The Concept of the Sale Contract and the Parties' Obligations
The acquisition of business assets in Georgia rests on the rules of the sale contract in the Civil Code. Under Article 477, under a contract of sale the seller is obliged to transfer to the buyer the right of ownership in the property, the documents connected with it, and to deliver the goods, while the buyer is obliged to pay the seller the agreed price and to accept the purchased property. This bilateral structure of obligations becomes the skeleton of any asset purchase transaction, whatever the composition of the asset package.
Where the price is not directly indicated in the contract, the parties may agree on the means of determining it — for example, a formula indexed to a benchmark or a method to be applied in the future. That determination should be recorded in writing and formulated so that the price can be calculated without dispute; otherwise the performance of the contract drifts towards litigation, and the transaction that seemed agreed turns into a quarrel over its essential term.
The Passing of the Risk of Accidental Loss
A decisive question in any asset deal is which party bears the risk of chance — what happens if the sold asset is accidentally destroyed before or after delivery. Under Article 482, the risk of accidental loss or deterioration of the sold thing passes to the buyer together with the delivery of the thing, unless the parties have agreed otherwise. The general rule of the law thus ties the risk to the moment of delivery, but the parties remain free to stipulate a different moment in their contract.
A special rule applies to carriage: where the seller sends the sold thing, at the buyer's request, to a place other than that provided for in the contract, the risk of accidental loss or deterioration passes to the buyer from the moment the seller hands the thing over to the carrier or to a person responsible for its execution. In practical terms, the risk of transportation passes to the party at whose instance the conditions of carriage were changed — a rule worth remembering whenever delivery logistics are renegotiated mid-transaction.
The Seller's Obligations on the Sale of a Defective Thing
The quality of an asset often reveals itself only after the deal is closed. Under Article 490, where the sold thing has a defect, the seller must either remedy the defect or, where the thing is generic, replace the thing within the period necessary for the purpose. The seller bears the costs necessary to remedy the defect, including the costs of transportation, carriage, performance of the work and the material.
The buyer's remedies are protected in both directions: the seller may not refuse either the remedy of the defect or the replacement of the thing on the ground that it requires disproportionately large expenses. Where, for the purpose of remedying the defect, the seller transfers to the buyer a defect-free thing, the seller may demand from the buyer the return of the defective thing. When asset purchase agreements are prepared, the exact allocation of these remedies must be balanced in the contract so that the statutory framework and the commercial expectations do not diverge.
The Transfer of Rights and Other Property by Sale
A package of business assets often contains more than physical goods — it includes claims, rights connected with licences and other property values. Under Article 498, the rules governing the sale of things apply accordingly to the sale of a right or other property: the same discipline extends to the intellectual and contractual components of an asset deal.
In the case of the sale of a right, the seller warrants the authenticity of the right and bears the costs of its transfer — meaning that the risk of a defective legal status remains with the seller. Where the sold right gives the possibility of possessing a thing, the seller is obliged to deliver to the buyer a thing that is free of defects both materially and legally: the asset must be sound as a physical object and as a legal position, and a defect in either dimension engages the seller's responsibility.
Frequently Asked Questions
What obligations do the parties bear under an asset purchase agreement?
Under Article 477, the seller transfers to the buyer the right of ownership in the property, the connected documents and delivers the goods; the buyer pays the agreed price and accepts the purchased property.
When does the risk of loss pass to the buyer?
Under Article 482, together with the delivery of the sold thing, unless the parties agreed otherwise; and where the thing is sent to another place at the buyer's request — from the moment the seller hands it over to the carrier.
What may the buyer demand where the asset is defective?
Remedy of the defect or, in the case of a generic thing, its replacement within the necessary period; the costs of the remedy, including transportation and materials, are borne by the seller.
How are rights and other property sold?
Under Article 498, the rules on the sale of things apply accordingly to rights as well; the seller answers for the authenticity of the right and bears the costs of transfer.
How We Help on Legal.ge
The reliability of asset purchase agreements lives in the details: in the inventory of the ownership transfer and the documents, in the method of determining the price, in the moment at which the risk passes, in the periods for remedying defects and the allocation of costs, and in the warranties of the authenticity of the transferred rights. The norms of the Civil Code frame all of this, but tailoring them to the needs of a concrete transaction is legal work that rewards precision.
The lawyers working on Legal.ge will help you prepare the draft of an asset purchase agreement, balance the risk and defect clauses, identify the rights to be transferred and plan the sequence of the transaction. Contact us for a consultation so that your asset deal is conducted on a legally sound footing.