What to do regarding liability before we owned the business?

We bought a restaurant 2 years ago and just got served papers on a accident that happened in

a year before we owned it. Are we liable for this claim? The business is an LLC. We made them sign a paper stating there were no back bills or anything.

Asked on May 4, 2016 under Business Law, Missouri

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If the business is the same LLC now as it was then--i.e. when you bought the restaurant, you bought the LLC--then the LLC would still be liable. An LLC is a "person" in this regard: it is the same "person" (or legal entity) now as it was then, so it can be liable for accidents occuring before you were the owners. (You will not be personally liable, since 1) you were not in any way personally at fault for what happened then; and 2) an LLC member is not liable for the LLC's liabilities simply because of being a member.)
The paper you had the prior owner sign does not bind the person suing your restaurant: he or she did not sign it. You can potentially sue the prior owner for breach of contract (violating a signed agreement) and/or for fraud (lying about potential liability) IF you can show that he would have known or had reason to know about the accident and potential for a lawsuit--if this came "out of the blue" and he would have had no idea, he would not be liable.


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