Legal Question in Business Law in California

Re: Getting out of an agreement

Simply 'backing out' of an agreement risks a lawsuit. Negotiating a fair resolution of this problem to avoid a lawsuit should be your first priority, regardless of the side you're on. It may be possible with the help of an attorney to get the agreement sorted out fairly, especially since this is between family. You may have legal 'defenses' regarding the values and facts you state. That should help persuade all parties to avoid going to court and spending a ton of money. Feel free to contact me for help if you're in Southern California.

Re: Getting out of an agreement

The first problem in analyzing and answering your question is that you have not made it quite clear whether this was a straight swap of ownership for ownership (as it sounds at first) or a swap of ownership with a lot of cash and assumption of liabilities thrown in "to boot." Perhaps more important, it is entirely unclear what the three-month "validity" is all about. Offers may be valid for a limited time, as may options, but ordinary contracts don't have limited validity. They may have a rescission period, or a specific time limit for performance, but in neither case does the contract become "invalid" at the end of the time. In the first instance, lapse of the rescission period would cut off the right of a party to back out, and in the latter example, a party's failure to give timely performance under the contract would be a breach and grounds for suit.

You haven't stated any reason for an attorney to think the contract would be invalid after three months. If it is binding now, it will be binding then. If rescission is possible now, then rescind. If the contract is an option, the party holding the option need not exercise it, but the party granting the option is stuck if the holder timely and properly exercises.

Courts don't usually let parties out of their contracts just because they made a bad bargain. Therefore, you'll have to look at unusual means to have it ruled invalid or unenforceable. These might include (in addition to possibilities set forth or hinted at above): fraud, undue influence, mistake, necessity of a written agreement (if it isn't written), failure to disclose, breach of fiduciary duty, and maybe more. You should also consider a malpractice suit against the attorney who drafted this horrible agreement (I know, it was home-made!).

If the delay in bringing the matter to trial, which is certainly going to take more than three months, would prejudice anyone's position or interests due to a contract (other than an option contract) becoming "null" in the interim, it is somewhat likely that the prejudiced party could seek and obtain a TRO and/or a preliminary injunction to extend their rights under the contract, in some way, until the entire matter could be tried and a final judgment given.

I would be pleased to give you a further analysis, at no charge, if you contact me directly with particulars including full details of the contract and the circumstances in which the deal was conceived.