What are my rights if I put down a deposit to buy a business but no papers were ever signed and now I have changed my mind?

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What are my rights if I put down a deposit to buy a business but no papers were ever signed and now I have changed my mind?

I did not go through with the business because after talking to people around that area I decided that the investment was too much for me to handle on my own as my partner backed out after I had put the deposit. I asked the owner to refund my deposit but he refuses. He said the deposit is a promise to buy. Am I entitled to that deposit back?

Asked on November 27, 2012 under Business Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The seller is essentially right: when you put down a deposit, you enter into an agreement under which you agree to buy the business and the seller agrees to sell it to you (and not to someone else; or to change his mind and not sell; or to change the price agreed upon; etc.). If the buyer does not go through with the purchase, he is in breach of that agreement and the seller is entitled to keep the deposit as damages. The fact that there was no written agreemen does not matter: an oral agreement, especially one evidenced by placing a deposit, is enforceable.


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