A purchaser indemnity needs separate advice when the old guarantee is called

The sale agreement is a second document to assess

A creditor calls a guarantee after you have sold your company interest. You remember the purchaser promising to take responsibility for the old accounts. Give your lawyer both the guarantee demand and the complete sale agreement. A possible claim against the purchaser needs assessment alongside the creditor's demand; do not assume the promise automatically resolves that demand.

Find the actual undertaking

Imagine a former director whose share sale agreement contains a clause about liabilities arising before completion. The creditor now seeks payment of an old trading account. Locate the signed agreement, schedules, completion records and any related communications. Explain the claimed account period accurately. A general recollection that the purchaser took over everything is not enough to assess the particular clause.

Check the parties and wording

Business.gov.au recommends clear contract terms and advice about unclear wording. Ask the lawyer who gave the undertaking, who may rely on it and which obligations it addresses. The purchaser, company and creditor may be different parties. Do not treat an arrangement between seller and buyer as a confirmed creditor release without examining the relevant documents and circumstances.

Source: business.gov.au: Prepare a contract

Ask what must happen before a claim

Have the adviser identify any notice, information, consent or other requirements relevant to the proposed indemnity claim. Provide the actual dates and correspondence rather than guessing that reimbursement is immediately due. If you already made a payment or concession, disclose it. This article does not decide enforceability, the available remedy or the timing required under a particular agreement.

Assess whether the proposed recovery is usable

In the former director's example, a purchaser may dispute the clause or lack funds to perform an obligation. Keep that uncertainty visible in the personal cash plan. Do not count a disputed reimbursement as money available to meet the creditor's demand. Ask about the commercial cost and practical prospects of pursuing the separate contractual route.

Coordinate both responses

Keep the creditor response and possible purchaser claim on separate advice records, with their own instructions and dates. Update each when facts change. The useful distinction is between an obligation asserted against you and a possible right to recover from someone else. Understanding both may change the available options, but a remembered sale promise should not leave either matter unattended.