ContractsCounsel Logo

Legal Questions and Answers

Get free proposals from vetted lawyers in our marketplace.

GET FREE PROPOSALS
No upfront payment required. Pay only if you hire.
Home Q&A Forum Is a business purchase agreement binding?

Acquisitions

Business Purchase Agreement

California

Asked on Oct 15, 2023

Is a business purchase agreement binding?

I am interested in purchasing a business and I am currently in the process of negotiating a business purchase agreement. I am curious to know if the agreement is binding and what legal implications it may have if I decide to move forward with the purchase. I have read through the agreement and I understand the terms and conditions, however, I would like to know if the agreement is legally binding.

1 Attorney answer

Answer

Acquisitions

California

Answered 232 days ago

David B.

ContractsCounsel verified

Business Lawyer
Licensed in California
Free Consultation

It seems that you are thinking of signing a letter of intent. A letter of intent ("LOI") is normally used to summarize the key points of a deal upon which the parties have reached an understanding. It is a prelude to a full set of agreements used to purchase a business. After the LOI is signed, the parties negotiate the minutiae of a deal and prepare the final set of agreement. LOIs usually contain a statement that the LOI does not bind either party to move forward with a deal. For the most part this is true. However, case law is replete with cases where the LOI was enforced against an unwilling party despite the disclaimer in the LOI. Generally speaking, courts will enforce an LOI where one party did not act in good faith after the LOI was signed, refused to negotiate or signed the LOI for nefarious purposes. A person contemplating an LOI should not assume that language saying the agreement is not binding will clear them of all responsibility. There is a duty to negotiate in good faith.

Use of the ContractsCounsel Q&A Forum does not create an attorney-client relationship between User and any Lawyer User. The Forum is not a substitute for legal advice from a lawyer but is intended to be educational and to help the user determine if legal services are necessary. The Forum, Content, and communications on the Forum do not constitute legal advice.
Meet some lawyers on our platform

Michael M.

609 projects on CC
CC verified
View Profile

Damien B.

19 projects on CC
CC verified
View Profile

Daniel R.

151 projects on CC
CC verified
View Profile

Brian S.

16 projects on CC
CC verified
View Profile

Find lawyers and attorneys by city