Q. I recently purchased a Gift Shop. The seller had an arrangement with a card supplier which meant that for every card sold the shop owner would take 40% and the card supplier the rest. However, the card supplier has now told me that they can't longer afford to offer me the same terms and they are only prepared to offer me 20%. Can they do this?
A. Yes. The contract is between the supplier and the previous owner. You do not actually have a contract with the supplier and you cannot force them to agree to the same terms the seller had negotiated. They are therefore free to negotiate new terms with you. Because of this, your solicitor should have attempted to make sure that the seller transferred this contract to you when you purchased the business.
Q. We didn't use Solicitors as we both thought that it was straight forward and we simply shook hands on it. If I had know what was going to happen I wouldn't have bought the shop. Can I sue the seller?
A. Only if you can prove that it was a term of your contract to buy the business that the Seller would arrange for this contract to be transferred to you. This seems unlikely in the circumstances. If you had used Solicitors there would have been a written contract dealing with this issue, and many other issues besides.
It is vital that a Solicitor is used when buying a business as it involves many complex matters regarding, amongst other things, taxation, the transferability of contracts and possibly employment rights. A Solicitor would ensure that any potential problems are sorted out for you before you buy the business not after, leaving you free to concentrate upon making the business a success.
Purchasing a business can be a very complex matter. Expert advice is essential.
Should you have any queries regarding this issue or a related issue please contact Keith Swan of Patterson, Glenton & Stracey Solicitors by email at ks@pgslaw.co.uk or by telephone on 0808 231 7043. Patterson, Glenton & Stracey have provided legal advice to the people of South Tyneside for over 125 years. For details of their full range of services and to view previous Gazette articles please log on to www.pgslaw.co.uk.
