Sale of a running business or shop with goodwill
Selling a running shop or business: assets, stock and goodwill, price in stages, old debts kept by the seller, staff, and the seller's promise not to compete nearby for a period.
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Not yet reviewed by a lawyer. Check every line before it is signed.
How the paper begins
With Dastavo's sample details; the people and places are fictional. The words in blue are the ones you fill in.
AGREEMENT FOR SALE OF A RUNNING BUSINESS WITH GOODWILL
This agreement is made and executed at Amarnagar on 12 October 2026 by and between:
Sharma Hardware, through its proprietor Kabir Sharma son of Shri Dev Sharma, aged about 44 years, resident of House No. 7, Basant Vihar, Amarnagar, Tehsil and District Amarnagar, Punjab (hereinafter called the "SELLER", which expression shall, unless repugnant to the context, include his heirs, legal representatives and assigns) of the FIRST PART.
AND
Anil Verma son of Shri Ramesh Verma, aged about 31 years, resident of House No. 204, Sector 9, Shantipur, District Shantipur, Haryana (hereinafter called the "BUYER", which expression shall, unless repugnant to the context, include his heirs, legal representatives and assigns) of the SECOND PART.
WHEREAS the Seller is the sole owner of the running business of retail and wholesale trade in hardware, paints and sanitary fittings carried on under the name "Sharma Hardware" at Shop No. 3, Main Bazaar, Amarnagar (the "Business");
WHEREAS the Seller has agreed to sell, and the Buyer has agreed to buy, the Business as a going concern with its goodwill, on the terms below;
The rest of the paper is in Dastavo.
What to bring
Papers to bring
- For each party: identity proof and PAN; for a company, LLP or firm, its registration papers and the board resolution or authority letter of the person who signs
- The business's GST and other registrations and licences, and its latest returns and accounts
- A list of the assets sold, and of the stock if it is counted on handover
- The rent agreement and the landlord's written consent, or the title papers if the seller owns the premises
- A list of the business's debts and dues, and the bank's no-objection for any hypothecated asset
- Two witnesses, each with an identity proof
Where to go
Signed by the seller and the buyer before two witnesses, usually on e-Stamp paper of the value the state fixes; notarising it is optional. It is not usually registered, but premises sold, or let for a year or more, need their own registered deed.
Fee
The e-Stamp duty follows the state's schedule (some charge more when goodwill or assets pass); ask the e-Stamp centre. Ask a chartered accountant about GST and income tax on the sale.
Good to know
- Before paying, check the GST, municipal and bank records for dues, and publish a public notice of the sale in a newspaper.
- The seller's promise not to compete holds only because goodwill is sold, and only within reasonable local limits (s.27 Indian Contract Act, Exception 1).
- Pay by bank against receipts, and hold back the last instalment until the licences and the premises are in your name.
Papers and fees can change. Check with the office before you go. Guidance only, not yet reviewed by a lawyer.
Stamp paper
Deeds and agreements carry stamp duty that depends on the state, the document and its value; some must be registered with the Sub-Registrar. Check the current duty and registration rules before printing on stamp paper.