How to Pursue a Business Seller Who Was Less Than Forthcoming

If you purchased a business a little while ago, you may have gone through a lengthy process of negotiation with the seller, during which time you were presented with a raft of data to help you come to your conclusion. You may have been given a number of assurances by the seller in relation to the health of the business and may have been told that there were no outstanding debts, other than what may have been disclosed. However, you may have been dealt a nasty surprise after you'd signed on the dotted line and may now be liable to pay an unexpected creditor a good amount of money. Do you have any recourse to claim this back from the seller?

More Than Due Diligence

There is a saying in legal circles—caveat emptor. Essentially, this means that the buyer must always be aware of what they are doing whenever they engage in a transaction and must conduct a reasonable amount of due diligence before they move forward. Yet even if somebody had been very diligent, they may still not uncover a surprise like this, especially if the seller had cooked the books to a certain degree.

Alleging Fraud

If you think that the seller was well aware of this outstanding creditor and took steps to deceive you, then you may well be able to move forward with a lawsuit alleging fraud. You could look at this from several different angles and may be able to prove your case from more than one approach.


For example, you may assert that they deceived you by knowingly misrepresenting a material fact. In this case, they told you that there were no outstanding creditors, and while you believed this, it has caused you financial harm.

Concealed Data

You may also be able to prove that they concealed information when they had a duty to disclose it. You may prove that they knew full well this would lead to issues for you and that you would have taken a different approach if you were aware of the facts. Once again, their actions have caused you actual harm.

False Promise

Have a look at the paperwork. Did they promise to indemnify you if anything came out of the woodwork like this? If they did and subsequently backed away from that statement, then you may be able to prove that they committed something known as promissory fraud, where they said they would do something without the intention of following through.

Taking Action

You shouldn't simply let this sit and absorb the loss, especially as it may have a material bearing on your business success. Have a constructive talk with a fraud lawyer first to see what options are open to you.