Legal Question in Business Law in California

Re: Does a new business owner have to honor contracts made between previous owne

It doesn't sound to me as though the gift certificate law applies here, but someone, either the old owner or the new owner, is liable to you. It is fraud for the buyer and seller of a business to fail to provide for claims of customers, suppliers, employees, etc.

Ordinarily, the new owner assumes the liabilities of a business as well as acquiring its assets. A transaction can be structured so that the new owner doesn't assume the liabilities (such as service obligations), but in that event the prior owner must make provision for handling the obligations not assumed by the buyer. They remain his obligations.

The foregoing assumes the business was and is a sole proprietorship. If it were a corporation, a change of shareholders would have no effect whatsoever on its liabilities.

You should consider sueing both the old and new owners in small claims court, and let them duke it out over which of them has to take care of your service claims. One of them must.

Re: Does a new business owner have to honor contracts made between previous owne

Your contract was not with a particular individual (the old owner) but rather with the store. If the new owner purchased the business, then he acquired its liabilities along with its assets unless his deal specifically provides otherwise.

It is possible that the new owner purchased only the property of the business that used to run the store and that he operates it as a different company. If that is the case, then your best bet would be to seek a refund from the former owner.

Has the new owner given you a reason why he won't honor the contract? There is a law in California which says that gift certificates cannot expire, so if he claims that your agreement is out of date there may be a way to take advantage of this law, depending upon what kind of documents you have.