Can a buyer void a contract because a seller did not provide a copy of no tax due at signing?

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Can a buyer void a contract because a seller did not provide a copy of no tax due at signing?

Earlier this month I sold my small business owner financed to an LLC company. In the contract it stated that he must keep the store open regular business hours for at least 6 months. All last week I noticed that he did not have it open. So I e-mailed him and asked why and he said that the contract was null and void because I did not provide him with a certificate of no tax due at the time of signing the contract. He said that I owed taxes and that he could not get the busienss under his name. He didn’t contact me to inform me of the problem. I called the state tax office and they said that I only owed $120, which I am taking care of immediately. Is he just trying to get out of the contract? He already had access to all inventory and hard telling what he took. Also, now that the business has been closed for over a week, and I am afraid it has damaged the business sales.

Asked on December 19, 2011 under Business Law, Missouri

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you do not own the business any longer there not be much you can do. Review your contract and see if it includes any issues like this in the contract itself. If it is, then you need to see what the next steps are. If it is silent on you having to provide a no tax due letter, then you every right to sue for breach of contract but that is only if your contract includes a provision that entitles you to the business back and damages if he breached the contract. I would check with a business lawyer in your state to see if your original private sale agreement was even binding and see if you have recourse to do damage control.


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