Legal Question in Business Law in Illinois

I purchased an accounting firm on contract. The contract states no payoff is allowed within the first 36 months. What would the consequences be if I paid it off early? There is no mention of penalties in the contract.

Asked on 8/20/09, 4:59 pm

2 Answers from Attorneys

Burton Padove Indiana and Illinois Lawyer, Burton A. Padove
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You need to have an attorney review the entire contract and all related documents before this question can be answered.

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8/25/09, 7:14 pm
Kenneth J. Ashman Ashman Law Offices, LLC
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Obviously, one would need to review the contract in its entirety before rendering a formal legal opinion. That said, what would typically occur is that you would not get a discount for the interest due on the note; in other words, you would still pay the full amount due, with interest, as if you had made the payments over the course of 36 months. Thus, there would be no economic benefit in paying it off early. Insofar as "penalties" are concerned, there are typically restrictions as to the amount. For example, a $1 million penalty on a note for $10K would not likely be upheld. Please note that this is different than paying the full amount of interest that I just discussed.

If you do have the cash at hand, you might want to contact the seller and negotiate a lump sum payout. You'd reduce the amount of interest you would otherwise owe, and the seller would get the benefit of cash without the risk of non-payment.

-- Kenneth J. Ashman; KAshman@AshmanLawOffices.com

The information provided by Ashman Law Offices, LLC (“ALO”) is for general educational purposes only. No attorney-client relationship is established by this communication and no privilege attaches to such communication. ALO is not taking and will not take any action on your behalf and will not be considered your attorney until both you and ALO have signed a written retention agreement. There are strict deadlines, called statutes of limitation, within which claims or lawsuits must be filed. Therefore, if you desire the services of an attorney and decide not to retain ALO on terms acceptable to ALO, you should immediately seek the services of another attorney.

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8/26/09, 12:39 am

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