How to stop this happening.

[dummies]

Hi Somersoft members,

My cousin has just gotten herself into a difficult situation and hopefully we can find some advices how to deal with this. She bought a manicure business 4 months ago through an oral agreement and there were couple of months delay in payment as cousin was running short of money. As a result, the old owner (very rude old lady) got really angry, harassed her in front of people, even threatening that she would open a new shop and take away all my cousin's customers.

Worst thing happened, cousin just found out a few days ago the new shop will start opening in a month being located couple minutes away from us. We immediately went to a solicitor and got advised that even though my cousin doesn't have the sale contract, law still apply to prevent the old owner opening a new shop within 4kms. However, we need to find out whether the business is actually in her name, if she use someone else name to open the shop there is little chance for us to win the case. My cousin is not in the right state of mind as she has invested so much in the business and her business would be affected a lot if it opens next month.

 

[TMNT]

geez thats horrible, but yes, even if there was an anti competition clause, opening another business under a totally different person would be hard to prove,

I guess being directors of a new business wouldnt be legal if the clause was inserted.

I feel sorry for your friend but even with a competition clause, I think its hard to even contest a new business unless its in her personal name

keep us updated

 

[thatbum]

You did find some advice - from the solicitor. Why not follow their advice?

 

[dummies]

Thanks TMNT,

I guess the best thing I can do now is calming her down and stop the idea of burning their shop

 

[dummies]

You did find some advice - from the solicitor. Why not follow their advice?

We are hopeful that there may be another way to deal with this.

 

[pinkboy]

Hi Somersoft members,

My cousin has just gotten herself into a difficult situation and hopefully we can find some advices how to deal with this. She bought a manicure business 4 months ago through an oral agreement

Red flag here straight up.

and there were couple of months delay in payment as cousin was running short of money.

Running tight on money even before she started in business? Another reg flag.

As a result, the old owner (very rude old lady) got really angry, harassed her in front of people, even threatening that she would open a new shop and take away all my cousin's customers.



Worst thing happened, cousin just found out a few days ago the new shop will start opening in a month being located couple minutes away from us. We immediately went to a solicitor and got advised that even though my cousin doesn't have the sale contract, law still apply to prevent the old owner opening a new shop within 4kms.

Did your cousin not go to a Solicitor before handing money over, before signing a contract? Quite foolish.

Also, that 'law' wording is quite specific, where did that come from? A term sheet? Drawn up contract?

However, we need to find out whether the business is actually in her name, if she use someone else name to open the shop there is little chance for us to win the case.

What exactly is the case? There doesn't appear to be a contract?

My cousin is not in the right state of mind as she has invested so much in the business and her business would be affected a lot if it opens next month.

This looks like a train wreck. Are you giving us all the details? I think you need to engage a solicitor's advice who specialises in business transactions.


pinkboy

 

[jrc]

Hi Somersoft members,

My cousin has just gotten herself into a difficult situation and hopefully we can find some advices how to deal with this. She bought a manicure business 4 months ago through an oral agreement and there were couple of months delay in payment as cousin was running short of money. As a result, the old owner (very rude old lady) got really angry, harassed her in front of people, even threatening that she would open a new shop and take away all my cousin's customers.

Worst thing happened, cousin just found out a few days ago the new shop will start opening in a month being located couple minutes away from us. We immediately went to a solicitor and got advised that even though my cousin doesn't have the sale contract, law still apply to prevent the old owner opening a new shop within 4kms. However, we need to find out whether the business is actually in her name, if she use someone else name to open the shop there is little chance for us to win the case. My cousin is not in the right state of mind as she has invested so much in the business and her business would be affected a lot if it opens next month.

If this is in NSW get the solicitor to show your cousin the exact law that says the owner cannot open a shop within 4 km. Unless there is an express agreement not to compete, your cousin will be wasting time, money and energy. Courts in NSW would normally regard restraints of trade as being a commercial matter between the parties and would not put a restraint in place, so the solicitor needs to show your cousin the exact piece of law that he says applies.

Your cousin needs to focus on having a point of difference, finding out why her customers come and what they want and then getting more customers.

