# Small-Business Asset Purchase Agreements: Structure and Parties[^about]

Whether to buy a small business through an asset purchase or a stock purchase, when the buyer can become responsible for the seller's debts, whether the owners must approve the sale, and when the owner should sign as well as the company.

## Should the business be bought through an asset purchase or a stock purchase? {#asset-or-stock-purchase}

**Short answer.** An asset purchase gives the buyer more protection from the seller's liabilities than a stock purchase, subject to successor-liability exceptions, while a stock purchase transfers the company with all of its liabilities but generally leaves its contracts in place, so the choice turns on liability, tax and third-party consents. [^p1-kddk-stock-vs-asset-liabilities][^p1-kddk-asset-buyer-exceptions][^p1-tr-stock-sale-contracts-stay]

**Liabilities.** In a stock purchase, the buyer acquires the company as an entity, and the company keeps all of its liabilities, so the buyer bears them as the new owner. [^p1-kddk-stock-vs-asset-liabilities] In an asset purchase, the buyer generally does not take on the seller's debts, but in some cases an asset buyer can be held liable for certain liabilities of the seller; the [successor liability question](#successor-liability) covers those exceptions. [^p1-kddk-asset-buyer-exceptions]

**Tax.** In an asset sale, each asset is classified and its gain or loss is figured separately, so the seller's result depends on the mix of assets; for example, the sale of inventory produces ordinary income or loss. [^p1-irs-inventory-ordinary] The buyer's basis in purchased property is generally its cost, [^p1-usc-1012-cost-basis] which the [price allocation](/practice-guides/asset-purchase-price-and-payment/us#purchase-price-allocation) spreads across the assets.

In a stock sale, the owner sells shares instead of assets and usually realizes capital gain or loss. [^p1-irs-corporation-interest-capital] The buyer's basis in the shares it buys is generally their cost; [^p1-usc-1012-cost-basis] because the company itself sells nothing, its basis in its own assets does not change unless the parties make one of the elections described next.

**Both at once.** A stock purchase can receive asset-sale tax treatment through an election under 26 U.S.C. § 338(h)(10), which treats the target corporation as if it sold all of its assets in a single transaction. [^p1-usc-338h10-deemed-asset-sale] The regulations make that election available when the buyer acquires the stock from a selling consolidated group, a selling affiliate or the shareholders of an S corporation, [^p1-reg-338h10-s-corp-sellers] but only in a qualified stock purchase, which the statute limits to stock acquired by another corporation. [^p1-usc-338d3-corporate-buyer] Section 336(e) supplies a similar election when a corporation sells all of the stock of a subsidiary that meets the statute's ownership test. [^p1-usc-336e-election] The regulations extend that election to dispositions by the shareholders of an S corporation, [^p1-reg-336-s-corp-disposition] and they state that its results should generally coincide with those of a § 338(h)(10) election. [^p1-reg-336-coincide-results]

"an election may be made to treat such sale, exchange, or distribution as a disposition of all of the assets of such other corporation, and no gain or loss shall be recognized on the sale, exchange, or distribution of such stock."[^p1-usc-336e-election]

An election is not a unilateral buyer decision: a § 338(h)(10) election is made jointly by the buyer and the sellers, and S corporation shareholders who do not sell must also consent, so a stock purchase agreement that depends on an election addresses it expressly. [^p1-reg-338h10-joint-election]

**Consents.** Transferring contracts in an asset purchase typically triggers an anti-assignment clause unless the clause has an express exception, [^tr-asset-sale-anti-assignment-trigger] while a stock purchase generally does not, because the company continues to own its contracts after closing. [^p1-tr-stock-sale-contracts-stay] A stock purchase can still trigger a change-of-control clause, which gives the other party rights such as consent, payment or termination in connection with an acquisition; the [consent question](/practice-guides/asset-purchase-closing-and-handover/us#consent-failure) covers what happens when a consent is not obtained. [^p1-tr-change-of-control-rights]

**Approvals.** A Delaware corporation may sell all or substantially all of its property and assets through its board of directors when authorized by a resolution of the holders of a majority of its outstanding voting stock, adopted at a meeting called on at least 20 days' notice. [^p1-dgcl-271a-approval] In a stock purchase, the buyer instead buys the owners' shares in the corporation or limited liability company, so each selling owner signs for its own shares, while the [signing question](#owner-signing-capacity) covers who signs for the seller in an asset purchase. [^p1-mellor-stock-purchase-shares]

Buyers often prefer an asset purchase, which the rest of this guide assumes, [^p1-kddk-buyers-prefer-asset] while a stock purchase may suit a business whose key contracts cannot be assigned without consent, because the company keeps those contracts. [^p1-tr-stock-sale-contracts-stay]

## Do the owners have to approve a sale of the company's assets? {#owner-approval-of-asset-sale}

**Short answer.** A Delaware stock corporation that sells all or substantially all of its property and assets needs both its board's decision and a resolution adopted by the holders of a majority of its outstanding stock entitled to vote, under 8 Del. C. § 271(a). [^p3-dgcl-271]

Whether a sale reaches all or substantially all of the assets is not only a matter of size, because Delaware's Court of Chancery has held that a sale is beyond the board's power alone if it is of assets quantitatively vital to the operation of the corporation, is out of the ordinary, and substantially affects the corporation's existence and purpose. [^p3-gimbel-substantially-all]

Section 271 is a corporate statute, and for a Delaware limited liability company management is vested in the members in proportion to their interests in profits, with members owning more than 50 percent controlling, unless the LLC agreement provides otherwise or provides for management by a manager, so the LLC agreement is the first document that answers who approves a sale of the business. [^p3-dellc-18-402]

A buyer can make the approvals a closing condition, as in one filed agreement where the buyer's obligation to close depended on receiving certified copies of the seller's board and shareholder resolutions authorizing the agreement and the transaction; the [closing-deliverables question](/practice-guides/asset-purchase-closing-and-handover/us#closing-exchange) lists where those certificates fit. [^p3-greenfield-resolutions-condition]

