Legal Question in Business Law in California

Calif. Civil Code section 1749.5 provides that no gift certificate can have an expiration date.

Calif. Civil Code section 1749.51 states, "[a]ny waiver of the provisions of this title is contrary to public policy, and is void and unenforceable."

I believe that an attempt by the new and old businesses to waive the responsibility of either to honor your daughter's gift certificate is void ab initio as against public policy.

See also: http://www.dca.ca.gov/publications/legal_guides/s-11.shtml.

As a previous response points out, California law does not allow gift certificates to expire or become worthless under most circumstances (there are a few exceptions, but they don't seem to apply here).

Given this, the question becomes one of whether the new owner or the old owner, or a business entity, is liable for honoring the gift certificate or refunding the full value.

Businesses can be organized and operated as sole proprietorship, corporations, LLCs, partnerships, and a few other ways. The form of business entity that was used at the time the gift certificate was sold may be important here. If the business that sold the gift certificate were a corporation or an LLC, the obligation to honor it goes along with the entity, regardless of who owns it. (Think, for example, of a major corporation such as Safeway Stores. If you have a claim against Safeway because you slipped on a banana peel in one of their stores, you don't give a hoot who owns Safeway stock, or how much it has changed hands between the date of the accident and the date you file suit. Similarly, if this is ABC Spa, Inc., it is irrelevant who owns the stock now-- it is ABC Spa, Inc. which must honor the gift certificate.)

When a sole proprietorship business is sold, the buyer must assume the obligations of the business UNLESS the seller has paid off a particular outstanding debt or obligation, or has made acceptable provisions to do so. So, your questions to the management should be, "Is this business a corporation, LLC, partnership or sole proprietorship?" and "Who is responsible for the pre-transfer or ownership liabilities of the business?" If the current owners try to pin liability on the prior owners, and if the business is and was a proprietorship, you may need to pursue the seller.

Otherwise, the new owner is the person who must honor the gift certificate. It is without much doubt still valid; the only question is which party or parties are liable to you. My hunch is that the current owners inherited the duty to honor it, either by agreement with the seller of a proprietorship or by operation of law.