Buying a business but no contract signed

UPDATED: Sep 30, 2022

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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