This is the same as for an asset sale (see above, asset sales). In addition to compensation for violations of environmental representations, it may be appropriate for the parties to accept special compensation for environmental issues. These can take many forms and cover some known problems, potential liabilities or both. Specific environmental compensation can be particularly useful when due diligence has identified a well-known problem, but it is not yet possible to calculate the extent of liability. In these circumstances, the parties may not be able to agree to an adjustment of the purchase price in order to take account of liability. Thus, the parties may accept a special environmental compensation clause that provides the buyer with a certain level of protection, while the transaction can be concluded before the extent of liability is known. In short, the rights and obligations of environmental compensation can vary considerably from transaction to transaction and are often dictated by problems identified (or not) during the due diligence process. Of course, if the buyer is blocked, if he settles the seller`s debts, if this is not part of the deal, it is likely that it will be repaid by the seller under the terms of the contract to purchase property. But if the seller`s creditors have not been paid by the seller, the probability is quite high that the seller will not pay the buyer either. Buyers should therefore comply with mass sales laws if they are applicable.
Agreements that include compensation for environmental issues may also include certain environmental restrictions: some courts have imposed inheritance liability on the basis of broad language in certain statutes. Two of these statutes include the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) and the Employee Retirement Income Security Act of 1974 (“ERISA”). CERCLA involves environmental rehabilitation, while ERISA generally appears in the case of underfunded pensions and pension plans. While both are federal laws, some states have imposed inheritance liability on business buyers in similar contexts. Most of the legal proceedings that have broadened the scope of estate liability have occurred in specific contexts, in which it seemed simply unfair for the owners of a selling company to profit from the sale of assets and move away from certain liabilities. The courts would not work too much on certain debts of the seller if they were not paid. However, with respect to product violations, environmental commitments and pension fund deficits, the courts have become creative and have considered ways to ensure that someone is on the hook somewhere to deal with this type of debt. One of the reasons (there are many others) that buyers prefer to buy the assets of the sale transaction rather than the shares or other holdings held by the owners is to prevent the acquisition of the company`s liabilities from selling. Most buyers prefer to pick up the company`s assets and leave the liabilities behind. Succession liability also occurs for large sales. A bulk sale is the sale of most of a company`s assets outside of normal activity. Most bulk sales apply only to a seller whose main activity is the sale of inventory, including those who manufacture what they sell.
Service companies are not subject to the Bulk Sales Act. Nor are software as service companies and other companies that do not sell products out of the warehouse as a retail store does. For items to be considered in dealing with environmental issues, see There is no legal obligation for a seller to explicitly disclose environmental issues in an asset sale. Where the seller is a landfill unit under enhanced supervision, it must disclose environmental issues (environmental protection law) accessible through public records. If the seller is not an entrepri