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Purchase and Sale Agreements For Coalbed Methane Properties

Patricia Dunmire Bragg, Coalbed Gas Development (1992)


A.Types Of Transactions. There are three basic forms that a negotiated acquisition can take: (a) Purchase Of Assets, (b) Purchase Of Stock, (c) Merger.

1.Purchase Of Assets. Simply put, an acquisition of assets involves the purchase by a buyer of certain specified assets to a seller for cash, property, notes, securities, or a combination thereof. The transaction may also include the assumption of certain liabilities of the seller.

(a)Advantages. Some advantages to a buyer of purchasing assets are as follows:

(1)Avoidance Of Liabilities. The primary advantage to a buyer is the ability to negotiate the extent to which the buyer will assume the liabilities of the seller. This is particularly important when the seller has substantial contingent liabilities or the potential for such liabilities. The buyer is able to leave these liabilities with the seller and generally acquire the assets free from such liabilities and the past business sins, known or unknown, of the seller. A cautionary note is in order. Some jurisdictions will use the doctrine of “successor liability” to impose liability on a new owner of a business for unassumed liabilities of the previous owner. Historically, the successor liability doctrine has been used most often in product liability cases. Successor liability has also been applied in other areas, such