Explore the legal intricacies of an $11 million Chrysler Jeep Dodge dealership purchase in upstate New York, emphasizing the importance of due diligence and clear contract terms in M&A transactions.
M&A Stories
November 2, 2023
Introduction:
Buying an auto dealership involves intricate transactions, often entailing financing and franchise agreements with automakers. In this M&A story, we delve into a case of an $11 million Chrysler Jeep Dodge dealership purchase in upstate New York, illustrating the importance of due diligence and clear contract terms.
Case Overview:
In the spotlight is a Florida buyer’s ambitious endeavor to acquire the assets of a Chrysler Jeep Dodge dealership in Albany, New York. The buyer committed to the purchase with the condition of securing financing and satisfactory terms from the auto maker. As a show of intent, the buyer placed $1 million in escrow as earnest money, refundable in case the deal fell through without the buyer’s fault.
Regrettably, the deal missed the closing deadline because the buyer couldn’t secure favorable financing or an agreeable franchise arrangement with the automaker. Subsequently, the buyer demanded the return of the $1 million deposit, which the seller disputed.
Legal Hurdle:
To resolve the dispute, the buyer initiated a lawsuit in an Albany federal district court to recover the deposit. The seller’s counterargument rested on a technicality, claiming the buyer breached the agreement.
Verdict:
The court sided with the buyer, dismissing the seller’s technicality. It ordered the return of the $1 million deposit and granted the buyer the right to recover legal costs and reasonable legal fees, as stipulated in the purchase agreement.
Key Lesson:
This case underscores the importance of clear contract terms and a robust legal position. The buyer’s insistence on securing favorable financing and franchise terms was legally sound and prevailed in court.
Case Reference:
LMP Clifton 001 Holdings, LLC v. Zappone, No. 1:22-CV-00565 (MAD/DJS) United States District Court, N.D. New York (September 14, 2023).
By John McCauley: I write about recent legal problems of buyers and sellers of small businesses.
Email: jmccauley@mk-law.com
Profile: http://www.martindale.com/John-B-McCauley/176725-lawyer.htm
Telephone: 714 273-6291
Podcasts https://www.buzzsprout.com/2142689/12339043
Check out my books: Buying Assets of a Small Business: Problems Taken From Recent Legal Battles and Selling Assets of a Small Business: Problems Taken From Recent Legal Battles
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