Legal Question in Business Law in California

Threat of Lawsuit from Sale of Hair Salon Business

We sold a franchise hair salon business. The buyer already owned a salon of the same franchise.The week following the sale a new low price competitor opened in a large retail center across the street. The buyer insists we should refund $45,000 of the $115,000 sale price because his business dropped from $4800 per week to $3000 per week because the new competitor opened. He thinks we knew the competitor was opening and should have told him. The fact is we did not know, as the competitor is an obscure part of the next retail center. He claims a former employee told him we knew about this new competitor. We have a contract that clearly states the buyer has made an independent investgation of the business and all profits are future and to be derived from the buyers own endeavors. Does he have any chance to be successful? If he proceeds and loses can we recover legal expenses? The contract is silent on the latter issue.


Asked on 11/18/99, 11:17 am

2 Answers from Attorneys
Timothy J. Walton Internet Attorney

Re: Threat of Lawsuit from Sale of Hair Salon Business

The answer to your questions is "maybe."

If they can show you knew or should have known, then they have a chance of prevailing.

Some legal expenses may be recoverable, but unless attorneys' fees are specified in the contract, your best hope for recovering your expenses would probably be to sue for malicious prosecution.

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Answered on 11/18/99, 4:10 pm
John Hayes The John Hayes Law Offices

Re: Threat of Lawsuit from Sale of Hair Salon Business

I sent an answer to the email that you sent to me personally. I look forward to speaking with you tomorrow morning. Again my number is 888-563-8529. The call and consultation are free.

John Hayes

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Answered on 11/19/99, 12:02 am


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