i sold a business, i have a detailed signed contract, the person i sold to has defaulted and broke contract. what are my rights?
3 Answers from Attorneys
Did you get a note? Did you get any security for the promise to pay? Is there some security interest in the sold business obtained by a security agreement and a UCC-1 filing? What does the purchase agreement say about your rights in a default? Were these issues reviewed with you by your counsel at the time of sale, or was this done without counsel? Does your buyer have any money, so that a suit against the buyer would be productive? Do you anticipate a bankruptcy filing? Was your buyer an individual or a business entitiy (like and LLC or Corporation)?
More information is necessary to advise you.
Your rights would start with money damages for breach of contract. In addition, you are likely to have additional remedies as specified in the "breach" "default" and/or "remedies" sections of your detailed contract. An analysis of what-to-do-now must take into consideration the details of your contract relating to breach, remedies, security and collateral, and also what has happened to the business and its new owner since the transaction closed. If the business is failing, you'll probably want to focus on going after the buyer rather than foreclosure-and-repossession type remedies to get the business back. This is where having strong security and collateral provisions, including personal guarantees, pays off. Presumably, you involved a lawyer in preparation of the sale contract. If not, or if you are dissatisfied with him/her, I'd be willing to review your documents and the facts surrounding the breach, without charge, and make recommendations based upon more complete knowledge of the deal and what went wrong. I can be contacted at [email protected] or (707) 878-2230.
I might add that I have done business and spent a lot of time in Alturas in connection with the railroad, starting with the SP in the mid-1960s and more recently involvements with the Lake County (Oregon) and Alturas-Canby-KFalls operations, both of which I was quite familiar with until recently.
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