Signed a Business Purchase contract - Seller backing out now

[gsethi]

Ok...so me (buyer) and the Seller signed a contract for a business. 2 days later, I call up the Seller to inquire some things and he says that he has another buyer who is offering him better terms favorable to him.

He tells me that his attorney is saying that the contract that we signed is not a legal binding agreement. I explained him that it is but we can work things out if he is not happy with the deal (spent ~1-1.5 hours on phone discussing details). I tell him to think about it and get back to me before 10AM today (as I have another business opportunity also available but I would prefer him) and explained him that our contact is a legal binding contract and there can be legal problems later on.

No call from the seller yet. I called him up at ~11:45AM and left a message to call me back (he normally picks up the phone whenever I call). Called up again at ~3:00PM and still doesn't picks up.

I talked with my attorney today and have faxed him the agreement and will get a response back from him tomorrow.

Right now, my options are as follows:
1) I can simply walk out.
2) I try to work things out with the seller and settle for a compromise.
3) I do as the Seller says (basically take a hit). (its like agreeing on a price and then seller wants more $$$$)
4) I enforce my rights and hold up the sale of the business for at least couple of years. (I know that the seller wants to get out of the business and I can hold it up so that he will not be able to sell it to anyone)
5) I take legal action and force the seller to sell the business to me at the price we agreed upon.

Right now, I am aiming for option 2) and trying to reach the Seller so that we can work things out and resolve the situation like gentlemen. But, so far, as of today, all my efforts to reach him are in vain and I am probably going to take option 4) tomorrow after consulting with my attorney (you screw me, I screw you).

Cliffs:
1) Signed Business purchase agreement
2) Seller wants to back out - demands different terms (telling me he has another buyer and tells me to beat that other buyer).
3) Want to resolve matter but seller not answering
4) I might go hard at the seller.

 

[D1gger]

You have to ask yourself if you need this grief in your life. If you go ahead and take Option 4, it will be a drain on your energy and finances to chase this through the courts. It sounds like you are in the right, but is it worth the hassle.

I would go with a strong push on Option 2, and then fall back to Option 1, as long as you didn't incur any legal or other costs in the initial purchase deal.

 

[Rage187]

I would request the new buyer buy your interest out of the deal.

 

[Q]

If it's REALLY worth it, then go for the legal options if you KNOW you are right, but otherwise, I'd just try to compromise and if not, back out.

 

[gsethi]

Originally posted by: D1gger
You have to ask yourself if you need this grief in your life. If you go ahead and take Option 4, it will be a drain on your energy and finances to chase this through the courts. It sounds like you are in the right, but is it worth the hassle.

I would go with a strong push on Option 2, and then fall back to Option 1, as long as you didn't incur any legal or other costs in the initial purchase deal.

Thats what I am doing....I want to work it out with the seller. My problem is that while working on this deal with this seller, I have lost out on another deal (I preferred this over the other and told the other seller2 that I have done a deal with this seller)

Option 4 is going to be very little expense for me. Basically, I(my attorney) just send our agreement and a letter to the Franchisor (the business is a franchise) and tell them that I have first rights on this store and they cannot transfer to store to any other buyer without my consent.

My attorney told me that he would go through the agreement and then write a letter to the seller explaining the consequences and then we will decide at that point depending on seller's response.

EDIT:
If I go for the legal option, then I will NOT be purchasing the business. Legal option is just going to be retaliation from my side towards the seller for wasting my time (in which I have lost another opportunity. My legal option would be basically delaying the sale of seller's business from which he wants to get out off (basically, you screwed me, now i am screwing you) In Short, I am so MAD at the seller for trying to play with me.

 

[gsethi]

Update:

Talked with my attorney. Acc. to my attorney, we can enforce the contract and hold up the sale of the business for quite a while.

Also got a call from the Seller as follows:
The other buyer is offering him more $$$ (aka he wanted me to beat the other buyer). I told him that I have talked with my attorney and that he is requiring me to BID higher after we have signed an agreement. I did mention to him that I might take up the matter to court and the sale of his business can be held up for a quite a while (I know that the seller wants to sell the business before the middle of this year).

Then he was like we should get together and work things out. I told him that I am willing to work a compromise but if he wants me to BID up and beat the other buyer after we signed a contract, I am not going to do so. He kept mentioning that the contract that we signed is "not a legally binding contract" and I told him that would be upto court to decide if it is a binding or not. So apprently, immediately he wanted to meet and work things out.

I have a meeting (face to face) with seller tomorrow afternoon. Lets see how things go.

 

[dirtboy]

Originally posted by: gsethi
He tells me that his attorney is saying that the contract that we signed is not a legal binding agreement.

hahahaha

Of course he is!

