Mergers, acquisitions, dissolutions and other types of complete or partial transfer or ending of business operations, name and other related items are not simple transactions. There is often much more to the sale of commercial operations than there is to say a residential home. Our prior posts have touched on the complexity of the contracts covering these types of deals. Complexity isn't the only issue involved.
In some cases even one of the most well-drafted contracts can run into problems. Why, because there are still people involved in carrying out the terms of these contracts. This is the reason that even after a contract is drafted and executed, you still hang on to an experienced contract attorney's phone number. When one of the parties fails to live up to the terms that they agreed to, it is considered a breach of contract. The recent sale of a restaurant shows one such breach.
Some individuals enjoy starting a restaurant and operating it, but it doesn't mean that they want to keep it forever. They are hard work and demand attention. A restaurant company recently decided that they wanted to sell the business, the operations end of things. However, the company wanted to retain the commercial property.
Thus, an agreement was born that allowed the property owners to retain the commercial property while selling the restaurant business. The new owner was required to lease the building, pay real estate taxes and change the name of the restaurant to something that was sufficiently different from the name it operated under before the sale.
The new owner changed the name from Bozo's, but the original owner claimed that the new name of Bozo Vodanovich was too close to the original and constituted a breach of contract. The original owner also stated that the new owner's failure to pay the agreed upon taxes was also a breach of the terms of the contract. The original owner sought damages in the amount of half of the original purchase price valued at $250,000.
Source: The Louisiana Record, "Bozo's restaurant sued by former owner for breach of contract," Kyle Barnett, Feb. 19, 2013
If you have questions about holding other parties to a contract, our San Diego business law firm helps draft complete agreements and helps enforce ones that are already in place.
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