I purchased a business under a stock sale agreement. It should have not been titled a stock agreement sale. Would it be possible to change to a goodwill sale?
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I purchased a business under a stock sale agreement. It should have not been titled a stock agreement sale. Would it be possible to change to a goodwill sale?
I need to know if I can make amendment to original contract to make it a goodwill sales agreement.
Hello! My name is Dolan and thank you so much for contacting me! I just had a few quick questions for you: What is a reason it shouldn't have been a stock sale? Was it an LLC?
The seller was a S corp and I am an LLC.
Got it! So an S-Corp is just a tax filing status and not the way the company is organized; however, typically an S-Corp would have been organized either as a corporation or an LLC. If the business you purchased was an LLC, then it'd actually be a membership interest that you bought and not stock. Stock is for corporations. So this means if it was an LLC, what you guys can do is draft an amendment that reflects that this was a membership interest sale and not a stock sale and it was only the verbiage that needs to be changed.
The issue is that the owner was suppose to transfer interest in the corporation before 5 days after the sale. This did not happen due to the owner refusing and the liquor license not being able to be transferred to a new owner. The previous owner wanted us to open a new LLC. This is why this was a goodwill sale and not a share transfer.
Ok thanks! So in this case, a "goodwill" sale is not specifically legally defined; however, it sounds like the previous owner just failed to perform their express and implied duties here1 A breach of contract simply means that one party was obligated to perform and they have either not performed or have said that they will not perform. (Restatement (Second) of Contracts.) This applies regardless of whether the agreement was written or done orally. Typically, the aggrieved party is entitled to be returned to the same position they were in before the breach. You have some options you can explore: So in this case, my recommendation is to send a demand letter. Here is a template that can help - https://www.contractscounsel.com/t/document-form-checkout/119
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