 

[TMNT]

If this is in NSW get the solicitor to show your cousin the exact law that says the owner cannot open a shop within 4 km. Unless there is an express agreement not to compete, your cousin will be wasting time, money and energy. Courts in NSW would normally regard restraints of trade as being a commercial matter between the parties and would not put a restraint in place, so the solicitor needs to show your cousin the exact piece of law that he says applies.

Your cousin needs to focus on having a point of difference, finding out why her customers come and what they want and then getting more customers.

would it even get this far, as it seems like there is no contract according to op?

I guess its now a case of either getting the money back from a non existing contract or settling the purchase asap, and hoping the old lady hands the business owner without delay or doing a runner

 

[S.T]

Your cousin needs to focus on having a point of difference, finding out why her customers come and what they want and then getting more customers.

Great advice, just tell her to get on with running her business and beating any competition. If it wasn't the old owner starting up, whats to stop others from doing the same thing? Business is all about competition.

 

[dummies]

My cousin is so naive, always believe in people and especially doesn't know much about legal stuff, some of them took advantage of her and I believe she has learned a value lesson after all this happened. I take my hat off to you guys for all the inputs

 

[TMNT]

Great advice, just tell her to get on with running her business and beating any competition. If it wasn't the old owner starting up, whats to stop others from doing the same thing? Business is all about competition.

yes it was great advice, but she needs the busienss first!!!

there is a chance that the owner might not even give it to her after receiving the money

as for being naive, especially if its a foreginer ( iget the vibe OP might not have lived all his life in oz and so the cousin), not knowing the legal systemI wouldnt consider naive, its a pretty daunting task to buy a business,

ive lived here pretty much all my life and buying a business is daunting and confusing

 

[S.T]

yes it was great advice, but she needs the busienss first!!!

there is a chance that the owner might not even give it to her after receiving the money

as for being naive, especially if its a foreginer ( iget the vibe OP might not have lived all his life in oz and so the cousin), not knowing the legal systemI wouldnt consider naive, its a pretty daunting task to buy a business,

ive lived here pretty much all my life and buying a business is daunting and confusing

Read the OP again, shes had the business now for 4 months. from that the deal is done, Old lady ex-owner is a bit cheesed off though and wants to open a competition business close by.

 

[dummies]

Cousin had paid the amount in full couple months ago and pretty much at this day most of customers she getting are from ex-owner. She is afraid that majority of them will switch back to the ex asa opening.

I only got in touch with my cousin not long ago and we both came to Australia just a few years back, I was in disbelief when the cousin told me about this.

 

[Ace in the Hole]

Something else to consider - what's the lease looking like?
Has it even been approved to be transferred to the new owner?

How does one buy such a business via an oral agreement?
So much wrong with this.
Scary.

 

[Paul@PFI]

A good lesson here. Seek advice BEFORE doing anything. Even the accountant would ask if there is a contract - What are you buying etc and then send the client to a lawyer to ensure the buyer has protection for the rights and property being acquired.

Banner outside store - New friendly management might bring new business and address the hag.

 

[jim1964]

open a competition business close by.

When i sold my last business,i had to sign a Stat Dec i would have nothing to do in the particular industry for 3 years,including using close family and friends to head up any business name or ventures.

 

[S.T]

When i sold my last business,i had to sign a Stat Dec i would have nothing to do in the particular industry for 3 years,including using close family and friends to head up any business name or ventures.

Yup, that's what the OP's cousin should have done. But that's not going to help them now.

 

[MRO]

If there was a delay in payment in line with the terms I think the seller was within her rights to demand payment and threaten to establish a competing business. I suspect this was only done to induce payment.

We used to write a default clause in our purchase/sale contracts that specifically voided the non compete clause if the purchaser didnt pay on time. Not applicable here as there is not written contract.

 

[TMNT]

Read the OP again, shes had the business now for 4 months. from that the deal is done, Old lady ex-owner is a bit cheesed off though and wants to open a competition business close by.

oops, yes how did I miss that bit,

too many Coronas last night

 

[Terry_w]

How to stop this happening.

1. Seek legal advice before entering a contract
2. Have a written contract
3. Written contract has restraint of trade clauses.