Legal Question in Business Law in California

Re: The person I purchased a business from is taking my current customers

Generally there is no prohibition for the conduct you describe. However, if the parties signed a contract which prohibits that type of conduct, your friend may have recourse. Your friend should contact a lawyer in the area and have any documents signed by your friend and the old owner reviewed.

Re: The person I purchased a business from is taking my current customers

Your friend needs to have the contract reviewed by a local attorney. If customer "good will" was included in the purchase price, there might be a "no competition clause" to protect your friend's interests. However, it is impossible to provide specific advice based on the scant information that you provided.

Re: The person I purchased a business from is taking my current customers

It's not necessarily illegal. But the purchase and sale agreement should have contained a covenant not to compete. If it did not, the broker who arranged the sale probably was a moron.

Typically, in sales of small businesses, the selling owner(s) will covenant not to directly compete with the purchasing owner for a certain period of time and generally will covenant not to contact the business' customers for the same period of time.

If you have such a covenant in the purchase/sale agreement, a suit needs to be filed to enforce it.

If you don't have such a covenant in the purchase/sale agreement, you might have a claim under the Unfair Business Practices Act, but it's going to be an uphill climb. The law favors the free marketplace.

If you would like advice specific to this situation, please feel free to call or email us. We are litigators with extensive experience in unfair trade practice claims and would be pleased to review your case.

Good luck.

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Re: The person I purchased a business from is taking my current customers

Depending upon the facts of what he is doing, you may have grounds for suit under breach of agreement, unfair competition, and others. If you have the basis for a suit, you also then have leverage to convince him to stop doing it and settle your claims without spending a ton of money on suit. Feel Free to contact me if interested in pursuing this.