General Question

RedDeerGuy1's avatar

Whats the law that business partners can buy a buisness from another owner offers him?

Asked by RedDeerGuy1 (17515points) December 28th, 2017

At the same rate. Is it just a Canadian law or do other countries have similar laws? For example if business man A wants to buy a larger portion of a buisness from buisness Man B. Buisness man B can then offer business man A the same amount even if it Is a rip off

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12 Answers

Zaku's avatar

I can’t make any grammatical sense out of your question, and don’t know what you mean. Buy what?

RedDeerGuy1's avatar

@Zaku Sorry. Its an obscure buisness law. Where businessman A can counter offer, like a share of a convenience store ,the same price that is offered even if it Is a rip off price. If anyone knows how to describe it better or knows what I am talking about please chime In?

RedDeerGuy1's avatar

It’s to help buisness owner’s from ripping eachothers off. When selling a buisness.

imrainmaker's avatar

Can you provide link to the site which states the law?

CWOTUS's avatar

I think that you’re conflating “law” with “agreements” or “contracts”.

Most properly-written partnership agreements will contain a clause regarding disposition of partners’ equity in the business. That is, in a two-person operation, for example, the agreement will state how the business is to be valued in case of dissolution or in case one of the partners wants out, for whatever reason. It doesn’t have to be a falling-out among the partners, a partnership can be dissolved because one of the partners is unable or unwilling to continue in the business, or needs to cash out for other reasons.

There should be an equitable way for the two partners to agree on the value of the exiting partner’s share, and a method for the remaining partner to have a say in who his new partner will be, or whether there will be another one (or more) or not.

This is not to say that this “has to be”. Many partnerships are formed without formal agreements, and the business may be successful for a long time when one of the partners dies, becomes disabled, chooses to start a new venture for which he needs to come up with investment cash, etc. And assuming the business has been successful, there will be equity to tap – and as an owner of that equity, and without any other agreement (or law, if there is one – which I doubt) then he can seek the best return and sell to “whoever”.

Most people starting a business venture are at least competent enough to do planning for such basic facts of life, and hire attorneys to write up agreements to protect the interests of all partners and likely heirs.

elbanditoroso's avatar

Are you talking about either this right of first refusal

or this:
straw man proposal

RedDeerGuy1's avatar

@elbanditoroso It is in the example in the Wikipedia link. Awesome thanks.

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LostInParadise's avatar

I don’t think it is a law, in Canada or anywhere else. It is just something that may be included in a business contract. Is there a specific instance of this that you are thinking about?

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