## Can the buyer become responsible for the seller's debts? {#successor-liability}

**Short answer.** Generally not: under the traditional rule the California Supreme Court described, an asset purchaser does not assume the seller's liabilities unless it agreed to, the transaction amounts to a consolidation or merger, the purchaser is a mere continuation of the seller, or the transfer was made to escape them fraudulently. [^ray-successor-liability-exceptions]

The New York Court of Appeals states the rule the same way for tort claims: a corporation that purchases another corporation's assets is not liable for the seller's torts, subject to four exceptions. [^p2-semenetz-four-exceptions] In *Omnicare Pharmacy of Florida, LLC v. Lake City Nursing, LLC*, an unreported 2026 ruling on a personal-jurisdiction motion, the Delaware Superior Court applied the same general rule [^p2-omnicare-general-rule] and the same four exceptions: assumption, de facto merger or consolidation, mere continuation and fraud. [^p2-omnicare-four-exceptions] Other states' versions of the rule need separate review; one federal appeals court has observed that many states have adopted rules expanding successor liability in products liability cases. [^p2-berg-states-expand]

In California, *Ray v. Alad Corp.* also held that a party that acquires a manufacturing business and continues its product line, in the circumstances presented there, assumes strict tort liability for defects in units of that line the predecessor made; that product-line rule is a separate California doctrine for product claims, not a fifth general exception. [^ray-product-line-holding] Other states have declined to adopt it: the New York Court of Appeals rejected a product-line fifth exception in *Semenetz v. Sherling & Walden, Inc.*, [^p2-semenetz-product-line] and the Wisconsin Supreme Court declined to adopt it in *Fish v. Amsted Industries, Inc.* [^p2-fish-product-line]

A governing-law clause in the purchase agreement does not necessarily decide which state's rule applies to a creditor's successor-liability claim: in *Berg Chilling Systems, Inc. v. Hull Corp.*, the Third Circuit, applying Pennsylvania choice-of-law rules, held that the asset purchase agreement's choice-of-law provision should not apply to whether the transaction in fact constituted a merger. [^p2-berg-choice-of-law]

The purchase agreement bears directly on the first exception, which turns on whether there was an express or implied agreement of assumption. [^ray-successor-liability-exceptions] One filed agreement states that the buyer will not assume any obligation or liability of the seller outside its definition of assumed liabilities. [^p2-grove-no-other-liabilities] In *Omnicare*, the court held that the creditor had failed to establish that the new operators of the business expressly or impliedly assumed the old operators' liabilities. [^p2-omnicare-no-assumption] The same opinion states that courts narrowly construe the mere-continuation theory. [^p2-omnicare-continuation-narrow]

Some state tax statutes impose successor liability directly and set out a procedure for avoiding it: in New York, when a seller that is required to collect sales tax makes a bulk sale of business assets outside the ordinary course, the purchaser must notify the tax authority at least ten days before taking possession or paying, whether or not the seller says it owes tax. [^ny-tax-1141c-notice] A purchaser that fails to comply becomes personally liable for the seller's sales taxes, up to the higher of the purchase price or the fair market value of the assets. [^ny-tax-1141c-liability]

California uses a withholding rule instead: when a person liable for an amount under the state's sales and use tax law sells out the business or its stock of goods, the buyer must withhold enough of the price to cover that amount until the seller produces a receipt showing payment or a certificate that nothing is due. [^ca-rtc-6811-withhold] A purchaser that fails to withhold becomes personally liable for the amount it should have withheld, up to the purchase price. [^ca-rtc-6812-liability]

These procedures affect the closing timetable and the amount paid at closing: the New York notice has to go out at least ten days before the buyer pays or takes possession, [^ny-tax-1141c-notice] and the California amount is withheld until the seller produces the receipt or no-tax-due certificate, so a holdback or escrow for it can be released against that document rather than on a fixed date. [^ca-rtc-6811-withhold]

A seller indemnity for retained liabilities allocates the loss between the parties, but an unsecured indemnity from an individual seller who has spent the proceeds is worth far less than its face value. [^p2-meyers-individual-seller] A [holdback or escrow](/practice-guides/asset-purchase-price-and-payment/us#escrow-holdback-and-deferred-payment) keeps part of the price available for those claims; one filed agreement held its escrow amount as security for the seller's indemnification obligations. [^p2-luna-escrow-security]

## Should the company owner sign as well as the company? {#owner-signing-capacity}

**Short answer.** When the owner of a selling company personally holds a U.S. copyright used in the business, 17 U.S.C. § 204(a) requires a transfer of that copyright, other than by operation of law, to be in a writing signed by that owner or the owner's authorized agent. [^ip-contracts-asset-and-liability-perimeter]

The company signs as seller of the assets it owns, and the intellectual-property conveyances can be made in separate short-form assignments, as in two filed asset purchase agreements that called for separate trademark and copyright assignments at closing alongside the bill of sale. [^p3-grove-ip-assignments][^p3-greenfield-ip-assignments]

Recording the short form protects the buyer against a later purchaser who takes without notice: a patent assignment is void against a later purchaser or mortgagee for value without notice unless it is recorded in the Patent and Trademark Office within three months from its date or before the later purchase or mortgage. [^p3-usc-261-recording] A trademark assignment is void against a later purchaser for value without notice unless the prescribed information is recorded in the Patent and Trademark Office within 3 months after the assignment or before the later purchase. [^p3-usc-1060-recording] Copyright transfers are recorded in the Copyright Office instead, and between two conflicting transfers the one executed first prevails if it is recorded within one month after execution in the United States, two months if executed abroad, or at any time before the later transfer is recorded. [^p3-usc-205d-priority] Recording in the Copyright Office gives constructive notice only if the document identifies the work and the work has been registered. [^p3-usc-205c-notice]

