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We started the process of looking into the purchase of a…

Hi there, We started...

Hi there, We started the process of looking into the purchase of a business. On Feb. 23, we met with her to look at her inventory and discuss
the financials. We signed the confidentiality agreement at the beginning of the meeting but as it turned out, she did not have any financial statements prepared for us to see at this meeting. Last night we met with her again, and she provided us with 2 years of very basic financial statements. The most current statement was 20 months old, and shows the business operating at a loss. She also said the current financials would not be ready for us to see until Mid-April. My accountant said he didn't
think they were prepared by an accountant at all due to all of the errors, omissions and inconsistencies.We are rather frustrated with this process and have pretty much decided that this company is not worth purchasing at any price. We would like to pursue the idea of starting our own company instead, but I am not sure how iron-clad a confidentiality agreement is, as we did not receive all of
the proper financial statements at the time that we signed it, or within a reasonable amount of time. Also, as my daughter is a current employee of
this company, she had signed a contract when she started agreeing to not work for a competitor for 6 months or starta competing business for 2 years. I
actually signed it as well, as she was only 16 at the time. There are items in that contract that look like it prohibits her from working or starting a company as well. I'm also wondering how iron-clad that contract
is.

Lawyer's Assistant: What state are you in? And have you consulted a local attorney?

I am in Canada. I have not contacted my attorney

Lawyer's Assistant: Has anything been officially filed? If so, what?

No nothing has been filed to purchase the business

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

I have copies of the contracts if needed

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Answered in 7 hours by:
3/29/2018
Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 103,875
Experience: Lawyer
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Hello! My name is Debra (formerly known as Legal Ease). Thank you for your question. I'm reviewing it now, and will post back again shortly.

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What province are you in please?

Can you please attach the confidentiality agreement?

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Customer reply replied 22 days ago
Hi Debra, we are in Alberta. Please find attached copies of the Confidentiality Agreement as well as my daughters employment contract. Thanks so much for your time. I appreciate it very much.

The only area of concern is the non-competition provision in the confidentiality agreement. But it is not likely enforceable. First, the owner didn't make disclosure as promised. Second, the two years is overly restrictive. It is rare for a court to allow more than a one year restriction. On top of that, of course you may compete You were thinking of buying their business.

In terms of your daughter, she cannot be bound by a contract she signed as a child and again the two years is overly restrictive.

But there are no guarantees of course and so it may make sense to have a lawyer send this woman a letter asserting your position and rights.

Please feel free to post back with any follow-up questions you may have. If you don't have any then I hope I have earned a 5 star rating but if you don't feel that I have please don't hesitate to reply back and let me know what more I can do to assist you. Finally, please know that even after you rate me I will be here for you and you can ask follow-up questions if you think of them later on at no further charge of course.

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Customer reply replied 22 days ago
Would it matter that I co-signed that employment agreement with my daughter?So just to clarify, you are no reason why I couldn’t start up a very similar business? In your opinion the Confidentiality agreement is not valid because the financial information is incomplete?Would you be able to write the letter that you suggested?Thanks again for the quick reply! You’re a lifesaver!

In my view it is not valid because she didn't complete her end of the obligations but even if the agreement was valid it is much too restrictive.

You are not liable for your daughter's breach even if that provision was enforceable.

I am sorry but I cannot do the letter.

You can contact the Law Society and use their Lawyer Referral Service. You will be given the name of a lawyer and can consult with the lawyer and the first half hour will be free.

The number is:

1-***-***-**** or
***-***-**** in Calgary

Debra
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 103,875
Experience: Lawyer
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Debra and 87 other Canada Law Specialists are ready to help you
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Customer reply replied 22 days ago
Thank you. I will contact them tomorrow. I appreciate your help.

You are very welcome.

Thanks and take good care.

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