Well, I have a call in to a friend of a friend who is a contract attorney, but thought I would turn here for help, too, as I will probably be talking with the business purchaser before I hear back from the attorney.
Kramer
What is the name of your state? California
Hello, My dad sold his tax and accounting business earlier this year. Unfortunately, he recently passed away. The agreement was for a certain amount of the price up front (~75%) and the rest paid out over 12 monthly payments starting 2 months after purchase. Only a couple of payments had been made before my father passed away (around 120 days after the sale). Now, the buyer does not want to pay any more, based on the bolded clause below. The following is from the purchase contract:
The buyer got a good price on the business, and my dad's bad health was very obvious when the contract was signed and it was the primary reason my dad sold the business. The buyer was even hurrying the training because it was not clear how long my dad would live (if that matters). All my dad's clients were aware of my dad's bad health and they welcomed the transition. The buyer is extremely qualified to run the business.
There is a standard-looking California arbitration clause in the contract to resolve disputes. I am wondering what folks think of this from a legal angle? I do not want my mom to lose out on this money and my dad would roll over in his grave if he had known this would happen. There is nothing in the contract about death. I know that my dad certainly did not intrepret the contract this way when he signed it.
Kramer
What is the name of your state? California
Hello, My dad sold his tax and accounting business earlier this year. Unfortunately, he recently passed away. The agreement was for a certain amount of the price up front (~75%) and the rest paid out over 12 monthly payments starting 2 months after purchase. Only a couple of payments had been made before my father passed away (around 120 days after the sale). Now, the buyer does not want to pay any more, based on the bolded clause below. The following is from the purchase contract:
My dad worked hard to help the buyer up until he died (120 days after purchase), and the transition has been successful. But the buyer said that my dad cannot fulfill the 12 months time frame mentioned in this clause. Mostly the buyer has met the accounting clients, but I think he is worried that he won't have my dad to fall back on for recommendations to returning tax clients in the Jan-Apr time period.. TRANSITION PERIOD: Seller agrees to devote a reasonable amount of time to the details involved in transferring the Business to Buyer for thirty (30) days immediately following the close of escrow, not to exceed sixty (60) days. Seller shall be available (by phone, fax, etc) to answer questions regarding client issues and introductions during the 12 months following close of escrow at no charge.
The buyer got a good price on the business, and my dad's bad health was very obvious when the contract was signed and it was the primary reason my dad sold the business. The buyer was even hurrying the training because it was not clear how long my dad would live (if that matters). All my dad's clients were aware of my dad's bad health and they welcomed the transition. The buyer is extremely qualified to run the business.
There is a standard-looking California arbitration clause in the contract to resolve disputes. I am wondering what folks think of this from a legal angle? I do not want my mom to lose out on this money and my dad would roll over in his grave if he had known this would happen. There is nothing in the contract about death. I know that my dad certainly did not intrepret the contract this way when he signed it.