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NSW Purchasing a Business - Can I Get Deposit Back?

Discussion in 'Commercial Law Forum' started by Winnet222, 28 February 2015.

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  1. Winnet222

    Winnet222 Active Member

    27 February 2015
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    Hi there, I recently bought a shop from a friend, but later we had a dispute since I found out that he is not being honest to me.

    Is it possible to get my holding deposit back (I paid $52K, selling price is $100K) if:

    1. The vendor of the business doesn't provide any official purchase contract (we used a business contract downloaded online called Form 3 Estate Agents Act 1980). We didn't use a solicitor and I am in NSW.

    2. The vendor didn't provide me with any official vendor statements (loss profit statement, accounting report etc.) even after I waited 3 weeks since paying the deposit.

    3. He won't let me to see the landlord as he thought the landlord will not agree to provide the lease as I am inexperience so he only notified the landlord that there is someone interested in buying the company's shares. Lease is still under his name.

    4. At beginning, I asked for trial period but was denied as he tried to rush me into putting the deposit by using other prospective buyers, but later I found out that other buyers hadn't agreed with the sale price (misleading conduct)

    5. He didn't mentioned anything about the poor conditions of the assets and the A/C was actually broken.

    The settlement is due in 10 days and I have been running the shop for 3 weeks, now I have no interest, and was going to see a solicitor to cancel the business contract. Is there any chance that I can get my money back via the legal way (i.e. commercial law)?

  2. Tim W

    Tim W Lawyer

    28 April 2014
    Likes Received:
    Seeing a solicitor is a good choice in this case.
    Ivy likes this.
  3. DennisD

    DennisD Well-Known Member

    11 July 2014
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    Agree here with Tim W
  4. Sarah J

    Sarah J Well-Known Member

    16 July 2014
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    Agree with the above. Best to see a lawyer as this can get quite complicated.

    However, a good place to start, in the meantime, is to look at your business purchase agreement (even the one downloaded will suffice) and see if the vendor made any representations as to (i) right to assign; (ii) good title; (iii) right to assign the lease etc. If not, then do you have anything supporting oral representations made which the vendor now cannot satisfy? As to good title, if the vendor cannot prove this, you are within your right to rescind the contract given there is an implied covenant that the vendor has good right and is able and willing to pass on good title in the property being sold.

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