Buying A Business: Contracts US Buyers Should Review

Buying a business and wondering which contracts you actually need to read before you sign? The reassuring answer is this: you don't need to review every email the seller has ever sent, but you do need to understand the contracts that keep the business running.

Those contracts can tell you whether the revenue is secure, whether suppliers will keep supplying, whether you can use the business name, and whether key staff or contractors are tied into proper agreements.

A purchase price can look attractive on paper. But if the customer contracts can't be assigned, the landlord won't consent, or the seller doesn't really own the brand assets, you may end up buying less than you thought.

Let's go through the main contracts US buyers should review before buying a small business, and what to look for in each one.

Which Contracts Should You Review Before Buying A Business?

You should review any contract that affects the value, operation, risk, or legal ownership of the business you're buying.

For most small business purchases, that usually means asking for a contract schedule and copies of the key documents. A good schedule lists the contract name, parties, start date, end date, renewal date, payment terms, and whether consent is needed to transfer it.

The main contracts to request include:

• Customer contracts, especially key accounts, recurring revenue agreements, purchase orders, subscriptions, service agreements, and open quotes.
• Supplier and vendor contracts, including distributors, manufacturers, software providers, marketing agencies, payment processors, logistics providers, and important trade accounts.
• Lease or occupancy documents, if the business operates from premises, a warehouse, a kiosk, or shared workspace.
• IP agreements, including trademark assignments, copyright assignments, software development agreements, design agreements, brand licenses, and domain name arrangements.
• Employment and contractor documents, including offer letters, employee handbooks, confidentiality agreements, invention assignment terms, contractor agreements, and consultant statements of work.
• Privacy and data documents, including privacy policies, customer consents, data processing terms, and platform terms if you'll receive customer data.
• Loan, security, and financing documents, including UCC financing statements, liens, equipment finance, and personal guarantees.
• Franchise or license agreements, if the business operates under a system, brand, territory, or formal operating rules.

You don't have to treat every contract equally. A $200 monthly software subscription matters less than a customer agreement that makes up 40% of revenue. Your first priority is to identify which contracts are mission-critical.

Do The Business Contracts Transfer To You Automatically?

No, contracts don't always transfer automatically when you buy a business, especially in an asset purchase.

This is one of the biggest issues buyers miss. If you're buying assets, you're usually buying things like equipment, inventory, business name rights, goodwill, customer lists, and certain contracts. The seller isn't automatically handing you every legal relationship unless the contract allows it and the transfer is properly documented.

If you're buying the company itself, the contracting party may technically stay the same. But even then, some contracts have change of control clauses that require consent if ownership changes.

Check The Assignment Clause

The assignment clause tells you whether the seller can transfer the contract to you.

Look for wording that says the contract:

• can be assigned without consent
• can be assigned only with the other party's written consent
• can't be assigned at all
• can be assigned to an affiliate or buyer of the business
• treats a change in ownership as an assignment

If consent is required, make it a closing condition in the purchase agreement. That means you don't have to close unless the key consents are obtained.

Say Maya is buying a small fitness studio. The studio's top corporate customer has a 12-month wellness services agreement, but the contract says it can't be assigned without the customer's written consent. If Maya signs the purchase agreement without dealing with that consent, she may find the revenue doesn't follow the business after closing.

Remember That The UCC Doesn't Replace The Contract

The Uniform Commercial Code, often called the UCC, can affect sales of goods, secured transactions, and certain assignments. But it doesn't give you a simple free pass to take over every contract.

Contract terms, state law, industry rules, and the type of transaction all matter. If a contract is central to the deal, get the transfer mechanics checked before you sign.

Are The Customer And Supplier Contracts As Valuable As They Look?

It depends, because a contract is only valuable if it creates reliable rights, revenue, supply, or protection for your business after closing.

Customer and supplier contracts are usually where the commercial value sits. They can also hide some uncomfortable surprises.

For Customer Contracts, Look At Revenue Quality

Don't just look at last year's sales. Look at whether the contracts support those sales continuing after you buy.

For each major customer, check:

• the exact customer name and contracting party
• the services or products being provided
• the pricing, discounts, credits, rebates, and payment terms
• whether the customer can terminate for convenience
• whether there are minimum purchase commitments
• whether there are service levels, warranties, refund rights, or penalties
• whether unpaid invoices will stay with the seller or transfer to you
• whether the contract can be assigned to you

Also check whether the seller has promised customers things that aren't written in the contract. Side promises can become your operational headache if customers expect them to continue.

