Legal Question in Business Law in California

Duty to inform

I am in the process of selling a business. There is 6 years remaining on my lease - which will be transferred to the new buyer. However, I just found out from the management company that there is a chance that they will not renew the lease when it expires; they do not have a master plan just yet. The management company will contract with a company to come in and assess/survey their needs. Since I have this knowlege - do i have the duty to inform? Can i be sued six years later for having this knowledge and failure to inform?

Thanks in advance!


Asked on 11/16/04, 3:39 pm

3 Answers from Attorneys
Christopher M. Brainard, Esq. C. M. Brainard & Associates - (310) 266-4115

Re: Duty to inform

You ought to disclose. However, I would like to inform you that I have a client looking to buy a business. You may contact me.

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Answered on 11/18/04, 4:42 pm
Roy Hoffman Law Offices of Roy A. Hoffman

Re: Duty to inform

When the seller of a business has knowledge that would affect the buyer's decision whether to buy the business it must be disclosed. If the information is not disclosed, it would be possible for the buyer to sue you under some circumstances (i.e., the buyer does not gain knowledge of the non-renewal until 4 or 5 years after the sale).

Your best bet is to disclose the information, in writing, to the buyer so that they have all the information the need to decide whether to buy the business. That way, you won't get sued in the future (or at least the buyer will not succeeed in a lawsuit).

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Answered on 11/18/04, 7:14 pm
Daniel King Law Offices of Daniel King

Re: Duty to inform

hi.

if you fail to disclose, whenever it is discovered, it could be the basis for a fraud action, (fraudulent concealment), against you. why not disclose anyway. if something so far out in the future would keep your buyer from going through with the transaction, it is likely that he or she has other things that might queer the deal regardless.

call if i can answer any questions.

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Answered on 11/18/04, 10:17 pm


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