I sold business 1.5 yrs ago and he is threatening to sue

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I sold business 1.5 yrs ago and he is threatening to sue

I sold an established branded online business to a guy in Poland 1.5 yrs ago. I sold it through an online broker and also had a lawyer generate contract for both of us to sign. Few weeks ago, I was informed the buyer is preparing for a lawsuit against me for proving him with misleading information. Supposedly, this Poland guy is rich and has a lot of money. He also owns a business in NY with his own NY lawyer hence his threat.

Part of the contract the buyer and I signed included ‘General Indemnity’. He is threatening me to return the original selling fund or else he will pursue a lawsuit.

I did not do anything wrong. And this is news to me. Why trying to go after me now? After 1.5 years? I plan on getting a lawyer soon but would love to hear your generalized advice. Thank you.

Asked on December 1, 2018 under Business Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

You don't have to do anything until and unless he sues. The following assumes that a suit is filed:
You have to defend yourself against the suit, not ignore it, even if you have done nothing wrong: if you fail to respond to the suit within the time period set by the court rules, you will lose by "default" or automatically.
Whether he is factually correct is a different story, but a claim that you provided him with misleading information is a claim you committed fraud, which is a recognized cause of action. So this will not be thrown out for failing to state a claim he could recover money for, since if he can prove his allegations, he can get a judgment in his favor requiring you to return or repay the sale price.
Why he waited 1.5 years? Possibly he did not discover what he claims the fraud to have been until recently...or he discovered it earlier and took awhile to decide to sue. It doesn't really matter.
A fraud claim, as he appears to be making, can result in voiding the contract and so bypassing any liability limitations in the contract.
So retain the lawyer right away, if and when sued: based on what you write, this is a serious threat.


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