent parts of such business.
3. The seller shall enable the buyer to take over the goodwill by handing to him all necessary documents and information.
4. The provisions of the Civil Code and of special laws shall apply to the assignment of patents and copyrights.
Art. 156 - Books and accounts.
1. On the day of the sale, the seller and the buyer shall check all accounts and prepare an inventory of all accounting documents and books.
2. The seller shall retain all his books and accounting documents and the correspondence sent or received by him, but he shall, notwithstanding any provision to the contrary, keep them available or inspection by the buyer for a period of two years.
Art. 157. – Commercial correspondence.
The seller shall hand to the buyer all correspondence relating to the business which he may receive after the sale of the business.
Art. 158. – Seller prohibited from competing.
1. During five years from the sale, the seller shall refrain from doing any act of competition likely to injure the buyer. He may not carry on, in the vicinity of the business he sold, a trade similar to the trade carried on by the buyer.
2. The contract of sale may specify the extent of such prohibition which shall in no case exceed five years.
Art. 159. – Right of the subsequent buyers.
A prohibition under Art. 158 shall be deemed to be an element of the business and may be enforced by the buyer and his heirs end by any subsequent buyer.
Section 4. Duties of the Buyer
Art. 160. – Duties of the Buyer.
The buyer shall pay the price in the manner provided in the contract or, where no special provision is made, in cash. Notwithstanding any agreement to the contrary, the provisions of Art. 162 of this Code shall apply.
Art. 161. – Publication of the sale.
The buyer shall ensure that notice of sale is published in accordance with the provisions of Art. 164-170 of this Code.
Art. 162. – Prohibition from disposing of proceeds of sale.
1. After the sale, the price of the sale shall not be paid to the seller until the period of time for making applications to set aside expires or, where any such application has been made, until the right of the creditors have been sett1ed by agreement or by the court and such creditors have been paid.
2. Until that time, no payment t or assignment of the claim shall affect the rights of the seller’s creditors.
3. The contract of sale may provide that the buyer shall deposit the price of the sale with a third party. Any such deposit shall discharge the buyer from his liabilities to the seller but the buyer shall remain liable to the seller’s creditors.
Art. 163. – Guarantee of the seller.
Until he is fully paid, the seller shall be secured by a legal mortgage and shall have the right to cancel the contract as provided in Art. 173-176 of
Section 5. Publication of the Sale and Rights of the Seller’s Creditors
Art. 164. – Publication of the sale.
1. Where a business is sold, the buyer &hall ensure that a notice to this effect is published in the official commercial gazette and in a news-paper empowered to publish legal notices circulating in the Taklay Guezat where the head office of the business is situate.
2. Where the business sold comprises branches or agencies situate in different places, the notice under sub-art. (1) shall be published in a newspaper empowered to publish legal notices circulating in the Taklay Guezat where each branch or agency is situate.
Art. 165. – Particulars to be published.
Notice under Art. 164 shall show:
a. the names and addresses of the seller and buyer;
b. the objects and address of the business;
c. the objects and address of any branch or agency which may have been sold with the business.
d. the date and nature of the contract of sale;
e. the price of the sale;
f. the address for service at the place where the business in situate.
Art. 166. – Time within which to publish notices.
1. Notices under .Art. 164 shall be published during the month within which the sale took place.
2. Late notice shall be va1id, but the buyer may be liable for any damage caused to the seller or to the seller’s creditors reason of the delay.
Art. 167. – Application to set aside.
1. Within one month from the publication of the last notice, any creditor of the seller may, even where his claim is not due, move the court to set aside the proceeds of the sale and shall notify the buyer at his address for service.
2. The application shall show the name and address of the creditor and the amount and basis of the claim.
3. Where notices under Art. 164 have not been published or did not contain all the particulars required under Art. 165, an application to set aside may be made at any time.
4. Until the application is decided on, the buyer or third party with whom the proceeds of the sale have been deposited may not dispose thereof and the provisions of Art. 162 shall apply.
Art. 168. – Application rejected.
The buyer may move the court reject an application which is not correct in form, or which is late or made without good cause.
Art. 169. – Distribution of the proceeds of the sale.
1. The proceeds of the sale shall be distributed by agreement or by order of the court between the creditors having a claim secured by the business and the creditors having made an application to set aside.
2. The surplus, if any, shall be handed to the seller.
Art. 170. – Overbid by creditors.
1. Creditors under Art. 169 (1) may move the court to order that the business be sold by auction where the price of I1he sale is insufficient to meet their claims.
2. The court shall order the sale by auction and the price of the sale shall be higher by one tenth than the price specified in the contract of sale.
3. Where no third party presents himself at the sale, the business shall be sold to the creditor making the highest bid.