Legal Question in Business Law in California

After 35 years in business, you should know the importance of written contracts for major deals as well as minor ......... how could you have sold your business without getting everything in writing?

Well, having said that, let's see where you'd stand if this went to court. Most likely, if there were nothing in your oral contract to sell the business to the contrary, "work in progress" would be deemed included in the deal. The buyer would, at the moment of acquiring ownership of the business, also acquire the duty to finish the work on the seven cars and the right to collect the remaining amounts due from the cars' owners.

Assuming that there was no discussion of the work in progress, no discussion of deposits or prepayments made by their owners, no discussion of how much work you had already done on the seven cars, and no discussion of how much remained to be done on them or how much the owners would owe, you are right to say what you said. I believe a court would rule that the completion was up to the new owner, and he also had the right to bill and collect from their owners.

On the other hand, if the judge believed that you and the buyer had negotiated something different, the judge would probably rule accordingly. That's the trouble with oral agreements. When something goes wrong and you end up in court, it's very difficult to prove what the terms you once agreed upon were, and the court can simply refuse to rule and leave the parties as it found them.

Well, I think I would inform the new owner that if the work on these cars is not completed those owners will have a claim and they will likely sue both of you and if they only sued you, you can seek to join the new owner as a defendant.

What you are saying also doesn't make sense if this place is to continue as an auto body shop right? Why would they want to do anything that would look bad on them and lose the opportunity to keep these people as customers.

This is definitely something that should have been thought through, but there is a legal theory of successor liability and while I'm not sure if it applies here, it may.

I suggest that you consult with a lawyer in private and discuss your objectives in more detail. You can start by calling around to several for a free phone consultation, get some insights then pick the best fit to work with.

Kind regards,

Frank

www.LanternLegal.com

866-871-8655

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DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.

Yet again, no written agreement detailing all the terms of the 'deal', leaves people arguing in court over who said what and who will be legally liable for the problems you two created.

If serious about hiring counsel to help in this, and if this is in SoCal, feel free to contact me. I�ll be happy to help fight and get the best outcome possible, given the facts and proof available.