Patent and trademark assignment records at the Patent and Trademark Office are open to public inspection, [^p3-cfr-1-12-public][^p3-cfr-2-200-public] and so are the Copyright Office's records of recorded documents. [^p3-usc-705-public]

Under Delaware law, a member of a limited liability company is not personally obligated for the company's debts, obligations and liabilities solely by reason of being a member, [^p3-dellc-18-303a] but a member may agree, in the LLC agreement or another agreement, to be personally obligated for any or all of them. [^p3-dellc-18-303b] An owner can therefore join only for purposes of named sections, as the selling company's shareholder did in one filed agreement by becoming a party solely for purposes of one section, [^p3-greenfield-joinder] under which he indemnified the buyer for breaches of two listed seller representations and for fraud. [^p3-greenfield-shareholder-indemnity] In another, an individual agreed that, solely for purposes of three listed sections, he would be treated as a shareholder and bound by a shareholder's obligations under them. [^p3-meta-lodge-joinder]

An owner can also join to give a seller restrictive covenant, as in one filed agreement that required non-competition agreements executed by each of the selling parties at closing. [^p3-grove-ip-assignments] Evidence that the company authorized the sale belongs in the closing deliverables; one filed agreement required a secretary's certificate attaching the board and shareholder resolutions approving the agreement, [^p3-luna-secretary-certificate] and [the owner-approval question](#owner-approval-of-asset-sale) covers whether the owners' approval is legally required.

In a stock or membership-interest purchase, by contrast, the buyer buys the owners' shares in the corporation or limited liability company, so each owner sells its own interest; [the structure question](#asset-or-stock-purchase) compares the two. [^d1-mellor-owner-shares]



[^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-09-28. License: CC BY 4.0. Steven Obiajulu, J.D. edits this topic article for U.S. purchases of profitable businesses with $1 million or less of earnings before interest, taxes, depreciation and amortization (EBITDA), including online and software businesses; negotiation, drafting and closing of the asset purchase agreement and transfer of the assets; Delaware, California and New York law used as examples; other state, tax and industry rules require separate review coverage. It synthesizes legal sources and is not legal advice. This article is for informational purposes only and does not create an attorney-client relationship. AI-authored research draft; not reviewed by counsel. Source excerpts and linked materials belong to their owners. CC BY 4.0. Cite as Steven Obiajulu, *Small-Business Asset Purchase Agreements: Structure and Parties*, OpenAgreements (last updated September 28, 2026), https://openagreements.org/practice-guides/asset-purchase-structure-and-parties/us.

[^p1-kddk-stock-vs-asset-liabilities]: **Successor liability in the purchase of a business, part 1 (Kahn, Dees, Donovan & Kahn)** — "In a stock purchase, the buyer purchases the target company as an entity, and therefore assumes the seller’s liabilities, since the company being acquired retains all of its liabilities as a matter of law. By restructuring the transaction as an asset purchase rather than a stock purchase, a buyer is provided with a much greater level of protection against liability for the target company’s obligations." *Jeffrey K. Helfrich, Successor Liability in the Purchase of a Business: Express or Implied Assumption of Obligations (Part 1 of 8), Kahn, Dees, Donovan & Kahn, LLP (May 5, 2015).* <https://kddk.com/2015/05/05/successor-liability-in-the-purchase-of-a-business-part-1-of-8/>

[^p1-kddk-asset-buyer-exceptions]: **Successor liability in the purchase of a business, part 1 (Kahn, Dees, Donovan & Kahn), exceptions** — "The law in most jurisdictions has traditionally held that when one company sells all of its assets to another, the buyer does not become liable for the debts and liabilities of the selling company. This is still true to a large extent, and we frequently recommend structuring a transaction as an asset purchase in order to protect the buyer from the liabilities of the business being acquired. However, over the past several years, the theory of successor liability has evolved and expanded as a result of a series of clashes between the policy in favor of allowing a company to sell its assets in an unrestricted manner, balanced against other policies, such as providing a source of relief for injured parties or other claimants. As a result, in some cases, a purchaser of assets may be held liable for certain liabilities of the seller." *Jeffrey K. Helfrich, Successor Liability in the Purchase of a Business: Express or Implied Assumption of Obligations (Part 1 of 8), Kahn, Dees, Donovan & Kahn, LLP (May 5, 2015).* <https://kddk.com/2015/05/05/successor-liability-in-the-purchase-of-a-business-part-1-of-8/>

[^p1-tr-stock-sale-contracts-stay]: **Step-by-step guide to M&A legal due diligence (Thomson Reuters), stock purchases** — "Stock purchase transactions — should the buyer acquire ownership of the target’s equity, rather than assets, the target company will continue to own its assets (including contracts) after the closing. That’s why a stock acquisition generally does not trigger an anti-assignment clause." *Chris O’Leary, Step-by-step guide to M&A legal due diligence, Thomson Reuters (July 31, 2026).* <https://legal.thomsonreuters.com/blog/mergers-and-acquisitions-due-diligence-guide/>

[^p1-irs-inventory-ordinary]: **Sale of a business, classifying the assets (Internal Revenue Service)** — "The gain or loss on each asset is figured separately. The sale of capital assets results in capital gain or loss. The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction. The sale of inventory results in ordinary income or loss." *Internal Revenue Service, Sale of a business (accessed Sept. 29, 2026).* <https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-a-business>

[^p1-usc-1012-cost-basis]: **26 U.S.C. § 1012, basis of property at cost** — "The basis of property shall be the cost of such property, except as otherwise provided in this subchapter and subchapters C (relating to corporate distributions and adjustments), K (relating to partners and partnerships), and P (relating to capital gains and losses)." *26 U.S.C. § 1012(a).* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1012&num=0&edition=prelim>

[^p1-irs-corporation-interest-capital]: **Sale of a business, corporation interests (Internal Revenue Service)** — "Your interest in a corporation is represented by stock certificates. When you sell these certificates, you usually realize capital gain or loss." *Internal Revenue Service, Sale of a business, Corporation interests (accessed Sept. 29, 2026).* <https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-a-business>

