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socrateaser, Attorney
Category: Business Law
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Experience:  Retired (mostly)
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I have a contract which has a non-compete agreement for a buisness

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I have a contract which has a non-compete agreement for a buisness that I sold for an area of the state of maine for $50,000. I moved from that area and started another business in another area in February of 2009 (13 months after I sold the original business).

I received $30,000 down and financed the remainder. In August of 2008, 8 months after receving the initial payment, I went through a divorce and the purchaser paid $6000 to me to help cover my financial needs at the time. We rewrote the contract for him to start paying the remaining financed amount January 15, 2009. I also reduced the amount owed by $4000 for paying me the $6000 in August of 08. In September, after my divorce, I moved out of the area and opened a retail store.

In January, the purchaser's first payment of $250, which was due on the 15th, was not received until February 3rd. That payment contained 2 payments ($500 - January and february). He stopped paying in April...... there is more....
Submitted: 8 years ago.
Category: Business Law
Expert:  socrateaser replied 8 years ago.

Based on your stated facts, if you sold the business and financed payment, then the buyer is the owner, until you successfully rescind the contract. The buyer's breach of payments, after paying over a substantial amount of the purchase price, does not void the deal. It's simply a breach entiting you to damages for default.


Therefore, the buyer is entitled to enforce the noncompete, absent your proving that you were not attempting to solicit customers within your former business' georgraphic territory -- which is the threshold question under Maine case law.


Hope this helps.


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Customer: replied 8 years ago.

what kind of damages would he be entitled to under maine law if he has paid 72% of the original purchase price?

Expert:  socrateaser replied 8 years ago.

The percentage of payment does not determine his rights to damages.The right to damages is controlled by his ownership of the business.


If he cannot prove actual damages, then he would have to show that the customers you closed would have been reasonably foreseen as his customers, but for your intervention.


Also, he would get attorneys fees and costs, and he could potentially get punitive damages to discourage any repeat behavior -- this is not likely, though.

Customer: replied 8 years ago.
If he was to go out of business due to lack of work, and had no proof of losses, would the contract be null and void?
Expert:  socrateaser replied 8 years ago.
No, he would still be the owner.
Customer: replied 8 years ago.
Thanks for your help. I guess my best course of action is to hire and attorney and discuss all of my options. I am confused on how the legal system works in this way and it just doesn't seem fair that if someone stops paying you, even though that every intention of paying you, that they can go and sue someone for breaching a contract that has already been breached by them. Again thank you for your time.
Expert:  socrateaser replied 8 years ago.
The reason is that your actions could be viewed as preventing him from paying you. Your recourse is to sue for breach of contract, not to compete against him. You can do this when he sues you, and obtain an offset against his damages, if any. And, it may be that you did not actually damage the buyer -- in which case, you win.
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