Toronto Sale of Business Dispute Lawyers
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Buyer Backed Out of Purchase of Business
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Claims from Sale of Business

Claims from Sale of Business | Failure to Close | Seller Backed Out of Sale of Business | Buyer Backed Out of Purchase of Business

The sale of a business in Ontario can involve either the sale of underlying assets or the sale of shares of the corporation that owns and operates the business.

Sale of business disputes are an unpleasant but often unavoidable part of selling a business. Sale of business disputes can arise in the context of:

Non-Compete Agreements

Non-compete agreements are often included in sale of business contracts. Such agreements typically provide for a promise by the seller not to go into a similar business in a specified geographic area for a specified period of time. A non-compete agreement may also provide for a promise that the seller will not use confidential business information, such as customer lists or trade secrets.

Breaches of non-compete agreements can be costly to the buyer. If a seller has breached a non-compete agreement, the buyer may seek damages from the seller or, in certain circumstances, seek to stop the competition by an injunction.

Product or Services Disparagement / Cyber Libel

Related to non-compete agreements, product or services disparagement and cyber libel can arise when a seller seeks to compete against a buyer. The lawyers at Gilbertson Davis LLP have experience with defamation and slander claims, including cyber libel claims.

Brokerage Disputes

Business sale brokers offer advantages, such as confidentiality, marketing, assistance with valuation, and experience. However, disputes may arise between the broker and the buyer or seller over the broker’s fees, as well as with issues regarding representations and valuation.

Misrepresentation or Non-Disclosure of Material Facts

Sellers may misrepresent the business with fraudulent tax returns or financial statements, including with inflated sales or non-existent partners. The lawyers at Gilbertson Davis LLP have experience in fraud litigation, including in retaining and instructing forensic accountants.

Disputes over Representations and Warranties

Sales of businesses typically involve the seller making representations and warranties about the business. Common representations and warranties can be regarding a) the value of accounts receivable, b) the status of tax liabilities, c) inventory levels, d) sales history, e) accuracy of financial statements, f) the existence of employee or contractor contracts, g) issued share capital, h) benefit and pension plans, and i) ongoing or expected legal liabilities.

Representations and warranties often have a significant impact on the purchase price. Buyers often insist that sellers often purchase representations and warranties insurance or set aside amounts in escrow to address breaches of representations and warranties.

Disputes over alleged breaches of representations and warranties are one of the most frequent issues to arise from the sale of a business.

Non-payment of Purchase Price

Payment of a business purchase price may be due immediately or on a deferred basis. In any event, the buyer may be unwilling or unable to pay, causing the seller to seek recovery of the purchase price. Gilbertson Davis has lawyers who have experience with searching for, locating and recovering assets.

Failure to Close | Seller Backed Out of Sale of Business |Buyer Backed Out of Purchase of Business

A seller or buyer may, after a contract is signed, refuse to close. Or, a buyer or seller may delay in closing. Refusal to close or delay in closing may amount to a repudiation of the contract, relieving the other party of further performance and giving rise to various remedies. Minor delays or other minor breaches of the contract may only give rise to an entitlement to damages or not be actionable at all.

If the sale of a business leads to a dispute, it is important to seek legal representation.

Injunctions | Urgent Remedies

Success in obtaining early injunctive relief often results in early dispute resolution.

We can provide sound advice and results-oriented representation in time sensitive matters. When there is need for immediate assistance from the courts, clients turn to lawyers who have acted in such proceedings before. Gilbertson Davis LLP can serve your needs with lawyers who are experienced in this practice area of seeking immediate litigation response, for both local and international clients.

If you have an issue relating to a the purchase or sale of a business, please contact us for an initial consultation.