Legal Question in Business Law in California

Re: Employees

It depends upon what the contract says and whether the business is your sole proprietorship or a distinct entity such as a corporation or LLC.

Your most difficult situation would be an employment contract with several years of guaranteed work yet to run, and a proprietorship. In such a situation, you would face finding a contract provision, express or implied, allowing you to assign it to the buyer (if the buyer will take the employee) or allowing you to terminate the contract if you voluntarily dispose of the business.

So, I guess basically it's a matter of comparing what the contract says with what the buyer and the employee want to happen in the future, and if anything needs to be negotiated to avoid a breach of the contract, work it out between the three of you and write a new employment contract and/or deal with the employee in the contract for sale of the business.

Re: Employees

To honor that contract. Have the new buyer acknowledge the contract and offer to keep the employee on the same terms, or offer him a severance package if he doesn't want to stay.

Re: Employees

It depends on the language of the contract. You should have a lawyer review the contract, the sale of the business (or the assets of the business), and evaluate your potential liabilities. Performing the analysis now is a lot cheaper than performing it later.

We can assist you in the analysis. Let us know if you would like our help.