Legal Question in Business Law in Texas

purchasing business

I plan on purchasing a floral business. The seller is saying that they will not be able to give over the uncollected A/R that have been set for future dates. (weddings in future) because they collected a down payment on the accounts. They say they legally are bound to fulfill the contract because they set itup and the customers signed a contract with them at that time. This eats up a lot of our profits for the next year if they continue to carry out the contracts after we buy the shop. They have already booked some weddings all the way up to Dec. 2007. What do I do?


Asked on 3/05/07, 6:20 pm

3 Answers from Attorneys

Johm Smith tom's

Re: purchasing business

Unless they personally obligated themselves to perform on those contracts, they company owns the contracts and they should go to you when you buy the company.

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Answered on 3/05/07, 6:26 pm
Peter Bradie Bradie, Bradie & Bradie

Re: purchasing business

See David Nance's response. The down payments should be credited against the selling price.

The seller is either ignorant or trying to gain an undue advantage. How would they satisfy the contracts if they sold the business to you? Are they planning on opening a competing business?

Do you have a non-compete clause in your buy/sell agrement?

I would give very serious consideration to walking away from this guy, unless you're bound by contract to buy the business.

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Answered on 3/05/07, 6:36 pm
Loyd Wright Loyd H. Wright

Re: purchasing business

It depends. Are you purchasing an entity, such as a corporation? If the contracts were signed in the corporate (business) name and you are purchasing that business these are business contracts that should not be affected by the fact that you are taking over that corporation (business). In other words, the accounts receivable/contracts should come with the business. If not, then you have to factor these receivables into what you are willing to pay for the business. Also, I would be very concerned about the seller selling you this existing business and then opening a shop down the road. You need a strong non-compete. Without seeing the purchase and sale documents its really difficult to advise you properly.

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Answered on 3/05/07, 9:10 pm


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