QUESTION
Am I resposible for paying a bokers commission if I close?
Asked on Mar 20th, 2016 on Business Law - Nevada
More details to this question:
I have been trying to sell a small business. It is listed with a business broker. It does not appear the business is going to sell I will need to close it by the end of the month if I don't have a deal. I cannot afford to keep it open any longer. Can the broker hold me responsible for the commission? The agreement states that if I take it off the market before the end of the term that I am responsible.
1 ANSWER
Not necessarily. Closing the business may not be the same as taking it off the market, as I assume that you would still be willing to sell even after you close the business. The issue would be whether by closing the business, and thereore making it more difficult to sell, certainly for the same price, you violated your obligation of good faith and fair dealing under the contract. Another question could be whether the provision that you have to pay the full commission is a penalty, rather than a valid liquidated damages provision, which it may be. I believe the true measure of the broker's damage, assuming that closing the business constitutes a breach, would be the amount of the commission minus the expenses the broker saved by not marketing the property after you closed it. The damages might even be zero, if you can show that, even if you hadn't closed the business, it would never have sold before the end of the term, and the broker would never have earned the commission.
Answered on Mar 21st, 2016 at 10:14 AM