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?
| Dispute | What it usually turns on |
|---|---|
| Indemnity claims | The representations, the cap, the basket, the survival period and the notice and procedure the agreement requires |
| Escrow release | The release conditions and dates, and whether a pending claim holds back funds |
| Earnouts | How 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 adjustments | The accounting method in the agreement and the dispute mechanism, which often sends the question to an independent accountant |
| Unpaid seller notes | The note terms, default and acceleration and any set-off rights the buyer asserts |
| Restrictive covenants | Whether the seller’s non-compete and non-solicit apply, and how far they reach |
| Account or listing problems after closing | Whether the issue arose before or after closing, and who bore that risk under the representations |
| Transition services | The 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?
- Gather the agreement and every amendment, notice and related email.
- Note every notice deadline and the survival period for claims.
- Preserve financial records, reports and communications.
- Do not stop performing, or withhold payment, before you know your rights.
- Do not agree to a change by email without checking the contract’s amendment terms.
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?
What are common disputes after selling an eCommerce business?
Can a buyer withhold money after closing?
What can I do if the buyer is not paying my earnout?
Who decides a working-capital or closing-adjustment dispute?
Can the seller’s non-compete be enforced after a sale?
Related pages
Advocacy and dispute resolution
The overview.
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
- Contract disputes follow the governing agreement and state law. See the M&A pages for the underlying deal terms.
Talk to a lawyer about a contract or post-sale dispute
Bring the agreement, any amendments and the notices exchanged.
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.