[^p1-usc-338h10-deemed-asset-sale]: **26 U.S.C. § 338(h)(10), elective recognition by the target corporation** — "Under regulations prescribed by the Secretary, an election may be made under which if- (i) the target corporation was, before the transaction, a member of the selling consolidated group, and (ii) the target corporation recognizes gain or loss with respect to the transaction as if it sold all of its assets in a single transaction, then the target corporation shall be treated as a member of the selling consolidated group with respect to such sale, and (to the extent provided in regulations) no gain or loss will be recognized on stock sold or exchanged in the transaction by members of the selling consolidated group." *26 U.S.C. § 338(h)(10)(A).* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section338&num=0&edition=prelim>

[^p1-reg-338h10-s-corp-sellers]: **26 C.F.R. § 1.338(h)(10)-1(c)(1), availability of the election** — "A section 338(h)(10) election may be made for T if P acquires stock meeting the requirements of section 1504(a)(2) from a selling consolidated group, a selling affiliate, or the S corporation shareholders in a qualified stock purchase." *26 C.F.R. § 1.338(h)(10)-1(c)(1).* <https://www.ecfr.gov/current/title-26/section-1.338(h)(10)-1>

[^p1-usc-338d3-corporate-buyer]: **26 U.S.C. § 338(d)(3), qualified stock purchase** — "The term ‘qualified stock purchase’ means any transaction or series of transactions in which stock (meeting the requirements of section 1504(a)(2)) of 1 corporation is acquired by another corporation by purchase during the 12-month acquisition period." *26 U.S.C. § 338(d)(3).* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section338&num=0&edition=prelim>

[^p1-usc-336e-election]: **26 U.S.C. § 336(e), stock sales treated as asset transfers** — "Under regulations prescribed by the Secretary, if- (1) a corporation owns stock in another corporation meeting the requirements of section 1504(a)(2), and (2) such corporation sells, exchanges, or distributes all of such stock, an election may be made to treat such sale, exchange, or distribution as a disposition of all of the assets of such other corporation, and no gain or loss shall be recognized on the sale, exchange, or distribution of such stock." *26 U.S.C. § 336(e).* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section336&num=0&edition=prelim>

[^p1-reg-336-s-corp-disposition]: **26 C.F.R. § 1.336-1(b)(6)(i), qualified stock disposition** — "The term qualified stock disposition means any transaction or series of transactions in which stock meeting the requirements of section 1504(a)(2) of a domestic corporation is either sold, exchanged, or distributed, or any combination thereof, by another domestic corporation or by the S corporation shareholders in a disposition, within the meaning of paragraph (b)(5) of this section, during the 12-month disposition period." *26 C.F.R. § 1.336-1(b)(6)(i).* <https://www.ecfr.gov/current/title-26/section-1.336-1>

[^p1-reg-336-coincide-results]: **26 C.F.R. § 1.336-1(a)(1), relation to section 338(h)(10)** — "Generally, except to the extent inconsistent with section 336(e), the results of section 336(e) should coincide with those of section 338(h)(10)." *26 C.F.R. § 1.336-1(a)(1).* <https://www.ecfr.gov/current/title-26/section-1.336-1>

[^p1-reg-338h10-joint-election]: **26 C.F.R. § 1.338(h)(10)-1(c)(3), joint election** — "A section 338(h)(10) election is made jointly by P and the selling consolidated group (or the selling affiliate or the S corporation shareholders) on Form 8023 in accordance with the instructions to the form. S corporation shareholders who do not sell their stock must also consent to the election." *26 C.F.R. § 1.338(h)(10)-1(c)(3).* <https://www.ecfr.gov/current/title-26/section-1.338(h)(10)-1>

[^tr-asset-sale-anti-assignment-trigger]: **Step-by-step guide to M&A legal due diligence (Thomson Reuters), asset purchases** — "Asset purchase transactions — if assets (including contracts) of the target company are to be transferred to the buyer, this typically triggers an anti-assignment clause unless an express exception to the clause is included in the contemplated transaction." *Chris O’Leary, Step-by-step guide to M&A legal due diligence, Thomson Reuters (July 31, 2026).* <https://legal.thomsonreuters.com/blog/mergers-and-acquisitions-due-diligence-guide/>

[^p1-tr-change-of-control-rights]: **Step-by-step guide to M&A legal due diligence (Thomson Reuters), change of control clauses** — "A change of control clause in an agreement gives a party certain rights such as consent, payment, or termination in connection with a merger or acquisition." *Chris O’Leary, Step-by-step guide to M&A legal due diligence, Thomson Reuters (July 31, 2026).* <https://legal.thomsonreuters.com/blog/mergers-and-acquisitions-due-diligence-guide/>

[^p1-dgcl-271a-approval]: **8 Del. C. § 271(a), sale of all or substantially all assets** — "Every corporation may at any meeting of its board of directors or governing body sell, lease or exchange all or substantially all of its property and assets, including its goodwill and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or other property, including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors or governing body deems expedient and for the best interests of the corporation, when and as authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote thereon or, if the corporation is a nonstock corporation, by a majority of the members having the right to vote for the election of the members of the governing body and any other members entitled to vote thereon under the certificate of incorporation or the bylaws of such corporation, at a meeting duly called upon at least 20 days’ notice." *8 Del. C. § 271(a).* <https://delcode.delaware.gov/title8/c001/sc10/index.html>

[^p1-mellor-stock-purchase-shares]: **Asset purchase vs. stock purchase (The Mellor Law Firm)** — "In a stock purchase, you buy the owner’s shares in the corporation or LLC." *Mark Mellor, Asset Purchase vs. Stock Purchase: What California Business Buyers Need to Know, The Mellor Law Firm, APLC (May 14, 2026).* <https://www.mellorlawfirm.com/business-law-education/asset-purchase-vs-stock-purchase/>

