The Numerous D’s of Buy-Sell Contracts

A phrase, QFRDD, will be employed to discuss certain key trigger occasions which are generally addressed in buy-sell contracts. QFRDD stands for an additional occasions within the lives of companies as well as their proprietors:

Q – Quits

F – is Fired

R – Retires

D – Dies

D – Disability

While it’s true these trigger occasions are essential for buy-sell contracts, there are many other occasions that you might want to look into your agreement, or perhaps in the contracts of the clients. Many of them start with the letter D. Actually, should you search while using term “Ds of buy-sell contracts,” you’ll find several references to numerous articles addressing Ds within this context.

Like a thought teaser, I made the decision to list out a few of the many Ds that may be trigger occasions or have to be considered inside your agreement or related shareholder contracts. Without comment, the numerous Ds of Buy-Sell Contracts Include:

Departure (Quits)

Discharge (Firing for cause)




Default (Personal personal bankruptcy)

Disqualification (Lack of legal standing to function)

Disaffection (Quit, in position)

Disagreement (Deadlock procedures)

Disclosure (Associated with private information/ip)

Debt (Corporate personal bankruptcy)

Disaster (Bad things do happen)

Dispute resolution (How you can resolve disputes)

Dilution (Protection against dilution)

Distributions (Agreement, for instance, to distribute for shareholder taxes)

Drag-alongs (Legal rights for control shareholders to want minorities to market)

Double entities (Would be the operating assets in another, related entity?)

Differential prices (Associated with different trigger occasions – dying versus. quitting and competing)

Don’t compete (Non-compete contracts connected with buy-outs)

Donate (Under what conditions can stock get to children, charitable organization, etc.)

Their email list of 20 D’s isn’t intended to be completely comprehensive, but it’s intriguing and thought-provoking. There are a variety of other situations that may warrant consideration inside your buy-sell agreement that do not start with Ds. Included in this are:

Right of first refusal (Common restriction on transfer)

Tag-along legal rights (Right of minority shareholders to market with majority)

Optional buy (Buy-sell is optional for company to purchase – or seller to market)

Mandatory (Buy-sell requires mandatory acquisition of shares after trigger event)

Existence insurance (How treated? As corporate asset or funding vehicle for repurchases?)

S corp eligibility (Requirement to keep possession to help keep S election)

The master of stock (After trigger event, does stock be a to receive value or keep stock?)

Control (Control maintenance)

Election limitations

Personal guarantees

Relative possession

Again, their list isn’t complete, but it may seem helpful to prompt your opinions regarding your existing agreement or even the one you’re focusing on now.

Comments are closed.