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  1. #1

    Unhappy Business Purchase Breach of Contract

    My question involves business law in the state of: Florida. We signed a contract to purchase a business in 2009. The contract states that, "The financial statements have been done with generally acceptable accounting principles" "The books of account are complete and correct."
    The previous owners do not have adequate records and mixed their business with their personal purchases. (checks and credit cards) They did not give complete credit card statements or receipts for purchases. The accountant for the companies previous 12 years refuses to speak with us. The trasaction is not complete and the shares are being held in escrow.

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Business Purchase Breach of Contract

    If the deal is contingent upon satisfactory financials and they're unable to produce satisfactory financials (after two years), consider walking away.

    You need to share enough facts and state a question clearly enough that we understand the issues and what you're trying to ask.

  3. #3

    Default Re: Business Purchase Breach of Contract

    I was trying to keep it short, but it is quite involved.

    The issues of the financial records and money owed to them, are why it is still in escrow.

    This was a company that my husband worked for for 28 years. When the previous owner decided to retire, he gave us the "opportunity" to take over. He had a contract written up and was basically giving us the business. We thought he was giving it to us because we had known him and his wife for 28 years and my husband had been basically running the field operations for him many years.
    They had a contract written up by a local attorney. We could not afford an attorney, but trusted them.

    At closing the attorney asked if we had our own attorney. My husband replied, " No, do we need one?"
    The attorney replied, "I don't think so, I have never seen anything like this. They are giving you the business."
    We had closing at the end of January 2009.

    In February we were getting our "training" in operations from them. They were our employees, until May, per the contract agreement.
    I was working with his wife learning office operation and my husband was learning his end of the operation.

    I started asking questions about when we would get the records as stated in the contract.
    They kept saying they would get those together for us as time went by.

    We asked to speak with the accountant of 12 years. Long story short, he refused to speak with us.

    We were in the office one day and realized that after we had opened our new bank account for the business, the previous owners had not closed the old account, but intended on keeping it open.
    We said that was not acceptable and asked him to close it.
    He said that he would not close it and said there was nothing we could do about it because he had accounts receivable that belonged to him.

    We began to realize that something was quite wrong, but they insisted that it was just a matter of them finding all of the records.

    The new accountant we hired asked us if we had received the records for the previous 3 years, since we would be responsible to the IRS for them. He asked to look at them.
    We showed him what we had. After seeing that they had mixed their business with their personal and did not have adequate records, he said we needed to get all the records possible
    and that we were in trouble.

    The previous owners dragged that out until the end of October when they admitted that they did not have complete records, including credit card statements and receipts for 2008.
    They told us at that time that they would redo the contract so that it was an assets only puirchase, effective 1/1/2009, making them owners of the shares not us.
    We agreed and waited on them to write the contract.
    We could not come to an agreement with them on how the contract would be written. They refused to compromise and seemed to be dragging it out on purpose.

    They gave us an ultimatum in September of 2010. We did not agree.

    Two weeks later, the previous owner (man) was diagnosed with stage 4 brain cancer and after an operation was not able to speak. He died in April.

    His wife has not spoken with us regarding business issues since September. Her attorney sent us an email request last week asking to meet and tie up the loose ends.

    The business bank account is closed. The accounts receivable have come in.

    When we received the bank statements from the old bank account (held open against our wishes) which was closed in November 2009, we saw that they had written checks on the account and signed their names to our corporate checks for personal expenses and cash.

    We originally borrowed money from them to get started. The original note has been satisfied. There is additional money loaned to us but no note on that money. This is what she wants to meet about.

    We are wondering what is the best course of action at this time.

    Thank You.

  4. #4
    Join Date
    Jun 2011
    Location
    Utah
    Posts
    3

    Default Re: Business Purchase Breach of Contract

    Thanks for helping me.

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