QLD How Binding is the Sales Agreement under Contract Law?

[bigpillows94]

Sale Agreement
LJ is to purchase the remaining 30% shares from GK for the amount of $15,500 AUD.

Upon which LJ will be 100% shareholder and sole director of Company.

Upon transfer of shareholding, LJ will be responsible for the full operation of Company, including the responsibility of paying the liability and debt Company owns, which is currently NIL as at the date of this agreement.

It is agreed by parties involved (LJ AND GK) the funding of the purchase is to be made upon a payment plan consisting of $600AUD per week, with initial payment to commence within 1 week of this signed agreement.

If this agreed payment plan is defaulted on, (payment falls greater then 1 week behind) inline with QLD Credit Guidelines, GK has the right to serve LJ with a credit default notice, calling in the total outstanding debt, to be paid within 30 days.

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My question with regards to the arrangement is, how binding is this if both parties have signed and it has been witnessed by a JP under contract law?

Also with regards to control of the company, does LJ have 100% control as director effective as of 1st of November 2015? Or only upon completion of the instalments?

What rights does G have under Commercial law? Can he lock company bank accounts, access bank accounts, etc? Does G still owe director duties to the company?

And when can LJ start talking to someone who is interested in buying 30%?

 

[Sophea]

Hi,

Yes. I don't see why this would not be a binding agreement if both parties have signed it and it has been witnessed by a JP.

Is what you have written above exactly what the contract says word for word or are there other clauses or wording that you have left out. If this is the extent of it, its difficult to say definitively what the intention of the parties was. However I would lean toward the contract bring consistent with the interest being transferred upon transfer of the shareholding notwithstanding the payments would be made over a period of time. Therefore when the shares are transferred and changed with the ASIC register this is when the purchaser would gain control of the company.

If the shares of the company are physically transferred to the purchaser - then I would assume he is in full control and the seller (G) does not have any rights with regard to the company anymore.

If LJ is the sole owner of the company then he or she would have the right to sell off shares in it.

 

[DennisD]

To determine whether a contract is binding it’s necessary to look at the words of the contract and in particular to look at the intent of the parties. Does the contract say “contract” or “agreement”, or on the other hand “heads of agreement” or “memorandum of understanding”? Or, in the contract itself, does it use words such as “The parties intend to create binding legal relations”. Such words aren’t necessary but certainly would help your cause