A bulk sale is a sale of goods by a business which engages in selling items out of inventory, often in liquidating or selling a business, and is governed by Article 6 of the Uniform Commercial Code (UCC) which deals with bulk sales. Article 6 has been adopted at least in part in all states. If the parties do not comply with the notification process for a bulk sale, creditors of the seller may obtain a declaration that the sale was invalid against the creditors and the creditors may take possession of the goods or obtain judgment for any proceeds the buyer received from a subsequent sale.
UCC Section 6-104 specifies the duties of the bulk sales buyer, including determining the identity of the seller, and preparation of a list of claimants and a schedule of distribution. These duties are imposed on the buyer in order to give claimants the opportunity to learn of the bulk sale before the seller has been paid and disappeared with the money.
The Iowa Provision in Bulk Sales Agreement Regarding Information to be Supplied by Seller is a crucial component in commercial transactions and ensures transparency and protection for all parties involved. This provision outlines the specific information that the seller must provide to the buyer before the transaction is finalized. Here are some key details and variations of the Iowa Provision: 1. Iowa Provision Overview: The Iowa Provision is a legal requirement in the state of Iowa that governs bulk sales agreements. It aims to safeguard the buyer by ensuring that they receive complete and accurate information about the business being purchased. 2. Seller's Obligations: Under the Iowa Provision, the seller is responsible for providing extensive details about their business operation and finances. This typically includes comprehensive financial statements, tax records, accounts receivable and payable information, inventory valuation, and details about any liens or claims against the business. 3. Asset Description: The provision may also require the seller to provide a comprehensive list and description of all the assets being conveyed in the sale. This includes tangible assets, such as equipment, inventory, and property, as well as intangible assets like trademarks, patents, and customer contracts. 4. Due Diligence: The Iowa Provision encourages the buyer to conduct thorough due diligence by allowing them a specified timeframe to review and verify the provided information. This allows the buyer to assess the risks associated with the transaction and negotiate any necessary adjustments to the terms of the agreement. 5. Exceptions and Exemptions: While the Iowa Provision generally applies to bulk sales involving tangible personal property, the law may provide certain exceptions or exemptions. For example, transactions involving the sale of goods by merchants in the ordinary course of business or ongoing auctions may be exempted from this provision. 6. Legal Consequences: Failure to adhere to the Iowa Provision can have legal consequences for both the buyer and the seller. If the seller fails to provide the required information or intentionally withholds crucial details, the buyer may have the right to seek damages or rescind the agreement. It is important to note that the specific details and variations of the Iowa Provision may differ depending on the individual circumstances and the legal expertise involved. It is advisable to seek professional legal advice and consult the relevant Iowa state statutes when drafting or entering into a bulk sales agreement subject to the Iowa Provision.