[^p1-kddk-buyers-prefer-asset]: **Successor liability in the purchase of a business, part 1 (Kahn, Dees, Donovan & Kahn), buyer preference** — "When purchasing a business, buyers often prefer that the transaction be structured as an asset purchase rather than a stock purchase." *Jeffrey K. Helfrich, Successor Liability in the Purchase of a Business: Express or Implied Assumption of Obligations (Part 1 of 8), Kahn, Dees, Donovan & Kahn, LLP (May 5, 2015).* <https://kddk.com/2015/05/05/successor-liability-in-the-purchase-of-a-business-part-1-of-8/>

[^p3-dgcl-271]: **Delaware General Corporation Law, sale of all or substantially all assets** — "Every corporation may at any meeting of its board of directors or governing body sell, lease or exchange all or substantially all of its property and assets, including its goodwill and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or other property, including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors or governing body deems expedient and for the best interests of the corporation, when and as authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote thereon or, if the corporation is a nonstock corporation, by a majority of the members having the right to vote for the election of the members of the governing body and any other members entitled to vote thereon under the certificate of incorporation or the bylaws of such corporation, at a meeting duly called upon at least 20 days’ notice." *8 Del. C. § 271(a)* <https://delcode.delaware.gov/title8/c001/sc10/index.html>

[^p3-gimbel-substantially-all]: **Gimbel v. Signal Cos. (Del. Ch. 1974)** — "If the sale is of assets quantitatively vital to the operation of the corporation and is out of the ordinary and substantially affects the existence and purpose of the corporation, then it is beyond the power of the Board of Directors." *Gimbel v. Signal Cos., 316 A.2d 599 (Del. Ch. 1974).* <https://www.courtlistener.com/opinion/2324516/gimbel-v-signal-companies-inc/#:~:text=If%20the%20sale%20is%20of,of%20the%20Board%20of%20Directors.>

[^p3-dellc-18-402]: **Delaware LLC Act: management** — "Unless otherwise provided in a limited liability company agreement, the management of a limited liability company shall be vested in its members in proportion to the then current percentage or other interest of members in the profits of the limited liability company owned by all of the members, the decision of members owning more than 50 percent of the said percentage or other interest in the profits controlling; provided however, that if a limited liability company agreement provides for the management, in whole or in part, of a limited liability company by a manager, the management of the limited liability company, to the extent so provided, shall be vested in the manager who shall be chosen in the manner provided in the limited liability company agreement." *6 Del. C. § 18-402* <https://delcode.delaware.gov/title6/c018/sc04/index.html>

[^p3-greenfield-resolutions-condition]: **Greenfield Online–Dohring asset purchase agreement (2004), resolutions condition** — "(g) Seller shall have delivered to Buyer a Good Standing Certificate for Seller from the Secretary of State of the State of California and each other jurisdiction where Seller is qualified to do business dated as of a date within 5 days preceding the Closing Date; (h) Buyer shall have received certified copies of resolutions of Seller’s Board of Directors and shareholders authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby;" *§7.1(g)–(h)* <https://www.sec.gov/Archives/edgar/data/1108906/000095012304012367/y67858exv2w1.htm#:~:text=(g)%20Seller%20shall%20have%20delivered,of%20the%20transactions%20contemplated%20hereby%3B>

[^ray-successor-liability-exceptions]: **Ray v. Alad Corp. (Cal. 1977)** — "As typically formulated the rule states that the purchaser does not assume the seller’s liabilities unless (1) there is an express or implied agreement of assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts." *Ray v. Alad Corp., 19 Cal. 3d 22 (1977).* <https://www.courtlistener.com/opinion/1221982/ray-v-alad-corp/#:~:text=As%20typically%20formulated%20the%20rule,liability%20for%20the%20seller%E2%80%99s%20debts.>

[^p2-semenetz-four-exceptions]: **Semenetz v. Sherling & Walden, Inc. (N.Y. 2006), traditional rule** — "A corporation that purchases another corporation’s assets is not liable for the seller’s torts, subject to four exceptions outlined in Schumacher v Richards Shear Co. (59 NY2d 239 [1983])." *Semenetz v. Sherling & Walden, Inc., 7 N.Y.3d 194 (2006).* <https://www.courtlistener.com/opinion/2192271/semenetz-v-sherling-walden-inc/#:~:text=A%20corporation%20that%20purchases%20another,Co.%20(59%20NY2d%20239%20%5B1983%5D).>

[^p2-omnicare-general-rule]: **Omnicare Pharmacy of Florida, LLC v. Lake City Nursing, LLC (Del. Super. Ct. 2026)** — "As a general rule, a buyer of assets is not liable for a seller’s debts or tortious conduct." *Omnicare Pharmacy of Fla., LLC v. Lake City Nursing, LLC, C.A. No. N25C-01-233 KMM (Del. Super. Ct. Aug. 31, 2026).* <https://www.courtlistener.com/opinion/10963507/omnicare-pharmacy-of-florida-llc-v-lake-city-nursing-llc/#:~:text=As%20a%20general%20rule%2C%20a,seller%E2%80%99s%20debts%20or%20tortious%20conduct.>

[^p2-omnicare-four-exceptions]: **Omnicare Pharmacy of Florida, LLC v. Lake City Nursing, LLC (Del. Super. Ct. 2026), exceptions** — "However, this general rule does not apply where (i) the buyer assumed the seller’s liability; (ii) there is a de facto merger or consolidation; (iii) the buyer is a mere continuation of the seller under a different name; or (iv) there was fraud in the transaction." *Omnicare Pharmacy of Fla., LLC v. Lake City Nursing, LLC, C.A. No. N25C-01-233 KMM (Del. Super. Ct. Aug. 31, 2026).* <https://www.courtlistener.com/opinion/10963507/omnicare-pharmacy-of-florida-llc-v-lake-city-nursing-llc/#:~:text=However%2C%20this%20general%20rule%20does,was%20fraud%20in%20the%20transaction.>

