Buying a business but no contract signed
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Buying a business but no contract signed
My husband and I are in the process of
buying a little diner. Two year lease, no
contract or papers were ever signed to
start the buying process. We want to
walk away. What would we be liable
for?. Also the name of the diner was
changed would that be like me signing
papers or a contract? There was no
lawyer present.
Asked on August 28, 2016 under Business Law, Pennsylvania
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
Oral (also, incorrectly, called verbal agreements; i.e. unwritten contracts) can be enforced. If you breach the agreement (walk away from the sale) at a minimum, you could very likely be held liable for any amounts the seller has spent on the sale process, and any additional "carrying costs" he incurred by taking his diner off the market (if he was actively marketing it) in the expectation of selling to you. It is also possible that you could be held liable for his full profit and/or required to go through with the sale. Much depends on the circumstances: how definite or final the agreement was, even if not reduced to writing; how certain it was that both sides were committed to the sale; the exact terms; what losses or costs can be proven; etc. In short, you are almost certainly liable for something, but that *something* could range from a small amount (maybe just any costs the seller incurred) up to the full amount under the contract. Before doing anything, consult in detail with an attorney, bringing with you *all* communications with the seller, any marketing/advertisting materials for the diner, cancelled checks for any deposits, etc. you made, and as detailed a summary of the agreement and how the parties showed they agreed to it as you can recall or provide.
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