A contract is a contract. It's not your problem he found a better deal after signing with you. Tell him if he doesn't honor it that you'll see him in court.

 

[gsethi]

Originally posted by: dirtboy

Originally posted by: gsethi
He tells me that his attorney is saying that the contract that we signed is not a legal binding agreement.

hahahaha

Of course he is!

A contract is a contract. It's not your problem he found a better deal after signing with you. Tell him if he doesn't honor it that you'll see him in court.

I did tell him that. First when he called, he said that the other buyer is offering him x+5k (our agreement is for x amount) and I need to meet that. That upset me and I told him that we had a agreement and I don't even need to compromise but I am willing to do it but since he is trying to BID it up now, I will be seeing him in court and holding up the sale.

Then immediately, he was like lets meet and work things out. Lets see how tomorrow goes.

Basically, what he is doing now is that he knows he will get x amount from me and he is trying to see if he can get some extra sweets on the top.

 

[K1052]

See how the meeting goes. Stand your ground and feel him out, he might buckle under threat of enforcing the contract.

If you really want the business offer a very modest increase in purchase price or legal action. Basically make it clear that you have X amount of dollars that he can either take or you are willing to piss away on legal costs to make his life miserable for as long as possible. I know it sucks but it gives him an out where you end up with the biz. Make it clear if he screws you again there will be zero talking.

 

[waggy]

do not back down. do not take a hit.

they signed a contract. if he wants to be an as sue.


he has already tried to screw you once. why give him a 2nd chance?

 

[Sluggo]

Do you really think he has a new buyer or do you think he is trying to squeeze a few more dollars from you.

 

[gsethi]

Originally posted by: K1052
See how the meeting goes. Stand your ground and feel him out, he might buckle under threat of enforcing the contract.

If you really want the business offer a very modest increase in purchase price or legal action. Basically make it clear that you have X amount of dollars that he can either take or you are willing to piss away on legal costs to make his life miserable for as long as possible. I know it sucks but it gives him an out where you end up with the biz. Make it clear if he screws you again there will be zero talking.

I am not going to increase even a single penny more and I did tell him that over the phone. He wants me to work out with him so that i increase the down payment and he carries lesser amount of loan (which I might be willing to do depending on how much less he wants to carry now - since I have the upper hand ).

What really is pissing me off was that he was calling me (was really after me) for the past 2 weeks when I had another opportunity. He even came to my business couple of time to talk to me (while I was away). The agreement that we signed, he specially came to my place to discuss the details and we signed the agreement there.

 

[gsethi]

Originally posted by: waggy
do not back down. do not take a hit.

they signed a contract. if he wants to be an as sue.


he has already tried to screw you once. why give him a 2nd chance?

I am not going to back down...will just work around the original agreement. I will NOT be "voiding" or "nullifying" the original agreement. Whatever changes we both agree to will be an "addendum" to the original agreement.

unfortunately, in "suing", only the lawyers end up winning. It will cost me to sue and it will cost him to defend (in lawyer fees) and I explained that to him. I did tell him that I am ready to take a hit on lawyer fees.

I have a good honest attorney and he told me that If I really want that business, the extra 5k doesnt matter. He asked me to think twice before taking legal action...and was like, are you sure if will be worth after all the legal costs.

it is not a matter of 5k...its just that we agreed on a price and he is trying to bid up. Now, if I agree at x+5k, he might come back to me next week asking x+10k....

Originally posted by: Sluggo
Do you really think he has a new buyer or do you think he is trying to squeeze a few more dollars from you.

I am trying to find that out. I dont think that he has another buyer and is just trying to squeeze more $$$ from me now. Think about it, we signed on Sunday (there was no other buyer and he came to my place to discuss the details and sign the agreement). I get a call from him on Tuesday telling me that another buyer is offering him.

I am yet to see any serious buyer who can go through all the paperwork, look at the place and evaluate the offer price within 2 days. I took ~3 weeks to come up with my offer (after doing several calculations) and I am already in the same business (it is a franchise) for the past year.

 

[K1052]

Originally posted by: gsethi

Originally posted by: K1052
See how the meeting goes. Stand your ground and feel him out, he might buckle under threat of enforcing the contract.

If you really want the business offer a very modest increase in purchase price or legal action. Basically make it clear that you have X amount of dollars that he can either take or you are willing to piss away on legal costs to make his life miserable for as long as possible. I know it sucks but it gives him an out where you end up with the biz. Make it clear if he screws you again there will be zero talking.

I am not going to increase even a single penny more and I did tell him that over the phone. He wants me to work out with him so that i increase the down payment and he carries lesser amount of loan (which I might be willing to do depending on how much less he wants to carry now - since I have the upper hand ).