[^p2-berg-states-expand]: **Berg Chilling Systems, Inc. v. Hull Corp. (3d Cir. 2006), state variation** — "Additionally, many states have adopted rules expanding successor liability in products liability cases." *Berg Chilling Sys., Inc. v. Hull Corp., 435 F.3d 455 (3d Cir. 2006).* <https://www.courtlistener.com/opinion/793037/berg-chilling-systems-inc-v-hull-corporation-sp-industries-inc/#:~:text=Additionally%2C%20many%20states%20have%20adopted,liability%20in%20products%20liability%20cases.>

[^ray-product-line-holding]: **Ray v. Alad Corp. (Cal. 1977), product-line holding** — "We therefore conclude that a party which acquires a manufacturing business and continues the output of its line of products under the circumstances here presented assumes strict tort liability for defects in units of the same product line previously manufactured and distributed by the entity from which the business was acquired." *Ray v. Alad Corp., 19 Cal. 3d 22 (1977).* <https://www.courtlistener.com/opinion/1221982/ray-v-alad-corp/#:~:text=We%20therefore%20conclude%20that%20a,which%20the%20business%20was%20acquired.>

[^p2-semenetz-product-line]: **Semenetz v. Sherling & Walden, Inc. (N.Y. 2006)** — "Plaintiff Bridget Semenetz asks us to revisit Schumacher to endorse a fifth exception — the ‘product line’ exception in cases of strict products liability. For the reasons that follow, we reject the ‘product line’ exception." *Semenetz v. Sherling & Walden, Inc., 7 N.Y.3d 194 (2006).* <https://www.courtlistener.com/opinion/2192271/semenetz-v-sherling-walden-inc/#:~:text=Plaintiff%20Bridget%20Semenetz%20asks%20us,reject%20the%20%E2%80%9Cproduct%20line%E2%80%9D%20exception.>

[^p2-fish-product-line]: **Fish v. Amsted Industries, Inc. (Wis. 1985)** — "We decline to adopt the ‘product line’ exception to the traditional rule of no successor corporation liability." *Fish v. Amsted Indus., Inc., 126 Wis. 2d 293, 376 N.W.2d 820 (1985).* <https://www.courtlistener.com/opinion/1755821/fish-v-amsted-industries-inc/#:~:text=We%20decline%20to%20adopt%20the,of%20no%20successor%20corporation%20liability.>

[^p2-berg-choice-of-law]: **Berg Chilling Systems, Inc. v. Hull Corp. (3d Cir. 2006), choice of law** — "A de facto merger inquiry investigates whether a transaction labeled ‘Asset Purchase Agreement’ in fact constituted a merger — a determination that does not arise purely from the agreement itself. Thus, SPI and Hull could not have controlled, through express contractual language, whether their agreement in fact constituted a merger. Though strict adherence solely to the Restatement might lead to a different result, under Pennsylvania’s flexible combination of Restatement and interest-based analysis, the contractual choice of law provision should not apply to the issue." *Berg Chilling Sys., Inc. v. Hull Corp., 435 F.3d 455 (3d Cir. 2006).* <https://www.courtlistener.com/opinion/793037/berg-chilling-systems-inc-v-hull-corporation-sp-industries-inc/#:~:text=A%20de%20facto%20merger%20inquiry,not%20apply%20to%20the%20issue.>

[^p2-grove-no-other-liabilities]: **Grove–VitaMedica asset purchase agreement (2021), no other liabilities** — "Buyer will not assume or have any responsibility, however, with respect to any other obligation or liability of Seller not included within the definition of Assumed Liabilities." *§2.2(a)* <https://www.sec.gov/Archives/edgar/data/1775194/000147793221005211/grvi_ex21.htm#:~:text=Buyer%20will%20not%20assume%20or,the%20definition%20of%20Assumed%20Liabilities.>

[^p2-omnicare-no-assumption]: **Omnicare Pharmacy of Florida, LLC v. Lake City Nursing, LLC (Del. Super. Ct. 2026), assumption** — "Omnicare failed to establish that New Operators expressly or impliedly assumed the liabilities of Old Operators." *Omnicare Pharmacy of Fla., LLC v. Lake City Nursing, LLC, C.A. No. N25C-01-233 KMM (Del. Super. Ct. Aug. 31, 2026).* <https://www.courtlistener.com/opinion/10963507/omnicare-pharmacy-of-florida-llc-v-lake-city-nursing-llc/#:~:text=Omnicare%20failed%20to%20establish%20that,the%20liabilities%20of%20Old%20Operators.>

[^p2-omnicare-continuation-narrow]: **Omnicare Pharmacy of Florida, LLC v. Lake City Nursing, LLC (Del. Super. Ct. 2026), mere continuation** — "Courts narrowly construe the mere continuation theory." *Omnicare Pharmacy of Fla., LLC v. Lake City Nursing, LLC, C.A. No. N25C-01-233 KMM (Del. Super. Ct. Aug. 31, 2026).* <https://www.courtlistener.com/opinion/10963507/omnicare-pharmacy-of-florida-llc-v-lake-city-nursing-llc/#:~:text=Courts%20narrowly%20construe%20the%20mere%20continuation%20theory.>

[^ny-tax-1141c-notice]: **New York Tax Law § 1141(c), bulk sale notification** — "Whenever a person required to collect tax shall make a sale, transfer, or assignment in bulk of any part or the whole of his business assets, otherwise than in the ordinary course of business, the purchaser, transferee or assignee shall at least ten days before taking possession of the subject of said sale, transfer or assignment, or paying therefor, notify the tax commission by registered mail of the proposed sale and of the price, terms and conditions thereof whether or not the seller, transferrer or assignor, has represented to, or informed the purchaser, transferee or assignee that he owes any tax pursuant to this article, and whether or not the purchaser, transferee, or assignee has knowledge that such taxes are owing, and whether any such taxes are in fact owing." *N.Y. Tax Law § 1141(c).* <https://www.nysenate.gov/legislation/laws/TAX/1141>

