Who pays the outstanding business debt when selling our salon?
Full Question:
Answer:
The answer will depend on all the facts and documents involved. Basically, it is a matter of contract law, and generally, the sales contract may be drafted in the manner that best assures that the debt will be paid and credited to the proper invoice date and parties liable on the account. For example, the parties liable on the account wil be a factor to consider and whether this account will be assigned to the new owner. Generally, the names associated with a credit card account will be the name responsible for payment, such as primary and authorized users, and guarantors. If payment is made by another than the named account holder, it is important to note the proper invoice date and account name to apply the payment to.
It is possible that a sale price of a business may include an amount necessary for the business to pay off debts incurred by the business, so that the original owners may pay off the debt out of the sales proceeds. If the original owners may be liable for the business debt after the sale of the business, any agreement for the new owner to pay the business debt incurred prior to the sale should be worded carefully to protect the previous owners in the event that the new owner fails to pay the prior debt as agreed, so that the new owners will be indemnified for any losses. I suggest contacting the credit card company to inquire about the original owner's liability for payments after the sale of the business and contacting a local attorney who can review all the facts and documents involved.
