How to review an asset purchase agreement under English law

In an asset purchase the buyer picks the assets and liabilities of a business it wants, rather than buying the company that owns them. That flexibility comes with more moving parts: each contract, property and permit has to be transferred, and employees usually move automatically under TUPE. This checklist covers the clauses to check in an asset purchase agreement (APA) and how to review it in Word with LexDraft.

Last checked: 17 October 2026. The law changes; check the current position before relying on this page.

This guide covers the law of England and Wales. Scotland and Northern Ireland have their own rules on several of the points below.

Clause checklist

• Assets. Define the business and list the assets: goodwill, equipment, stock, IP, domain names, records, book debts (if included) and the benefit of contracts. Check the excluded assets list too.
• Liabilities. The point of an asset deal is usually that the buyer takes only assumed liabilities. Check that excluded liabilities are drafted widely and backed by an indemnity.
• Contracts. The burden of a contract cannot be transferred without the counterparty's agreement, so key contracts need novation. Where consent is not obtained by completion, check the sub-contracting or holding-on-trust arrangement.
• Employees and TUPE. Under the Transfer of Undertakings (Protection of Employment) Regulations 2006, employees assigned to the business usually transfer to the buyer on their existing terms. A dismissal is automatically unfair if the transfer is the sole or principal reason, unless there is an economic, technical or organisational reason entailing changes in the workforce (regulation 7). The seller must give the buyer employee liability information at least 28 days before the transfer (regulation 11), and both employers have duties to inform and consult (regulation 13). For transfers on or after 1 July 2024, a smaller employer with no existing representatives can consult employees directly where it has fewer than 50 employees or fewer than 10 employees are transferring (regulation 13A).
• Employment indemnities. Apportionment of pre- and post-completion employment liabilities, and indemnities for employees who transfer unexpectedly or do not transfer as expected.
• VAT. If the conditions for a transfer of a going concern are met, the transfer is not a supply for VAT and no VAT is charged. Conditions include that the buyer intends to carry on the same kind of business and is or becomes VAT registered where the seller is. For opted-to-tax property, the buyer must also opt to tax and notify HMRC in time. See HMRC's VAT Notice 700/9. Include a VAT clause that deals with HMRC disagreeing.
• Property. Freehold transfers and lease assignments (with landlord consent) are usually dealt with in a separate schedule. Stamp duty land tax may apply to the property element.
• Price and apportionment. Allocate the price across asset classes; the allocation matters for tax.
• Warranties and limitations. Fewer company-wide warranties than in an SPA, but still title, condition, IP, contracts, employees and compliance, with the usual limitations on claims.
• Data protection. Customer and employee databases are personal data; check the lawful basis for transfer and the buyer's transparency obligations.
• Conditions. The National Security and Investment Act 2021 can also reach acquisitions of assets, through the Secretary of State's call-in power, so consider a voluntary notification in sensitive sectors.
• Restrictive covenants and post-completion. Non-compete on the seller, change of the seller's name if the business name is sold, and transitional services.

Review the asset purchase agreement in Word with LexDraft

1. Open the asset purchase agreement in Word, open LexDraft from the Home tab and set the jurisdiction chip to UK: England & Wales (or UK: Scotland or UK: Northern Ireland if that is the governing law).
2. Run the quick checks. They are rule-based and run without AI, catching undefined or unused defined terms, broken cross-references, numbering gaps and inconsistent capitalisation.
3. LexDraft has four built-in playbooks (NDA, SaaS MSA, DPA and services agreement) and no dedicated asset purchase agreement playbook, so this runs as a general review against the governing law you chose. Use the checklist on this page to direct your own read. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
4. Accept or reject each proposed redline. Accepted edits land as native Word tracked changes, ready for the other side.
5. Ask the Assistant to explain a clause in plain English or suggest wording for your side. Answers use UK spelling.
6. Look up any case you want to rely on in the Case law tab, then open the judgment on Find Case Law and read it yourself. UK judgments in LexDraft come from The National Archives' Find Case Law service, which only partially represents the activities of the courts and tribunals. Not every judgment or decision is included. Find Case Law does not include judgments from Scottish or Northern Irish courts or tribunals.

LexDraft does not give legal advice and does not summarise judgments. AI output can be wrong, so qualified counsel must check every redline before it goes out.

Common mistakes

• Assuming no employees will transfer because the APA says so. TUPE applies whatever the parties agree.
• No fallback where a key customer contract cannot be novated by completion.
• Using "Business", "Assets" and "Business Assets" for overlapping things. The defined-term check catches this.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. LexDraft is not affiliated with or endorsed by The National Archives or any court. Spotted something out of date? Email support@lexdraft.ai and we will fix it.