Can we, as sellers, back out of a sale agreement with buyers

My husband and I have a restaurant we are selling. I drew up a ‘Deposit Toward Sale of Business’. First line starts out as ‘This Agreement’, and describes the sale of the business in one paragraph. I was the only signer as my husband was not available, and the buyer signed. They made a deposit and are to pay the balance on or before Sept 30th. Are we able to cancel the sale with these buyers and return their deposit? No actual sale agreement has been signed.

Thank you

Asked on June 17, 2017 under Business Law, Oregon


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

For a definitive answer, you have to bring the agreement to an attorney to review in its entirety with you; contracts are governed by their specific terms or language, so to really understand your rights under a contract, an attorney needs to review it with you. That said, to answer as best as we can based in what you have written here: no you do not appear to be able to back out IF there is a price for the business's sale in the "Deposit" agreement. If there is a written agreement which "describes the sale of the business," that is essentially a sale agreement: an agreement which states a business is to be sold for $X is a contract of sale, even if it is less detailed or thorough than it should be. If you have a contract signed by a person with authority (you, as both spouse and co-owner) and the other side paid the deposit called for in the agreement, thereby providing "consideration" (or a thing of value) to bind the agreement, there is an enforceable contract. If there is an enforceabe contract, you can't get out of it unless the agreement itself has some cancellation or early termination term with which you comply, or unless the other side breaches (violates) some material (important) term or obligation.
However, if there was no sale price for the business in the purported agreement, there was no contract formed: a contract requires a "meeting of the minds" or mutual agreement as to the material or important terms. Sale price is one of THE most important terms; if there was no sale price in the agreement, there could be no agreement as to it, and so no enforceable contract. In that case, you should be able to get out of the agreement, though you'd obviously have to refund the deposit.

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