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Business Seller Financing Agreement for Saudi Arabia

Business Seller Financing Agreement Template for Saudi Arabia

A comprehensive legal agreement governed by Saudi Arabian law that structures the financing arrangement between a business seller and buyer, where the seller provides financing for the purchase price. The document incorporates Sharia-compliant financing principles and includes detailed terms for payment schedules, security arrangements, and default provisions. It ensures compliance with both Saudi commercial regulations and Islamic finance requirements while protecting both parties' interests through clear covenant structures and enforcement mechanisms.

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What is a Business Seller Financing Agreement?

The Business Seller Financing Agreement is utilized in Saudi Arabia when a business seller agrees to finance part of the purchase price for the buyer, effectively becoming a creditor in the transaction. This arrangement must comply with both Saudi commercial law and Sharia principles, particularly regarding the structure of payments and profit mechanisms to avoid prohibited interest (riba). The document is essential when traditional bank financing is not preferred or available, allowing for more flexible payment terms while ensuring proper security arrangements. It includes comprehensive provisions for payment schedules, security interests, business operation requirements, and default remedies, all structured within the framework of Saudi Arabian law and Islamic finance principles. The agreement is particularly valuable for small to medium-sized business transactions where seller financing can facilitate deal completion while maintaining Sharia compliance.

What sections should be included in a Business Seller Financing Agreement?

1. Parties: Identification of the Seller (Financier) and Buyer (Borrower), including full legal names and registration details

2. Background: Context of the transaction, including business being sold and financing arrangement overview

3. Definitions: Key terms used throughout the agreement, including financial, technical, and legal definitions

4. Sale and Purchase: Core terms of the business sale transaction

5. Financing Terms: Sharia-compliant financing structure, amount, and payment schedule

6. Security and Collateral: Details of assets or guarantees securing the financing

7. Representations and Warranties: Statements of fact and promises by both parties regarding their capacity, authority, and business condition

8. Covenants: Ongoing obligations of the Buyer regarding business operation and financial management

9. Default and Remedies: Events constituting default and available remedies under Saudi law

10. Regulatory Compliance: Compliance with Sharia law and Saudi regulations

11. Governing Law and Jurisdiction: Confirmation of Saudi law application and dispute resolution mechanisms

12. General Provisions: Standard clauses including notices, amendments, and severability

What sections are optional to include in a Business Seller Financing Agreement?

1. Third-Party Guarantees: Required when additional parties provide guarantees for the financing

2. Intellectual Property Rights: Needed when the business sale includes significant IP assets

3. Employee Matters: Required when the sale involves transfer of employees

4. Real Estate Provisions: Included when the business sale involves property transfer or lease assignments

5. Post-Closing Cooperation: Added when ongoing seller involvement is required

6. Non-Compete Provisions: Included to restrict seller's future competitive activities

7. Tax Matters: Required when specific tax arrangements or obligations need addressing

8. Insurance Requirements: Added when specific insurance coverage is mandatory

What schedules should be included in a Business Seller Financing Agreement?

1. Schedule A - Business Assets: Detailed inventory of assets included in the sale

2. Schedule B - Payment Schedule: Detailed breakdown of payment amounts and dates

3. Schedule C - Security Details: Specific description of collateral and security arrangements

4. Schedule D - Existing Contracts: List of contracts being transferred as part of the business

5. Schedule E - Required Consents: List of third-party approvals needed for the transaction

6. Appendix 1 - Financial Statements: Recent financial statements of the business

7. Appendix 2 - Due Diligence Documents: Key due diligence findings and representations

8. Appendix 3 - Compliance Certificates: Relevant regulatory and Sharia compliance certifications

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Document Type

Contract to Sell

Cost

Free to use
Relevant legal definitions





































Clauses





































Relevant Industries

Retail

Manufacturing

Professional Services

Technology

Healthcare

Real Estate

Construction

Food and Beverage

Automotive

Education

Hospitality

Transportation and Logistics

Industrial Services

Media and Entertainment

Relevant Teams

Legal

Finance

Compliance

Risk Management

Corporate Development

Treasury

Business Development

Commercial Operations

Executive Leadership

Islamic Finance Advisory

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Finance Director

Business Development Manager

Commercial Director

Compliance Officer

Risk Manager

Corporate Lawyer

Investment Manager

Business Owner

Managing Director

Company Secretary

Financial Controller

Treasury Manager

Sharia Compliance Officer

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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