Legal Question in Business Law in California

Re: business purchase fell through

My estimation is that there is some risk to you, but probably not a whole lot. The issue is whether you would be misappropriating trade secrets. Generally speaking, neither a Schedule C nor the profit-and-loss statements of a business will be trade secrets within the meaning of the law that makes it a tort to misappropriate them; it may be that a business owner doesn't want the profitability (or lack thereof) made public to employees, customers and competitors, but this is not what is meant by a trade secret. Trade secrets are information that has independent commercial value, such as a secret process, formula, or list of valuable clients and their particular purchasing habits.

The risk is primarily that you may be sued and forced to defend yourself; even if you win, which is likely, you would have spent time and money on your defense.

California protects trade secrets, but also protects a person's right to engage in any lawful business, trade or occupation. I don't know exactly what information was given you during your negotiations, but in my estimation purely financial information is not entitled to protection.

Re: business purchase fell through

It's hard to tell from your question whether the "on-line business" was legitimate or a scam (as many so-called "business opportunities" are). My best guess -- from the extremely few facts you've given -- is that the person is blowing smoke and has no basis, or real intention, to sue you.

In addition, you should be aware that California regulates "business opportunity" brokers - they must be licensed - as well as "seller assisted marketing plans." The following link may, or may not, be helpful:

http://ag.ca.gov/consumers/general/samp.php

Get appropriate advice before buying any business. You could contact SCORE (Service Corps of Retired Executives).

Re: business purchase fell through

The two previous answers to your question were excellent, and I am responding to add only that their responses, especially Bryan Whipple's, would also apply in Washington.