[^ny-tax-1141c-liability]: **New York Tax Law § 1141(c), purchaser liability** — "For failure to comply with the provisions of this subdivision the purchaser, transferee or assignee, in addition to being subject to the liabilities and remedies imposed under the provisions of article six of the uniform commercial code, shall be personally liable for the payment to the state of any such taxes theretofore or thereafter determined to be due to the state from the seller, transferrer or assignor, except that the liability of the purchaser, transferee or assignee shall be limited to an amount not in excess of the purchase price or fair market value of the business assets sold, transferred or assigned to such purchaser, transferee, or assignee, whichever is higher, and such liability may be assessed and enforced in the same manner as the liability for tax under this article." *N.Y. Tax Law § 1141(c).* <https://www.nysenate.gov/legislation/laws/TAX/1141>

[^ca-rtc-6811-withhold]: **California Revenue and Taxation Code § 6811** — "If any person liable for any amount under this part sells out his business or stock of goods or quits the business, his successors or assigns shall withhold sufficient of the purchase price to cover such amount until the former owner produces a receipt from the board showing that it has been paid or a certificate stating that no amount is due." *Cal. Rev. & Tax. Code § 6811.* <https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=6811.>

[^ca-rtc-6812-liability]: **California Revenue and Taxation Code § 6812** — "(a) If the purchaser of a business or stock of goods fails to withhold from the purchase price as required, he or she becomes personally liable for the payment of the amount required to be withheld by him or her to the extent of the purchase price, valued in money." *Cal. Rev. & Tax. Code § 6812(a).* <https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=6812.>

[^p2-meyers-individual-seller]: **Conor Meyers: Representations and warranties in a business sale (Clark Meyers), individual seller** — "Where the seller is an individual who will have spent the proceeds, an unsecured indemnity is worth far less than its face value." *Conor Meyers, Reps and Warranties in a Business Sale, Clark Meyers (Aug. 21, 2026).* <https://clarkmeyers.com/reps-and-warranties-business-sale/>

[^p2-luna-escrow-security]: **Luna–Micron asset purchase agreement (2018), escrow fund** — "The Escrow Amount delivered by Buyer at Closing pursuant to the Escrow Agreement shall be held in an escrow account and shall serve as security for payment of any indemnification obligations of Seller (the ‘Escrow Fund’)." *§2.10* <https://www.sec.gov/Archives/edgar/data/1239819/000123981918000071/ex21-assetpurchaseagreement.htm#:~:text=The%20Escrow%20Amount%20delivered%20by,of%20Seller%20(the%20%E2%80%9CEscrow%20Fund%E2%80%9D).>

[^ip-contracts-asset-and-liability-perimeter]: **Execution of copyright transfers** — "A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent." *17 U.S.C. §204(a)* <https://www.copyright.gov/title17/92chap2.html#204>

[^p3-grove-ip-assignments]: **Grove–VitaMedica asset purchase agreement (2021), closing documents** — "The Selling Parties shall deliver to the Buyer: (i) A Bill of Sale and Assignment in the form of Exhibit E executed by Seller; and (ii) An Assignment of Patents, Assignment of Servicemarks and Trademarks and Assignment of Copyrights in the form of Exhibits F-1, F-2 and F-3 executed by Seller; and (iii) Non-Competition Agreements in the form of Exhibit G (the ‘Selling Parties’ Non-Competition Agreements’) executed by each of the Selling Parties;" *§2.5(a)* <https://www.sec.gov/Archives/edgar/data/1775194/000147793221005211/grvi_ex21.htm#:~:text=The%20Selling%20Parties%20shall%20deliver,each%20of%20the%20Selling%20Parties%3B>

[^p3-greenfield-ip-assignments]: **Greenfield Online–Dohring asset purchase agreement (2004), transfer documents** — "Such documents shall include, without limitation, an Assignment and Bill of Sale in the form attached hereto as Exhibit 2.5, an Assignment of Trademarks in the form attached hereto as Exhibit 2.5(a), an Assignment of Copyrights in the form attached hereto as Exhibit 2.5(b), and any assignments or other documents necessary to effect such transfer and conveyance of the Transferred Assets." *§2.5(c)* <https://www.sec.gov/Archives/edgar/data/1108906/000095012304012367/y67858exv2w1.htm#:~:text=Such%20documents%20shall%20include%2C%20without,conveyance%20of%20the%20Transferred%20Assets.>

[^p3-usc-261-recording]: **Patents: recording of assignments** — "An interest that constitutes an assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage." *35 U.S.C. § 261* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title35-section261&num=0&edition=prelim>

[^p3-usc-1060-recording]: **Trademarks: recording of assignments** — "(4) An assignment shall be void against any subsequent purchaser for valuable consideration without notice, unless the prescribed information reporting the assignment is recorded in the United States Patent and Trademark Office within 3 months after the date of the assignment or prior to the subsequent purchase." *15 U.S.C. § 1060(a)(4)* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section1060&num=0&edition=prelim>

[^p3-usc-205d-priority]: **Copyright: priority between conflicting transfers** — "As between two conflicting transfers, the one executed first prevails if it is recorded, in the manner required to give constructive notice under subsection (c), within one month after its execution in the United States or within two months after its execution outside the United States, or at any time before recordation in such manner of the later transfer." *17 U.S.C. § 205(d)* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title17-section205&num=0&edition=prelim>

[^p3-usc-205c-notice]: **Copyright: recordation as constructive notice** — "Recordation of a document in the Copyright Office gives all persons constructive notice of the facts stated in the recorded document, but only if- (1) the document, or material attached to it, specifically identifies the work to which it pertains so that, after the document is indexed by the Register of Copyrights, it would be revealed by a reasonable search under the title or registration number of the work; and (2) registration has been made for the work." *17 U.S.C. § 205(c)* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title17-section205&num=0&edition=prelim>

