Legal Protection for a Business Buyer
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The solution is more than 300 words, with a reference, to analyze what happens when an entrepreneur buys a business and discovers the previous owner is now working for the competition. The specific textbook case is:
A man entered into a contract to buy a small business from the entrepreneur who had started it. Before completing the formalities, the buyer learned that the entrepreneur had taken a job with a larger rival company. The buyer now fears that the seller is taking vital business information with him to the rival business, and that this will affect the prospects of the small business. How can the buyer protect his interests? What legal protection does he have? Can the contract be declared illegal?
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Solution Summary
This solution is over 300 words and analyzes what potential ramification a business buyer has, when it is discovered the seller has gone to work for a competitor. The buyer fears that the seller will now take vital business away; prospering for the competition. The discussion includes what legal protection exists for the buyer and includes one reference.
Solution Preview
In a transaction such as the purchase of a business; the seller has a duty to disclose all material facts that could impact the value and/or continued functionality of the organization. The entrepreneur obviously knew he had secured another job with the rival company prior to selling his own small business. The legal protection the buyer has is a lack of full disclosure from the seller. With the buyer having learned of this material fact after entering into the ...
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