The business world can be risky and, while the prospect of being your own boss is an exciting one, if you buy a business that ends up not being all it was promised to be, it can be a real liability.
If you suffer loss because the seller was not being entirely honest with you, or even honestly mistaken in his representation, you may be able to make a claim. These types of claims are usually for breach of contract and misleading and deceptive conduct.
In every business sale, the seller wants to get the best price they can, and will, of course, present the business to you in the best possible light. Some sellers, however, distort the accounts, turnover, profit and other financial data to create a more attractive – but inaccurate – picture of the business.
As a result, you may decide to buy the business or pay more when, if you knew the whole truth, you would have walked away or made a lower offer. Depending on how far the truth is from the image portrayed by the seller, you could suffer a huge financial loss because of the seller’s deception.
Fortunately, there are protections under the Australian Consumer Law which makes it illegal for any person in trade or commerce to engage in conduct that misleads or deceives or is likely to mislead or deceive. It doesn’t matter whether the person intended to mislead or deceive – only whether the overall impression created by that person’s conduct is false or inaccurate.
It is possible to mislead through giving incorrect information, or even by saying nothing when it is reasonable to expect that the information would have been disclosed.
If you have purchased a business, and later found out that you were misled as to a material fact that may have impacted upon your decision to buy the business, or meant that you would not have paid as much for it, you may have a claim against the seller for misleading or deceptive conduct. There are several remedies available to you if you have suffered because of the misleading or deceptive conduct of another, including:
In a business purchase dispute, a lawyer will look at the issues and obtain all the relevant facts. Whether you are the seller or buyer of a business we can assist. Careful consideration is given to how the breach of contract or misleading conduct arose and how the law applies in those circumstances.
Once the initial assessment is made and the relevant facts are considered, we can determine the strength of your case and an initial estimate of your loss is quantified.
These types of disputes can be resolved in a variety of ways. Usually settling before you go to court is the best approach if both parties can work out an appropriate settlement.
A forensic accountant will typically be engaged to assist in establishing your actual financial loss, which can provide leverage to encourage the seller to settle early. If your case is correctly and thoroughly prepared it will make it more difficult for the seller to defend.
If you believe you may have been the victim of misleading or deceptive conduct during the purchase of a business, you should seek legal advice as soon as possible. Getting advice early can assist in resolving the business dispute quickly and cost-effectively before the sale proceeds disappear.
There may be urgent steps that can be taken to limit your loss (particularly if the sale is not yet final). Our experienced business purchase dispute lawyers in Melbourne and Sydney can help you claim back your loss.
Our litigation team have significant experience in business purchase disputes and will push hard to help you in claiming back your loss.