For consumer-facing businesses, also look at advertising claims, refund practices, and website terms. The Federal Trade Commission Act prohibits unfair or deceptive acts or practices, and FTC guidance can matter if the seller's marketing, pricing, testimonials, or privacy promises don't match what the business actually does.

For Supplier Contracts, Look At Continuity And Control

Supplier contracts tell you whether the business can keep operating the day after closing.

Check for:

• price increase rights
• minimum order quantities
• exclusivity commitments
• territory restrictions
• delivery times and remedies for late delivery
• credit terms and overdue amounts
• personal guarantees signed by the seller
• termination rights if the business is sold
• whether you need the supplier's consent before the contract transfers

If one supplier is essential, consider speaking with them before closing, with the seller's permission. A friendly conversation can reveal whether they're willing to keep trading with the new owner and on what terms.

For goods-based businesses, the UCC may fill some gaps around delivery, acceptance, warranties, and remedies. But written supplier terms usually do a lot of the heavy lifting, so read them carefully.

Who Owns The IP, Website, Data And Brand Assets?

You need to confirm that the seller actually owns or can transfer the intellectual property, website assets, data, and brand materials you're paying for.

This matters because brand value is often a big part of a small business purchase. The logo, name, content, software, customer database, packaging, photos, and social media presence can all affect the price.

Trademarks And Brand Names

For names, logos, slogans, and product brands, ask whether the seller has registered trademarks with the United States Patent and Trademark Office. Federal trademark rights are governed mainly by the Lanham Act.

A USPTO registration can be very helpful, but it still needs to be assigned correctly. The trademark assignment should identify the mark, registration or application details, goodwill, and the correct parties.

If the seller only has unregistered rights, you'll want to understand how the mark has been used, where it's been used, and whether anyone else may have conflicting rights.

Copyright, Content And Creative Work

Under the Copyright Act, copyright usually belongs to the creator unless there's a valid written assignment or the work fits within the narrower work made for hire rules.

That means you should check who created:

• website copy
• photos and videos
• logos and graphic design files
• training materials
• software code
• product manuals
• advertising materials

If freelancers, agencies, or developers created the materials, ask for the agreements that assign ownership to the seller. Without that paper trail, the seller may not own everything it's trying to sell you.

Copyright registrations with the US Copyright Office can also be relevant, especially for software, creative content, manuals, and media assets.

Trade Secrets, Confidentiality And Know-How

Trade secrets can include recipes, pricing models, customer lists, processes, formulas, playbooks, and technical know-how. At the federal level, the Defend Trade Secrets Act can protect trade secrets, but only if reasonable steps have been taken to keep them secret.

Ask whether the seller has confidentiality agreements with employees, contractors, suppliers, and partners who had access to sensitive information.

If everyone in the market already knows the information, it may not be much of a trade secret. If the business has protected it carefully, make sure those protections continue after closing.

Customer Data And Platform Access

If you're receiving customer data, subscriber lists, analytics accounts, CRM records, or app users, check the privacy documents before closing.

Ask:

• what data is being transferred
• how the data was collected
• what the privacy policy promised customers
• whether consents cover a sale or transfer of the business
• whether any vendors process data for the business
• whether state privacy laws or industry rules apply

The FTC can take action where privacy statements are misleading or data practices are unfair or deceptive. State privacy laws can also change the answer, so this is an area where tailored advice is worth getting if customer data is a major asset.

What Employment And Contractor Contracts Matter In A Business Purchase?

You should review the contracts for anyone whose work, relationships, or know-how is important to the business you're buying.

People are often part of the value of a business, even if you're technically buying assets. If the head chef, lead developer, store manager, sales director, or main technician leaves the day after closing, the business may not run the way you expected.

Employee Documents To Review

Ask for current versions of:

• offer letters and employment agreements
• employee handbooks and policies
• confidentiality agreements
• invention and IP assignment agreements
• bonus or commission plans
• benefit plan documents
• disciplinary or dispute records that could affect the business

If you're buying assets, you may need new employment documents for the people you choose to hire after closing. If you're buying the company, existing employment arrangements may remain in place, but you still need to understand what obligations the company has.

Employment law is heavily affected by state law and the facts of the workplace. If staff are central to the deal, confirm the position with a licensed attorney before you finalize the purchase agreement.

