Legal Question in Business Law in California

Re: Salon purchase

Our CA member contact would need to review your contract to begin to know what options you have. NanceGroup.com

Re: Salon purchase

As the out-of-state attorney said, you should read the contract again. Go back to the lawyer who you hired to review the contract, and ask him or her whether keeping the same name and phone number was part of the deal.

Re: Salon purchase

Lawyers and business brokers who prepare contracts for the sale of businesses are careful to have their clients list, in the contracts they draw up, exactly what is changing hands. X pays Y $50,000 for Y's business, and that includes inventories, goodwill, the remaining premises lease, the name, customer lists, supplier contacts, post office box number, telephone number, etc., but excludes cash and receivables. We also document liabilities that will be assumed by the buyer and those that remain the responsibility of the seller. If the deal is not all-cash, we get collateral for the balance of the purchase price. Finally, the parties usually agree upon and include a non-compete agreement. These have to be carefully drafted in order to be enforceable, but it can be done.

You have two or three possibilities. The first is that you didn't get everything you bargained for...giving you the keys to the front door is usually not an adequate turn-over - you should also get the phone number put in your name or be assured that it still rings at your new salon, etc.

Second, even if you contract was sloppily written, EVERY contract contains an implied promise of each party to the other to behave in good faith and deal fairly with the other party as to the broadly-defined subject matter of the contract. If you reasonably thought you were buying an intact and complete business, it is unfair and bad faith for the seller to run off with half the goodies that you thought you were getting under the broad heading of "buying a salon." Further, California law has some fairly broad and general concepts regarding unfair competition.

So, you probably have a leg to stand on in court, but your position is going to be a whole lot stronger if your business purchase agreement clearly says what you're to get for your money.

Re: Salon purchase

My LawGuru colleagues are correct that you need to review your contract to determine what the "deal" was.

From an intellectual property perspective (i.e., the trademark name of the business), however, there are court decisions which say when you buy a business as a "going concern" that the trademark rights impliedly transfer. Therefore, even if the contract doesn't specifically identify the name of the business as one of the assets transferred, you may still have options.

Unfortunately, this is not the type of question that can be answered without meeting with you and reviewing the situation in detail. Feel free to contact me if you would like to arrange a meeting.

Re: Salon purchase

The previous answers who stated that your inquiry begins with a review of your contract are correct. If all you purchased was the space, and not the seller's business, then the space is all you purchased. If you purchased the seller's business as a going concern, your recourse could include a lawsuit for (a) breach of contract, (b) unfair business practice (whereby you could get the court to prohibit your seller from using the name and phone line and other items of goodwill she sold to you), (c) fraud (if she never intended to honor her contract), and possible trademark violations if she transferred to you registered trademarks or tradenames.

As always, we (or any attorney)cannot give complete legal advise without being able to meet with you, interview you in detail, and review the relevant documents. Accordingly, the foregoing should not be relied on as legal advise or as a legal opinion. You should consult with an attorney promptly to determine your rights.