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WiseOwl58, Attorney
Category: Business Law
Satisfied Customers: 3725
Experience:  Senior Associate at White & Case LLP
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Question - I thought about buying a business in May 2007 and

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Question - I thought about buying a business in May 2007 and we had a management agreement so I could take over operations before the purchase agreement was finalized. After a few months I closed the business for a couple of reasons. I never signed the purchased agreement. Last Thursday the owner hired a new President to run his company. Now they are saying I owe the $450,000. If they can't produce the signed purchase agreement do I owe the money.
Submitted: 5 years ago.
Category: Business Law
Expert:  WiseOwl58 replied 5 years ago.
I'm going to have to give you the classic lawyer's answer of: "It depends."

Probably not. They probably can't hold you to a purchase agreement, not so much because they would not be able to produce a signed copy of the agreement, but more likely because you never agreed to purchase the business.

In other words, it is not just the act of signing the agreement that could bind you to a requirement to purchase the business. Although the signed agreement would be an important indicator of your agreement to purchase, and you said that you never signed it.

That is probably sufficent evidence that you never agreed to purchase the business.

They may argue, though, that you agreed in some other way than signing the agreement to purchase the business. For example, they may say that the agreement to purchase the business was a prerequisite to entering into the management agreement. Therefore, since you did act as the manager of the business, in their logic, of course you agreed to purchase it. Their argument would be strengthened if there was something in the management agreement to this effect, i.e., a statement that you agreed to purchase the business.

They may also try to argue that even though you did not sign the purchase agreement, you verbally agreed to purchase the business, and they may argue that such a verbal agreement is binding, and give testimony as to that verbal agreement.

They may also look for any other statement that you made that you intended to purchase the agreement.

So there are many ways that they will try to argue around the fact that even though you did not sign the purchase agreement, you agreed to purchase the business. Whether or not any of these arguments will work is fact specific, and I cannot say based on the little bit I know about your situation.

Furthermore, they may have a statute of limitations problem as well. That means, in a nutshell, that they may have waited too long to pursue their claim, since this all happened back in 2007, five years ago. Again, depending upon facts that I do not know, ,that most probably exceeds the statute of limitations for a written or a verbal contract. So their claim would be time barred

Good luck to you. Please press the green ACCEPT button. Thanks.
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