Legal Question in Business Law in California

New Owner Refused Gift Certificate

In June 2004, a numbered, signed and dated (1999) Gift Certificate was presented to a restaurant at the end of the meal but refused based upon new ownership. (The head waiter who refused the GC is the new owner AND the signature on the GC!) Consumer Affairs responded ''If the new owner assumed the restaurant's assets and not its liabilities as conditions of the sale, that could mean the new owner is not obligated to honor the gift certificate.'' If such a business transaction precludes CA Civil Code 1749.5-1749.51, how can I find out if the new owner did or did not assume the prior owner's liabilities?


Asked on 1/25/05, 7:39 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: New Owner Refused Gift Certificate

I'd probably start by asking the old owner. If he's not liable because the new owner assumed the liabilities, he should be happy to tell you and maybe even show proof (the sale contract).

A more powerful tool would be to sue both of them on the dis-honored certificate in the same small claims court action. This should smoke out who is the responsible party -- but it's probably not worth the effort.

Someone, of course, is liable. Further, failure of a business seller to make reasonable provision for creditors is generally a civil fraud on the creditors if there was enough money (from the sale proceeds, for example to pay off the business debts. For this reason, the seller is more likely the liable party here.

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Answered on 1/25/05, 8:05 pm


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