Legal Question in Business Law in New Jersey

Various Legal Matters

We purchased a restaurant for an amount with sellers financing. The financials provided by the seller were not solid, however we still moved forward. We paid 60% upfront and installments of $5K for 8 mos. The restaurant is not producing the amount per week as claimed by the seller, its much less. We are now behind 2 mos pymts and the seller is planning to take legal action. The seller did violate a few clauses in the contract where he did not provide 2 consec. mos service to us, did not notify vendors and did not clear up outstanding balances. We spoke to the seller to try and amend the contract to reduce the monthly payments but we were ignored. In our opinion he lied & knew that we couldn't possibly pay that amount plus bills and payroll. We've used our own personal financial resources to keep up. Attached to these are losses to us because of his failure to stay on board, we've had returned dinners, comp'd items etc. We recently found out that he has told some of our customers not to dine at our rest. and disclosed current legal issues. In addition he was to provide a list of customer names and he didn't. Can we file a complaint against the seller for false financial records and breach of contract?


Asked on 5/10/06, 3:00 pm

3 Answers from Attorneys
Robert Davies The Davies Law Firm, P.A.

Re: Various Legal Matters

You have a messy, expensive situation to deal with. I would be interested to see what the contract required the seller to tell you, and what your attorney did to protect you. This kind of problem, buying and then finding out the revenue is nowhere near what you were told it would be, is a very common problem when buying retail businesses, restaurants, gas stations. I have fought this fight several times.

However, the way to prevent this is to carefully review the finances before buying. How did this not get checked out beforehand?

If it comes to a lawsuit, you will be fighting back, stating that seller did what you say he did, and his misstatements caused harm to you.

If you would like, give me a call to set up an appointment; I am in northern New Jersey. My contact information can be obtained from the links below, just click on the Attorney Profile link. Let my secretary know you found me through LawGuru.

Disclaimer: you can not rely on the advice of an attorney given over the internet. The exact facts of your situation, including facts which you have not mentioned in your question, may completely change the result for your situation.

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Answered on 5/15/06, 12:44 pm
Daniel Pepper Pepper Law Group, LLC

Re: Various Legal Matters

The answers to your questions will mainly depend upon the specific provisions of your written contract with the seller. Please feel free to contact my office and we can provide an analysis of what your rights would be in this situation.

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Answered on 5/10/06, 4:18 pm
Bernard J. Berkowitz Berkowitz & Raiken

Re: Various Legal Matters

You raise several issues, but without reviewing your contract and closing documents, I could not give you a comprehensive answer. You do raise several defenses to owing the seller his money. I think the best thing for you to do is to quantify how much the seller owes you and send him a letter to offset that against what you owe him. If he sues you, you can counterclaim for that amount. If you would like a more comprehensive review of your matter, call for an appointment so I can review all the documents.

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Answered on 5/10/06, 4:21 pm


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