Bulk Sales Clause
(Commercial Purchase and Sale Agreement) (Pro-Seller) (IL)

Summary

This bulk sales clause may be used in a commercial purchase and sale agreement for property located in Illinois. This clause favors the seller in situations where the real property being transferred constitutes a majority of its business assets outside the normal course of business. This clause contains practical guidance, alternate and optional clauses, and drafting notes. A "bulk transfer" is a transfer of the major portion of the seller's assets outside of the ordinary course of its business. Bulk sales statutes were enacted in many states to make purchasers of a business or a major portion of a business's assets (including the transfer of real property) responsible for the seller's unpaid governmental fees and taxes. In order to avoid the obligation, the purchaser could file a bulk sale notice with the applicable governmental agency. Article 6 of the Uniform Commercial Code (UCC) governs bulk sales, but it has been repealed by most states, including Illinois. Bulk sales are still a concern in Illinois, however, because some statutes and ordinances impose an obligation on a purchaser for certain unpaid taxes and debts of the seller if the transfer is outside the seller's normal course of business and the real estate constitutes a major portion of the assets of the seller's business. A seller can use this clause to give itself the most flexibility in a situation where Illinois bulk sales laws apply to its transfer of real property. A bulk sales clause is usually highly negotiated by the parties to an Illinois purchase and sale agreement. This clause favors the seller but contains drafting notes and optional clauses from both the seller's and the purchaser's perspectives. Defined terms used in this clause should be conformed to those used in the relevant purchase and sale agreement. For more information on bulk sales in Illinois, see Lexis IL Tax P.I. 382, Lexis IL Tax P.I. 1,738, 35 Ill. Comp. Stat. Ann. 5/902, and 35 Ill. Comp. Stat. Ann. 120/5j. For a bulk sales clause that favors the purchaser, see Bulk Sales Clause (Commercial Purchase and Sale Agreement) (Pro-Purchaser) (IL). For a bulk sales clause for use in Cook County and the City of Chicago, see Bulk Sale Requirements for Sales Involving Commercial Real Estate (IL) (Cook County) (Chicago). For information on purchasing and selling commercial real estate in Illinois, see Purchasing and Selling Commercial Real Estate Resource Kit (IL). For a full listing of key content covering purchasing and selling commercial real estate, see Purchasing and Selling Commercial Real Estate Resource Kit. See also Junior Associate Real Estate Resource Kit (Commercial Purchase and Sale).