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Contract Disputes and Business Sale Disputes

A contract dispute usually turns on what the agreement says about breach, notice, cure, remedies and where disputes go. After a business sale, the same questions arise over indemnity claims, escrow releases, earnouts, working-capital adjustments and unpaid seller notes. We represent sellers, buyers and other parties in these disputes, from the first notice through settlement, arbitration or court. If we worked on your deal, or on the other side of it, we run a conflict check before we take the matter.

How does a contract dispute usually work?

A contract dispute is decided by the contract before it is decided by anyone else. The breach, notice, cure and termination clauses set the steps and the clock, and a notice sent to the wrong address, in the wrong form or a day late can end a claim worth the whole escrow. Caps, baskets, exclusions, legal-expense provisions and the governing-law choice decide what the claim is worth, and the dispute clause decides where it goes. We read the agreement first, send the notices so the clauses are satisfied and tell you what the claim is worth before anyone demands or responds. See Advocacy.

What disputes arise after a business sale?

DisputeWhat it usually turns on
Indemnity claimsThe representations, the cap, the basket, the survival period and the notice and procedure the agreement requires
Escrow releaseThe release conditions and dates, and whether a pending claim holds back funds
EarnoutsHow the metric is defined and calculated, the buyer’s operating covenants, access to records and any duty of good faith the governing law implies
Working-capital and closing adjustmentsThe accounting method in the agreement and the dispute mechanism, which often sends the question to an independent accountant
Unpaid seller notesThe note terms, default and acceleration and any set-off rights the buyer asserts
Restrictive covenantsWhether the seller’s non-compete and non-solicit apply, and how far they reach
Account or listing problems after closingWhether the issue arose before or after closing, and who bore that risk under the representations
Transition servicesThe scope and duration of the services the seller agreed to provide

For how those terms are negotiated in the first place, see selling an eCommerce business, buying an online business and the Buying or selling an online business.

Why are earnouts a common source of disputes?

An earnout ties part of the payment to the business’s later performance, which the buyer usually controls. Sellers worry the buyer will change advertising, listings or inventory in ways reducing the metric. Buyers worry about paying for performance from the seller’s own timing. Whether the buyer has any duty to operate the business to protect the earnout depends on the contract language and the governing law, so the agreement’s operating covenants, definitions and information rights decide most disputes. Keep the calculation records and send any dispute notice within the contract’s period.

What should I do first?

Many of these disputes settle with a written agreement on payment, releases and timing. See demand letters and litigation.

How do I get started?

Contact us. Tell us the contract, the sale if there was one and what the dispute is about, and we will tell you whether we can help.

Paul Rafelson is admitted in Florida and New Jersey. Katie Dariano is admitted in New York. For a matter governed by another state’s law, or in another state’s courts, we bring in local counsel or seek admission as the rules require.

Realistic expectations

  • We cannot guarantee any particular outcome, recovery or defense. We cannot predict how a court or arbitrator will read a contract.
  • Remedies and procedure depend on the agreement and the governing law.
  • Laws, platform programs and their terms change; confirm current terms before acting.
  • Past results do not guarantee similar outcomes.

Frequently asked questions

What should I do if the other side breaches a contract?
Send us the contract before you send anything to the other side. Notice and cure clauses are conditions, and a missed step or a wrong form loses the claim. We identify the breach, the loss and the remedy the contract allows, and we send the notice in the form the contract requires.
What are common disputes after selling an eCommerce business?
Indemnity claims, escrow releases, earnout calculations, working-capital adjustments, unpaid seller notes, restrictive covenants and transition services. Each turns on the purchase agreement’s terms and notice procedures, so send us the agreement and every notice exchanged since closing, and note any survival periods and deadlines that are running.
Can a buyer withhold money after closing?
Usually only as the agreement allows, through escrow, set-off rights or the indemnity process. A buyer withholding without a contractual basis faces a breach claim, and a seller disputing a claim usually must follow the agreement’s notice and dispute process. Check the exact terms.
What can I do if the buyer is not paying my earnout?
Earnout disputes turn on definitions and records: how the metric is calculated, what the buyer promised about running the business and what information you have a right to see. Dispute notices run on a contract clock, and a late one forfeits the objection. Send us the agreement and the buyer’s calculation as soon as you receive it.
Who decides a working-capital or closing-adjustment dispute?
Many purchase agreements send the accounting questions to an independent accountant, who decides them under the agreement’s rules, while other claims go to the dispute forum. Which questions go where depends on the contract, so check the dispute mechanism before sending a notice.
Can the seller’s non-compete be enforced after a sale?
A non-compete given in a business sale is generally reviewed less strictly than an employee’s, but enforceability depends on the state, the terms and the reach. Check the covenant’s scope, duration and territory, and whether the purchase agreement chooses a particular law and forum.

Litigation

Court and arbitration.

Selling an eCommerce business

Negotiating the terms that cause disputes.

Buying an online business

Diligence and the purchase agreement.

Sources and notes

About the author

Paul S. Rafelson is the Founder of Rafelson Law PLLC, a law firm for eCommerce and online business owners. The firm’s practice focuses on Amazon account issues, eCommerce mergers and acquisitions, Proposition 65 and related corporate work. He holds an LL.M. in Taxation from NYU (2017). He founded the Online Merchants Guild in 2018, a volunteer-led trade association run by and for Amazon sellers. He taught state and local taxation as an adjunct professor at Pace Law School. Katherine (Katie) Dariano is a Senior Counsel at the firm. Full biography.

Background

  • Founder, Rafelson Law PLLC; office at 2255 Glades Rd, Suite 319A, Boca Raton, FL 33431.
  • Admitted to the bars of Florida (2005) and New Jersey (2006). Katherine Dariano is admitted in New York (2021).
  • LL.M. in Taxation, NYU (2017).
  • Before private practice, Paul was in-house counsel at Microsoft, Walmart and GE.
  • Paul founded the Online Merchants Guild in 2018, a volunteer-led trade association run by and for Amazon sellers. More on the Guild's About page.
  • Paul taught state and local taxation as an adjunct professor at Pace Law School.

Talk to a lawyer about a contract or post-sale dispute

Bring the agreement, any amendments and the notices exchanged.

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Rafelson Law PLLC · 2255 Glades Rd, Suite 319A, Boca Raton, FL 33431

Phone: (833) 326-6529 · Email: [email protected]

Informational only; not legal advice. Contacting us does not create an attorney-client relationship, which begins only with a signed written engagement. Please do not send confidential details until we confirm in writing that we represent you. If you face a deadline, say so in your first message.

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