Contractor And Consultant Agreements

Contractor agreements are especially important where outside people created valuable assets.

Check whether the contractor agreement includes:

• a clear description of the work
• payment terms and outstanding amounts
• confidentiality obligations
• IP ownership or assignment wording
• permission for the business to use deliverables
• termination rights
• limits on subcontracting

Templates can miss the details that matter most in a sale, especially around IP ownership and confidentiality. A document that worked for a small project may not be enough when you're relying on that work as a purchased asset.

What Should The Purchase Agreement Say About These Contracts?

The purchase agreement should turn your contract review into clear promises, closing steps, and remedies if something is wrong.

This is where due diligence becomes protection. If you find a problem during review, the answer isn't always to walk away. Often, you can deal with it in the purchase agreement.

Key Protections To Include

Depending on the deal, your purchase agreement may need:

• A contract schedule listing every material customer, supplier, lease, license, employment, contractor, and financing agreement.
• Representations and warranties from the seller that the contracts are valid, complete, not in default, and disclosed to you.
• Assignment provisions showing which contracts transfer at closing and which require consent.
• Closing conditions requiring key customer, landlord, franchisor, supplier, lender, or licensor consents before you have to close.
• Indemnities covering losses linked to pre-closing breaches, unpaid amounts, hidden liabilities, or inaccurate disclosures.
• Holdbacks or escrow if part of the price should be retained until consents, transition steps, or risk periods are resolved.
• Transition assistance requiring the seller to help introduce customers, transfer accounts, provide training, or support supplier handovers.

You may also need closing documents such as a bill of sale, assignment and assumption agreement, IP assignment, trademark assignment, domain transfer documents, lease assignment, and officer certificates or company approvals.

Check For Liens And Security Interests

Before closing, check whether the assets are subject to liens or security interests. In the US, lenders often perfect security interests by filing UCC financing statements with the relevant state filing office.

If the seller's assets are encumbered, you need to know whether those interests will be released at or before closing. Otherwise, you could buy equipment, inventory, or receivables that are still tied to someone else's secured claim.

Your state may also have specific filing, notice, licensing, or transfer requirements for certain industries or asset sales. You don't need state-by-state advice at the first conversation, but you do need to flag anything that could affect closing.

Common Mistakes To Avoid

The most common mistakes are practical ones:

• assuming the business name, domain, and social accounts are owned by the seller
• signing before key customer or lease consents are obtained
• relying on revenue reports without reading the customer contracts
• missing personal guarantees or debts attached to supplier accounts
• forgetting contractor IP assignments
• buying customer data without checking the privacy promises made to customers
• treating verbal seller assurances as enough

If a contract is central to the price, don't leave it as a handshake issue. Put it clearly in the transaction documents.

Frequently Asked Questions

Is A Letter Of Intent Binding?

It depends on the wording. Many letters of intent say the main deal terms are non-binding, but confidentiality, exclusivity, costs, governing law, and dispute provisions may still be binding.

Can I Use The Seller's Contract Templates After Closing?

Sometimes, but only if the seller owns them or has the right to transfer them. You should also check whether the templates fit your post-closing business model, pricing, risk position, and state law requirements.

Should I Review Contracts Before Or After Due Diligence?

You should review the most important contracts during due diligence, before you sign a final purchase agreement or before your conditions expire. That gives you room to renegotiate, require consents, or walk away if needed.

What If The Seller Won't Share Contracts Yet?

You can ask to sign a confidentiality agreement first. If the seller still won't share material contracts before you're committed, treat that as a serious deal risk.

Key Takeaways

• When you're buying a business, the contracts often tell you what you're really buying.
• Customer, supplier, lease, employment, contractor, IP, data, and financing documents should be reviewed before closing.
• Contracts don't always transfer automatically, so check assignment and change of control clauses early.
• IP ownership needs a clear paper trail, especially for trademarks, copyright, software, designs, domains, and trade secrets.
• Your purchase agreement should include schedules, seller promises, consents, closing conditions, indemnities, and transfer documents.
• State law, industry rules, and the deal structure can change the answer, so tailored advice is worth getting before you sign.

If you'd like help with reviewing business purchase contracts, assignment clauses, IP ownership, customer and supplier agreements, and closing documents, you can reach our team at (888) 449-8437 or team@sprintlaw.com. Where legal services are required, they're provided by licensed US lawyers at ElevateNext US, LLC, a trusted US law firm, through the Sprintlaw platform.