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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10623
Experience:  Barrister 17 years experience
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I purchased a card & gift shop on 18th August 2014 from Mr

Resolved Question:

I purchased a card & gift shop on 18th August 2014 from Mr & Mrs Vendors. The agreed purchase price was £21K for the business and £15k for the stock. However the vendors had documented in the acquisition enquiries that they would appreciate a little flexibility with any stock that I didn’t want to accept as they were concerned at the time the SAV may be above the agreed £15k. As a token gesture due to them retiring I agreed that I would negotiate a very small increase to the £15K should the SAV be in excess of it but only if it could be payable over a 3 year period following the transfer of business.
The stock take took place by a private firm on the 16th August 2014. On completion, the final figure was much higher than predicted so negotiations for the very small increase was called off until the following morning. On Sunday 17th August negotiations resumed with both the vendors, myself and partner present at the shop premises. Mr Vendor (69) clearly didn’t want to negotiate a small increase to the £15k and indicated that we should pay the full amount or call it a day as he didn’t care to sell the shop or want to retire. Mrs Vendor (69) on the other hand was beside herself as she was desperate to sell the business in order for them both to finally retire. Mr Vendor eventually asked for an extra £3k which I declined and told him I would walk away. Following a long period of upset I told them my final offer was £1K payable into their private bank account over the 3 year period as previously agreed. Eventually and extremely reluctant by Mr Vendor both parties agreed on the £1K.
The following morning I instructed my solicitor to complete the sale. What I didn’t realise at the time was that the extra £1k was never documented between the solicitors.
On Monday 18th August 2014 I took over the business and due to the upset caused by Mr Vendor the previous day, I made the decision to pay the £1k as soon as possible. I set up a standing order for £100 per month commencing in September 2014. During a quiet period early 2015 I discovered large amounts of very old, shop soiled and in my opinion un-saleable stock. My partner rang and spoke to both Mr & Mrs Vendor regarding the matter as we both felt a reduction to the £1k should be discussed. Despite my partner inviting them both to the shop to view the stock or take the stock to them neither of them was willing to discuss it any further. I decided to absorb the loss and continued paying the £1k until it was finally paid in June 2015.
Towards the end of July 2015 I received a phone call from Mr Vendor enquiring as to why the payment for July had not reached their bank. I informed him that the agreed sum had been fully paid up the previous month; he then said he intended to put it in the hands of his solicitors. I checked to see what had been documented at the time of sale with the solicitor I used and that is when I found out the agreement for additional stock was to be made between the vendors, myself and partner only and no amounts were documented by either solicitor.
Today I have received a letter that was posted to my shop from Mr & Mrs Vendor dated August 25th 2015. It states that as I have made the decision not to continue to pay the agreed amount outstanding to us from the sale of the Card shop, we have contacted the small claims court and have been advised to try mediation first before going to court. It gives me the option to go through mediation and asks me to respond by email within 2 weeks.
It is my understanding that the purpose of a mediator is to reach an agreed solution to resolve a dispute. As I have already paid in full the agreed amount and do not owe anything else, I am mystified as to why I should agree to mediation. I realise I have no evidence of the agreed amount but neither do Mr & Mrs vendor. If however mediation would be in my best interest then I am willing to do so.
I would really appreciate guidance on this matter.
Submitted: 2 years ago.
Category: Law
Expert:  Buachaill replied 2 years ago.
1. This is very unethical behaviour by Mr. & Mrs Vendor. Additionally, they don't have a leg to stand on both legally and from the point of proving their case in evidence. So, you should essentially give them nothing. However, if I were you, I would agree to mediation if only to close the door on them. Obviously, as a couple, they are somewhat divided upon the issue of stock and leaving the business behind. Mediation will allow them to ventilate the issue without things ever going live. Both of them, at age 72, are long past the stage where they should be fighting about this issue. The way to deal with a small claims court case if they bring it on, is to raise a counterclaim for the amount of stock which was unsaleable and unusable. Put them in fear of losing and this will ensure their claim dies a death. So I would before mediation, write to Mrs. & Mr. Vendor and seek compensation for the stock that was not saleable and make a claim off them. Seek reimbursement of payments already made.
Customer: replied 2 years ago.

Thank you for your response.

I intend to write to Mr & Mrs Vendor and point out that the agreed amount has already been fully paid but I predict they will write back and disagree with what was originally agreed. Given that there is no written documentation on either side, what are the chances of it being accepted by the small claims court?

Expert:  Buachaill replied 2 years ago.
2. A Small claims court will hear every case, whether it is a good one or not. So if Mr. & Mrs. Vendor want the case to go before the Small Claims court it will. However, their prospects of succeeding are very poor, because they simply don't have any evidence in their favour which shows that the agreement went beyond the agreed amount of 1k. In fact, there is simply no evidence at all. However, I would suggest that rather than wasting a day before the Small Claims court, you turn it into a "loser" for them from the outset by counterclaiming rather than simply defending the case. Once they see a downside, they will be much more reluctant to waste their own time on a Small claims court case.
Customer: replied 2 years ago.

Would you advise to inform them during my response that if mediation is unsuccessful and they do bring a claim, I intend to bring a counter claim for the stock that was unsalable and unusable?

Expert:  Buachaill replied 2 years ago.
3. I would not hold back. There is no point in saving a counterclaim for the hearing in the Small Claims court as by then your time will have been wasted in dealing with the mater. I would make clear at mediation that you intend to get a refund for the stock which was unsaleable. Right from the off you need to show Mr & Mrs Vendor that they have a downside. So set out your counterclaim at mediation. Attack is the best means of defence.
Customer: replied 2 years ago.

Would you advise doing a inventory of all the un-saleable stock in preparation for the mediator?

Expert:  Buachaill replied 2 years ago.
4. Yes, I would advise doing an inventory of unsaleable stock before mediation.
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