Sale and purchase agreement (protocole de cession)

The sale and purchase agreement (SPA), protocole de cession in French, is the contract that sets the final terms of a deal between vendor and buyer. It follows the letter of intent and confirmatory due diligence. Signing it binds the parties. Ownership passes at completion, once the conditions precedent have been met.

In a transaction

The agreement usually covers:

• the subject: property, business or shares, with a list of what is included and excluded
• the price and its mechanism: fixed price, adjustment on completion accounts, or locked box for a share sale
• conditions precedent: financing, landlord or franchisor consent, permits
• the vendor’s warranties and the garantie d’actif et de passif
• how the hotel is run between signing and completion
• any escrow of part of the price
• the timetable and completion mechanics

In the hotel sector

The form depends on the structure. For a share sale, the agreement is a private contract drafted by the lawyers. For a sale of the property, or murs, the deal goes through a preliminary agreement and then a notarised deed, required for land registration. The sale of a business, or fonds de commerce, follows its own formalities: legal notices, a period for creditors to object, and the price held in escrow.

Change-of-control clauses in franchise or management agreements, and the landlord’s consent required by some leases, often drive the timetable. They should be checked before signing.

Not to be confused with

• The letter of intent, in principle not binding as to the deal itself.
• Completion, which is the performance of the deal, not its conclusion.

These documents are prepared with the notary, lawyer and accountant, coordinated throughout our sale process.