Mary owns a small accounting firm named GOACCOUNTING in midtown Manhattan that has a loyal base...

Mary owns a small accounting firm named GOACCOUNTING in midtown Manhattan that has a loyal base of clients who are all in the fitness business. The firm has been in business for 15 years. Mary’s main clients are within the State of New York. After much discussion, Mary negotiates to sell her firm to Benny for $1,000,000. As part of the agreement, Mary agrees not to practice accounting in Manhattan for a period of 18 months from the date of sale. One month after the sale of the business is made, Mary is feeling idle and bored so she begins to practice accounting again from her Manhattan apartment. She sends emails to her former clients letting them know she is “back in business.”

A - Is the agreement to sell the business from Mary to Benny fully enforceable?

B - Does the agreement need to be in writing? Why or why not?

C - If Benny sues Mary and wins, to what relief would Benny, if any, be entitled?

Explain A-C fully.

Expert Solution

A

From the set of questions, it appears to be a verbal contract between Mary and Benny. In case the contract is verbal, it will be difficult to prove the details of the contract. Also considering that the value in exchange is fairly large, the contract should be in writing. This is why the contract is not fully enforceable.

However, if the contract is in writing then we need to question the no-compete clause of the contract. This is often subjective. However, we can see that consideration provided by Benny is quite large ($1000000) for the restraint on Mary’s part. Hence it is a fair value transaction and in state of New York, non-compete clauses are accepted in the court. Hence it will be enforceable.

B

The contract is a sale of business and it will definitely last longer than a year. As a result, the contract should be in writing as per the Statute of Frauds.

The contract should be in writing.

C

If Benny sues Mary and wins, Benny can claim breach of contract. Hence it is possible for Benny to receive compensation in form of restitution.

Restitution is when the breaching party (Mary) pays back the aggrieved party (Benny) for the breach. This means that May may be asked to return the $1000000 to Benny.

keosha answered 4 months ago

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