What really is pissing me off was that he was calling me (was really after me) for the past 2 weeks when I had another opportunity. He even came to my business couple of time to talk to me (while I was away). The agreement that we signed, he specially came to my place to discuss the details and we signed the agreement there.

As I said, if you really want it offer something but not a lot. Otherwise stick him with the contract.

People do greedy crap like this all the time in business transactions. The buyer almost always gets the sh!t end of the stick (to some degree) when it happens in terms of wasted time/opportunity/money when it happens. It is an unfortunate risk of doing business.

 

[bctbct]

I am not a lawyer but I think you may create problems for yourself if you use the court system as a retaliation. Avoid telling the owner you plan on sueing him in order to block sales of his company.

Pretty sure if you lose the judge can force you to pay all of his legal fees. You should probably have a candid conversation with your lawyer on what you should or not say to the seller.

 

[Slew Foot]

Haha, "I've got another buyer". The oldest trick in the Real Estate/Business world. Half the time, they dont even exist.

 

[waggy]

Originally posted by: bctbct
I am not a lawyer but I think you may create problems for yourself if you use the court system as a retaliation. Avoid telling the owner you plan on sueing him in order to block sales of his company.

Pretty sure if you lose the judge can force you to pay all of his legal fees. You should probably have a candid conversation with your lawyer on what you should or not say to the seller.

If he goes in saying is going to sue to keep the other guy from buying yes that would be bad.

but no judge is going to go against him for ENFORCING a signed contract.

 

[K1052]

Originally posted by: bctbct
I am not a lawyer but I think you may create problems for yourself if you use the court system as a retaliation. Avoid telling the owner you plan on sueing him in order to block sales of his company.

Pretty sure if you lose the judge can force you to pay all of his legal fees. You should probably have a candid conversation on what you should or not say to the seller.

You obviously never say the actual words but body language/tone and noting that you have legal recourse typically gets the point across.

 

[Injury]

Teach him a lesson about putting his name on document that he doesn't intend to uphold, and teach him a lesson about bad business practices.

Make it worth your time and effort SOMEHOW.

 

[gsethi]

Originally posted by: waggy

Originally posted by: bctbct
I am not a lawyer but I think you may create problems for yourself if you use the court system as a retaliation. Avoid telling the owner you plan on sueing him in order to block sales of his company.

Pretty sure if you lose the judge can force you to pay all of his legal fees. You should probably have a candid conversation with your lawyer on what you should or not say to the seller.

If he goes in saying is going to sue to keep the other guy from buying yes that would be bad.

but no judge is going to go against him for ENFORCING a signed contract.

I don't need to tell that to anyone. The moment we file a lawsuit, that automatically takes effect since the issue is "purchase of a business" and we have a signed contract.

The easiest thing I can do is send a copy of the signed contract to the franchisor (business is a franchise and I am already an approved franchise running a store...this will be my 2nd store) and then I have first rights on the store before the franchisor can do the transfer...that way, even if the seller finds 10 other buyers, the franchisor cannot do a transfer.

I am hoping that things will work out tomorrow but if it doesnt, I might WALK off the deal. I have a GUT feeling that there is no other buyer. Even if there is, my gut feeling still says that the seller will come back to me within 2-3 weeks and then I can negotiate even more (but thats a risk)...

again, lets see how tomorrow goes.

 

[RossMAN]

Not to go OT but did you ever buy that Asus laptop from NewEgg.com?

 

[gsethi]

Originally posted by: RossMAN
Not to go OT but did you ever buy that Asus laptop from NewEgg.com?

no, I got the Asus A8JS (traded my m1210 for it - even trade)

 

[imported_Imp]

Funny. We just had a guest lecturer (big lawyer) who went over business/construction contracts with us. Went over lots of real cases, essentially, most people who signed a contract and backed out, lost. If you sign it and they try to gauge you, then it's well within your right to take legal action. However, main issues you've already pointed out are:; will legal fees be worth it, do you want the business that bad or are you pissed and just want to screw him like he screwed you. I'd go after the person for reason number 2 alone, but then I make bad choices...

 

[KarenMarie]

He was happy with X amount of money until he found he could have X + $5k.

Now he is trying to make you pay for his seller's remorse.

Screw him. He will sell to you for X or you will tie his ass up so tight, he will have no wiggle room to fart.

I hate greedy ppl.

 

[IHateMyJob2004]

Hahahahah, we sold our home to a-holes. They were being anuses. Our lawyer/father in law pretty much owned hte other people. Send them a letter and give htem 24 hours to repsond and in the letter state that if no response is given, that hte terms within the letter are agreed upon. If there are any issues, discussions no longer need to take place and we will proceed through other means.

We owned these jerks that bought our home. Pretty much told them buy our home (per signed agreement) or we will be officially sueing for damages in 24 hours. Really gets your point accross.