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Non Compete Asset Purchase Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that combines an asset purchase transaction with non-compete provisions. This document outlines the terms and conditions for the purchase of business assets while establishing restrictions on the seller's ability to compete with the purchased business. The agreement ensures compliance with Canadian competition laws and includes provisions for asset transfer, purchase price, payment terms, representations and warranties, while incorporating reasonable non-compete restrictions in terms of duration, geographic scope, and scope of activities. It is structured to be enforceable under Canadian federal and provincial legislation, particularly considering the Competition Act and relevant provincial commercial laws.

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What is a Non Compete Asset Purchase Agreement?

The Non-Compete Asset Purchase Agreement is a crucial document used in Canadian business transactions where a buyer acquires business assets while seeking to protect their investment by preventing the seller from competing in the same market. This agreement is particularly important in scenarios where the seller's knowledge, relationships, or expertise could pose a competitive threat to the purchased business. The document must comply with Canadian federal and provincial laws, including the Competition Act and provincial commercial legislation. It typically includes detailed schedules of assets, specific non-compete terms, and provisions for purchase price, payment structure, and closing conditions. The non-compete provisions must be carefully drafted to ensure enforceability under Canadian law, which requires reasonable limitations on duration, geographic scope, and restricted activities. This type of agreement is commonly used in business sales, mergers and acquisitions, and strategic business purchases where protecting the value of the acquired assets is essential.

What sections should be included in a Non Compete Asset Purchase Agreement?

1. Parties: Identification of the seller and purchaser, including full legal names and addresses

2. Background: Context of the transaction, nature of the seller's business, and purpose of the agreement

3. Definitions: Key terms used throughout the agreement, including Asset definitions, Closing Date, Purchase Price, etc.

4. Purchase and Sale of Assets: Description of the transaction and assets being transferred

5. Purchase Price and Payment Terms: Details of consideration, payment method, and timing

6. Non-Competition Covenants: Specific non-compete obligations including duration, geographic scope, and prohibited activities

7. Representations and Warranties: Seller's and purchaser's representations regarding the assets, business, and authority to enter agreement

8. Closing Conditions: Conditions that must be met before the transaction closes

9. Closing Procedures: Steps to be taken at closing, including document delivery and payment

10. Indemnification: Terms for compensating parties for breaches or losses

11. Survival: Which provisions survive after closing

12. General Provisions: Standard clauses including governing law, notices, amendments, etc.

What sections are optional to include in a Non Compete Asset Purchase Agreement?

1. Non-Solicitation Provisions: Additional restrictions on soliciting employees or customers, included when broader protection is needed

2. Transition Services: Terms for post-closing assistance from seller, included when operational continuity is crucial

3. Employee Matters: Provisions regarding transfer or hiring of employees, included when employees are key to the assets

4. Intellectual Property Rights: Specific provisions for IP transfer and protection, included when IP is a significant asset

5. Environmental Matters: Environmental representations and indemnities, included for assets with environmental exposure

6. Tax Matters: Detailed tax provisions, included for complex tax implications

7. Third Party Consents: Process for obtaining required third-party approvals, included when assets require consent to transfer

What schedules should be included in a Non Compete Asset Purchase Agreement?

1. Schedule A - Purchased Assets: Detailed list and description of all assets being purchased

2. Schedule B - Excluded Assets: List of assets specifically excluded from the purchase

3. Schedule C - Assumed Liabilities: Description of any liabilities being assumed by the purchaser

4. Schedule D - Purchase Price Allocation: Breakdown of purchase price across asset categories

5. Schedule E - Non-Compete Terms: Detailed terms of non-compete including territory and restricted activities

6. Schedule F - Required Consents: List of third-party consents needed for asset transfer

7. Schedule G - Intellectual Property: Detailed list of IP assets being transferred

8. Schedule H - Material Contracts: List of key contracts included in the purchase

9. Appendix 1 - Form of Bill of Sale: Template for the formal transfer document

10. Appendix 2 - Form of Assignment and Assumption Agreement: Template for transfer of contracts and obligations

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Canada

Cost

Free to use

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