Legal Question in Business Law in California

Hi, I own a grocery store in San Francisco. I’ve been in escrow since February 2018 we are ready to close the deal as the liquor license process is completed and the only thing we are waiting for are the buyers to put The rest of the money in escrow. For the last three weeks the buyers haveignoredthe landlord to finish signing the lease that she approved, they’ve also failed to deposit the money for the rent, they’ve given me and the broker various excuses after ignoring us for so long and the excuses range from we’ve been traveling, to one of my partners had a baby, to we will put the money in next week and then we don’t hear from them. Finally yesterday they told the broker they bought some other markets in southern California and they are not sure if they still want to buy my store after leading me on for four months. One of the requirements when we all agreed to sign the contract was they wanted me to run out my inventory extremely low to around $30,000 because they were going to make the market strictly liquor. I did that according to the agreement and it’s cause my sales to drop tremendously. I sent over a notice to perform last week and they still did not perform by the deadline so yesterday the broker submitted cancellation and it said I will keep their deposit of $35,000. Of course they did not sign the cancellation and said they feel they are entitled to their deposit back. My question is what recourse do I have? Can I sue them for causing my business sales to drop and also for not performing and by me running out my inventory it’s also cause the value of my business to collapse. One more thing these guys were going to purchase the business under their LLC if I do have any recourse I can take will their LLC stop me from going after them personally? Sorry for the long message

Also I’m in San Francisco, Ca


Asked on 7/06/18, 4:10 pm

1 Answer from Attorneys
Charles Perry Law Offices of Charles R. Perry

Much depends on the wording of your contract, and the rights that contract gives you upon the buyer's failure to perform. You need to look for a number of different provisions, such as whether keeping their deposit is your sole remedy, whether there is an arbitration provision, whether there is a provision limiting your damages, and whether any of the individual owners guaranteed the purchase. There may be other provisions that are important. While you definitely have rights if the agreement is silent on all these matters, your contract could "shape" the law and either expand or limit your rights.

You'll also want to see if there's an attorney's fees provision in your agreement.

Assuming there's no provision in the contract to the contrary, your damages are based on what would have been foreseeable by the other side at the time they signed the contract. "Foreseeability" is a difficult concept to state, but it should be helpful to you that the contract caused you to cut your inventory. Defendants thus knew you were going to have to do that.

It's not possible to say if you can find a way around the personal protections of the LLC. That's going to be quite fact specific.

I realize no one wants to hear that they should consult a lawyer, but you really need to consult a lawyer. In particular, you want a business or general civil litigation lawyer. Those of us you practice in this field know the law regarding contract disputes, know what to look for in the agreements, and know how to interpret those agreements. You can look for someone here on LawGuru, you can contact the San Francisco Bar Association, or you can conduct a search through your favorite search engine.

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Answered on 7/06/18, 7:52 pm


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