When a Business Sale Doesn't Match What the Seller Told You

If a seller or broker gave you false facts before you bought a business, you may have a claim. In Florida, the buyer misrepresented business sale lawsuit Florida courts hear usually rests on fraudulent misrepresentation. It can also include a claim for breach of the purchase contract. Ayala Law PA focuses on business and commercial litigation in Florida courts and arbitration. The firm serves businesses in Tampa, Hillsborough County and the wider Tampa Bay area.

What a Business Sale Misrepresentation Lawsuit Is

A buyer misrepresented business sale lawsuit Florida is a claim by a buyer against a seller, and sometimes a broker. It says false statements or hidden facts led the buyer to purchase the business.

The statements can come before closing, during talks, or in documents used to sell the company. Common sources include financial statements, sales presentations, and the seller’s answers to your questions.

This claim fits buyers of operating companies, franchises, professional practices and asset sales. It also fits buyers who relied on representations and warranties in the purchase agreement.

The contract matters a lot. A purchase agreement may contain promises about the business. Those promises can support a breach claim, and the same facts may support a fraud claim. Our team reviews both from the start.

Claims and Remedies Covered

Buyers usually pursue fraud-based claims, contract claims, or both. The right path depends on what was said and what the contract says.

• Fraudulent misrepresentation or fraudulent inducement: false statements of past or existing fact that led you to buy.
• Negligent misrepresentation: careless statements about the business, made without checking the facts first.
• Breach of representations and warranties: claims that the seller broke promises written into the purchase agreement.

Remedies can include money damages tied to your losses. In some cases, a buyer also asks a court to undo the sale. Which remedy fits depends on the contract, the timing, and whether the business can be returned.

Florida Elements: What You Must Be Able to Prove

A Florida fraud claim needs four things, as stated in a recent Florida fraud elements opinion:

• A false statement about a material fact.
• The speaker knew the statement was false.
• The speaker intended you to act on it.
• You were hurt because you relied on it.

A Florida Supreme Court fraud decision holds that justifiable reliance is not necessary. Justifiable reliance is not a necessary element of fraudulent misrepresentation. Butler v. Yusem, 44 So. 3d 102 (Fla. 2010)

Promises about the future can also count. The same opinion notes a promise may be fraud if the person making it had no intention of keeping it.

A careful contract review shows how they apply to your deal.

Common Examples of Misrepresentation in Business Sales

Misstatements in business sales often involve money, debts, licenses and customers. Watch for these issues:

• Revenue, profit, customer counts or contract backlog that were overstated.
• Undisclosed debts, tax bills, pending lawsuits, liens or lease defaults.
• Licenses or permits the business says it holds but does not.
• False statements about key employees or customer concentration.
• Hidden defects in equipment or real property included in the sale.

Buyers often find these problems after closing. Cash flow or records may not match what they were shown.

Florida also has a tax rule buyers should know. Under Fla. Stat. § 213.758, a transferee, or a group of transferees acting in concert, of more than 50 percent of a business, its assets or its stock of goods is jointly and severally liable with the transferor for the payment of the tax owed to the state from the operation of the business by the transferor, up to the transferee’s maximum liability for such tax due, subject to the statute’s exceptions. That liability is capped at the buyer’s maximum liability under the statute.

How a Business Sale Dispute Typically Moves Forward

Most disputes move from document review to a written demand. From there, they go to a court case or arbitration, then to discovery and resolution.

1. Review the documents: letter of intent, purchase agreement, disclosure schedules, financial statements, tax returns, and sale emails.
2. Map the statements: match each claim you were told to the contract and to the records.
3. Send notice: send a written demand where the contract requires it, and keep everything in writing.
4. File or arbitrate: the purchase agreement may set the forum.
5. Discovery and resolution: records requests, depositions, and then negotiation, mediation, arbitration or trial.

The forum matters. Under Fla. Stat. § 682.02, a written arbitration agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract. The court decides whether that agreement exists. Under Fla. Stat. § 682.03, a court may not refuse to order arbitration because the claim seems weak.

Venue also matters. Under Fla. Stat. § 47.011, suits must be brought only in the county where the defendant resides, where the cause of action accrued, or where the property in litigation is located; this section does not apply to actions against nonresidents. For a Tampa-area sale, Hillsborough County may be one of those places.

Deadlines apply too. Under Fla. Stat. § 95.11, time limits govern actions other than for recovery of real property. Under Fla. Stat. § 95.031, except as provided in subsection (2) and in s. 95.051 and elsewhere in these statutes, those limits run from when the cause of action accrues.

Waiting can also hurt. Florida ratification ruling explains that ratification happens when a party who could undo a deal fails to do so after learning the facts. Ratification occurs when a party entitled to rescind a voidable contract fails to do so after the discovery of facts that warrant a rescission. Flaherty v. Flaherty, 128 So. 3d 920 (Fla. 2d DCA 2013)

Why Buyers Work With Ayala Law PA

Ayala Law PA focuses on business litigation, commercial litigation and related disputes in Florida courts and arbitration.

The firm’s practice areas include contract disputes, shareholder disputes, construction litigation, real estate litigation and international trade litigation. Many sale disputes overlap with these areas.

The firm’s only office is at 1646 W Snow Ave, Tampa, FL. The firm represents businesses in Tampa, Hillsborough County, Brandon, Riverview, Plant City, Temple Terrace and the Tampa Bay area from its Tampa office.

Eduardo A. Maura is the responsible lawyer for this page. Our support staff help organize documents, and our lawyers review each matter.

If another lawyer or firm may be better suited to your matter, we will say so.

Frequently Asked Questions

Talk to Ayala Law PA About Your Sale

If the cash flow, debts or licenses don’t match what the seller showed you, time matters. Call (305) 570-2208 or request a case evaluation. Bring the purchase agreement, letter of intent, financial statements, tax returns and sale emails.