It is seldom that the intricacies of legal principle cause delay in any sale or purchase of business. More likely, the practicalities play a bigger role.
So, in a recent case, trouble started when the purchaser of a business was allowed to take possession of the business on exchange of contracts, after payment of only the deposit. The contract for sale provided that the balance of the purchase price would be payable when settlement would take place, 30 days later. Now, there is no legal principle against this, but practically it is safer to part with possession of a business on settlement, only when the balance of the purchase price has been paid.
So, unsurprisingly the vendor had to commence proceedings in the District Court, because the purchaser would not pay what was due on settlement. The Vendor claimed the balance of the price and also interest, because the contract determined that if the purchaser did not settle on time, interest ran, provided the failure to settle was not for the default of the vendor.
The purchaser resisted that claim, and by cross-claim the purchaser alleged that the vendor had breached a condition of the contract which obliged the vendor to ‘assist’ the purchaser in various matters in relation to the business, including providing tuition and introducing the purchaser to clients of the business.
On appeal, the District Court’s earlier decision in favour of the vendor was upheld. The court found that under the relevant condition, the vendor only had to provide tuition and assist the purchaser on request to do so by the purchaser, but not absent any such request. And as there had been no request, the vendor did not breach the contract.