[^p3-cfr-1-12-public]: **Patent assignment records open to public inspection** — "The assignment records, relating to original or reissue patents, including digests and indexes (for assignments recorded on or after May 1, 1957), and published patent applications, are open to public inspection at the United States Patent and Trademark Office, and copies of patent assignment records may be obtained upon request and payment of the fee set forth in § 1.19 of this chapter." *37 C.F.R. § 1.12(a)(1)* <https://www.ecfr.gov/current/title-37/section-1.12>

[^p3-cfr-2-200-public]: **Trademark assignment records open to public inspection** — "The assignment records relating to trademark applications and registrations (for assignments recorded on or after January 1, 1955) are open to public inspection at the Office, and copies of those assignment records may be obtained upon request and payment of the fee set forth in § 2.6 of this chapter." *37 C.F.R. § 2.200(a)(1)* <https://www.ecfr.gov/current/title-37/section-2.200>

[^p3-usc-705-public]: **Copyright Office records open to public inspection** — "(a) The Register of Copyrights shall ensure that records of deposits, registrations, recordations, and other actions taken under this title are maintained, and that indexes of such records are prepared. (b) Such records and indexes, as well as the articles deposited in connection with completed copyright registrations and retained under the control of the Copyright Office, shall be open to public inspection." *17 U.S.C. § 705(a)–(b)* <https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title17-section705&num=0&edition=prelim>

[^p3-dellc-18-303a]: **Delaware LLC Act: liability to third parties** — "(a) Except as otherwise provided by this chapter, the debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the limited liability company, and no member or manager of a limited liability company shall be obligated personally for any such debt, obligation or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company." *6 Del. C. § 18-303(a)* <https://delcode.delaware.gov/title6/c018/sc03/index.html>

[^p3-dellc-18-303b]: **Delaware LLC Act: agreement to personal liability** — "(b) Notwithstanding the provisions of subsection (a) of this section, under a limited liability company agreement or under another agreement, a member or manager may agree to be obligated personally for any or all of the debts, obligations and liabilities of the limited liability company." *6 Del. C. § 18-303(b)* <https://delcode.delaware.gov/title6/c018/sc03/index.html>

[^p3-greenfield-joinder]: **Greenfield Online–Dohring asset purchase agreement (2004), parties** — "This ASSET PURCHASE AGREEMENT (this ‘Agreement’), dated as of August 18th, 2004, is by and among GREENFIELD ONLINE, INC., a Delaware corporation having its principal offices located at 21 River Road, Wilton, Connecticut 06897 (‘Buyer’) and THE DOHRING COMPANY, a California corporation, having its principal offices located at 412 West Broadway, Third Floor, Glendale, CA 91204 (‘Seller’) and, solely for purposes of Section 9.7 hereof, DOUG C. DOHRING (‘Shareholder’)." *Preamble* <https://www.sec.gov/Archives/edgar/data/1108906/000095012304012367/y67858exv2w1.htm#:~:text=This%20ASSET%20PURCHASE%20AGREEMENT%20(this,hereof%2C%20DOUG%20C.%20DOHRING%20(%E2%80%9CShareholder%E2%80%9D).>

[^p3-greenfield-shareholder-indemnity]: **Greenfield Online–Dohring asset purchase agreement (2004), shareholder indemnity** — "Shareholder shall indemnify and hold harmless the Buyer Indemnitees, subject to the limits set forth in Section 9.3, in respect of any and all Damages incurred by any Buyer Indemnitee in connection with, or resulting from, any or all of the following: (a) Any breach of the representations or warranties made by Seller pursuant to Sections 3.8 and 3.15 of this Agreement; and (b) Any fraudulent statement or representation of Seller contained in this Agreement, or supplied to Buyer by Seller in writing after the execution of this Agreement, where ‘fraudulent’ means knowing, intentional fraud." *§9.7* <https://www.sec.gov/Archives/edgar/data/1108906/000095012304012367/y67858exv2w1.htm#:~:text=Shareholder%20shall%20indemnify%20and%20hold,%E2%80%9Cfraudulent%E2%80%9D%20means%20knowing%2C%20intentional%20fraud.>

[^p3-meta-lodge-joinder]: **Meta Financial–Fort Knox asset purchase agreement (2015), individual joinder** — "Lodge agrees that solely for purposes of Section 10.1(b), Section 10.3 and Section 10.6, he shall be included in the definition of ‘Shareholder’ and shall be bound by the obligations of a Shareholder as set forth therein." *§10.9* <https://www.sec.gov/Archives/edgar/data/907471/000114036115027769/ex2_1.htm#:~:text=Lodge%20agrees%20that%20solely%20for,Shareholder%20as%20set%20forth%20therein.>

[^p3-luna-secretary-certificate]: **Luna–Micron asset purchase agreement (2018), secretary's certificate** — "(xi) a certificate of the Secretary of Seller, dated as of the Closing Date, certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of Seller, (i) certifying and attaching all requisite resolutions or actions of Seller’s board of directors and shareholders approving the execution and delivery of this Agreement and the consummation of the Contemplated Transactions and the change of name contemplated by Section 10.4 and (ii) certifying as to the incumbency and signatures of the officers of Seller executing this Agreement and any other Transaction Document;" *§2.7(c)(xi)* <https://www.sec.gov/Archives/edgar/data/1239819/000123981918000071/ex21-assetpurchaseagreement.htm#:~:text=(xi)%20a%20certificate%20of%20the,and%20any%20other%20Transaction%20Document%3B>

[^d1-mellor-owner-shares]: **Asset purchase vs. stock purchase, owner shares (The Mellor Law Firm)** — "In a stock purchase, you buy the owner’s shares in the corporation or LLC." *Mark Mellor, Asset Purchase vs. Stock Purchase: What California Business Buyers Need to Know, The Mellor Law Firm, APLC (May 14, 2026).* <https://www.mellorlawfirm.com/business-law-education/asset-purchase-vs-stock-purchase/>

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