Buying or selling a business? Know what moves, and what stays.
Upload a business transfer, slump sale, asset purchase or share purchase agreement, as buyer or seller, and get the price structure, liabilities, warranties and indemnity, escrow, seller non-compete and closing conditions checked against Indian law.
What people are surprised to learn
A seller’s non-compete rests on the sale of goodwill.
Section 27 of the Indian Contract Act makes restraints of trade void, with a narrow exception for a seller of the goodwill of a business who agrees not to carry on a similar business within reasonable local limits. A restraint wider than the business sold, or on people who are not selling goodwill, is the kind that provision addresses. We flag both.
What this review checks
- Slump sale, asset sale or share purchase, and what that means
- Price paid at closing, in escrow, deferred or on an earn-out
- Liabilities that pass to the buyer and those that stay
- Warranties, indemnity cap, threshold and survival
- Seller non-compete and the goodwill exception (s.27)
- Consents, licences and employees that do not transfer automatically
- Share transfer restrictions and related-party approvals (Companies Act)
- Registration and stamp duty on property, and FEMA for non-residents
Quick answer
What should I check in a business transfer or slump sale agreement?
First, see whether it is a slump sale, an itemised asset sale or a share purchase, because that decides which liabilities move. Then check how the price is paid (at closing, in escrow, deferred or on an earn-out); which liabilities the buyer takes on; the warranties and the indemnity cap, threshold and survival; the seller’s non-compete; and the consents and licences needed before closing.
Who this review is for
- Buyers acquiring a small business, its assets or its shares
- Owners and promoters selling their business
- Founders selling a startup in an acqui-hire or asset deal
- Advisers who want a structured first read before their own review
How it works
- 1
Upload the agreement
PDF, Word, a photo or pasted text, with its schedules and annexures.
- 2
Say which side you are on
The same clause cuts opposite ways for buyer and seller, so the review is read from your side.
- 3
Read the report
Structure, price, liabilities, warranties, indemnity, non-compete and closing conditions, explained plainly with the clause quoted.
- 4
Take it to your advisers
Questions for the other side, and a reminder of what the agreement cannot show you.
7 red flags to look for
A share purchase without full warranties on past liabilities
The buyer takes the company with its tax and legal history.
An earn-out the buyer controls, on vague measures
The seller’s payment depends on decisions the seller no longer makes.
No escrow or holdback
A buyer who finds a problem after closing must pursue the seller directly.
A seller non-compete wider than the business sold
Section 27 allows restraints on a seller of goodwill only within reasonable local limits.
Licences, registrations or leases assumed to transfer automatically
Many do not, and the business may be unable to operate after closing.
Immovable property transferred without a registered instrument
The Registration Act (s.17) requires registration; stamp duty applies by state.
Tax section references to the Income-tax Act, 1961
The Income-tax Act, 2025 renumbered sections from 1 April 2026; confirm the current references with your CA.
Terms explained
- Slump sale
- The transfer of a whole business undertaking for a lump sum, without values assigned to individual assets.
- Business transfer agreement (BTA)
- The contract transferring a business, its assets and chosen liabilities to a buyer.
- Share purchase agreement (SPA)
- The contract under which a buyer acquires the shares, and with them the whole company.
- Earn-out
- Part of the price paid later only if the business meets agreed targets.
- Escrow or holdback
- Part of the price held back after closing to meet claims.
- Indemnity cap and threshold
- The maximum a seller can be asked to pay for claims, and the minimum loss before claims can be made.
- Conditions precedent
- What must happen before closing, such as consents and approvals.
Pricing in India
One plan covers all 14 India analyzers. Prices exclude GST at 18%; a GST invoice with your GSTIN is available.
Single Review
₹999 one-time + GST
One contract review. No subscription, pay once, use within a year.
Pro
₹3,299 / month + GST
4 reviews / month. For founders, freelancers and consultants.
Business
₹6,599 / month + GST
10 reviews / month for HR teams and regular reviewers.
Scale
₹13,199 / month + GST
25 reviews / month for high-volume teams and firms.
Business Transfer FAQs
What should I check in a business transfer or slump sale agreement?
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First, see whether it is a slump sale, an itemised asset sale or a share purchase, because that decides which liabilities move. Then check how the price is paid (at closing, in escrow, deferred or on an earn-out); which liabilities the buyer takes on; the warranties and the indemnity cap, threshold and survival; the seller’s non-compete; and the consents and licences needed before closing.
Is a non-compete on the seller enforceable in India?
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Section 27 of the Contract Act makes restraints of trade void, but it has an exception for a seller of goodwill who agrees not to carry on a similar business within reasonable local limits. The report checks whether the restraint fits within that exception.
Can you tell me the tax on a slump sale?
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No. The income-tax and GST treatment of a business transfer turns on specific conditions and figures. The report flags tax clauses and outdated section references so you can confirm them with your chartered accountant.
Does it work for the seller as well as the buyer?
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Yes. Choose your side when you upload; the review is weighted for you.
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ClauseAudit provides information and analysis, not legal advice, and does not create an advocate–client relationship. Findings use calibrated language because enforceability depends on facts and forum. Consult a qualified advocate before acting on any finding. See India pricing.