Business Sale Disputes: Misleading or Deceptive Conduct

Velocity Legal

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Key Insights

Misleading conduct is about the impression created, not just what was intended. A seller does not need to set out to deceive a purchaser for a misleading or deceptive conduct claim to arise. In a business sale, risk can come from overstated financial performance, incomplete answers during due diligence, silence about a material change, or information that gives the purchaser an inaccurate picture of the business.
Due diligence matters, but it does not fix misleading information. Purchasers are expected to investigate the business before signing, and courts will look closely at what the purchaser actually read, asked, knew and relied on. But “buyer beware” is not a complete answer if the seller’s conduct created a misleading impression. Good due diligence protects buyers, while clear disclosure helps sellers reduce the risk of a claim.
Most post-sale disputes are shaped before settlement. Many business sale disputes turn on what was said, disclosed, documented or left vague before completion. Accurate financial information, clear disclosure, properly drafted warranties and a record of what was provided during due diligence can make a significant difference if a dispute later arises.

Contents

What happens when the business you bought is not what you were told it was?

Business sale disputes often arise when a purchaser believes they relied on inaccurate, incomplete or misleading information before settlement. Whether the issue involves overstated profits, undisclosed liabilities, inaccurate financial records or the loss of a key customer, misleading or deceptive conduct claims can have significant consequences for both buyers and sellers.

In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Jess Hill and Leo Crnogorcevic to discuss misleading or deceptive conduct in business sales, how these claims arise, and the practical steps parties can take to reduce the risk of a dispute after completion.

The discussion covers:

what misleading or deceptive conduct means in a business sale;
how statements, omissions and silence can create risk;
common disputes involving profits, liabilities, customers and financial information;
the difference between misleading conduct claims and breach of warranty claims;
the role of due diligence and “buyer beware” principles;
how courts assess reliance and loss;
why disclosure matters before signing a business sale agreement; and
practical steps buyers and sellers can take before settlement.

A practical discussion for business owners, purchasers, vendors, accountants, brokers and professional advisers involved in buying or selling a business.

For advice on buying a business, selling a business, business sale disputes, misleading or deceptive conduct claims or commercial litigation, contact Velocity Legal’s Commercial and Disputes teams.

What happens when the business you bought is not what you were told it was?Misleading or deceptive conduct is one of the most common causes of disputes following the sale of a business. Whether it involves overstated profits, undisclosed liabilities, the loss of key customers, or inaccurate information provided during the sale process, these disputes can have significant financial consequences for both buyers and sellers.In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Jess Hill and Leo Crnogorcevic to discuss how misleading or deceptive conduct claims arise in business sales and the practical steps parties can take to reduce risk.The discussion covers:

What constitutes misleading or deceptive conduct under the Australian Consumer Law
The difference between misleading conduct claims and breach of warranty claims
Disclosure obligations during a business sale
The role of due diligence and buyer beware principles
Common disputes involving financial information, liabilities and key customers
How courts assess reliance and loss
Practical steps buyers and sellers can take before signing a contract

A practical discussion for business owners, purchasers, vendors and professional advisers involved in business sale transactions. For advice on business sales, business purchase disputes, misleading or deceptive conduct claims or commercial litigation, contact Velocity Legal’s Commercial and Disputes teams.

This podcast in no way constitutes legal advice. It is general in nature and is the opinion of the author only. You should seek legal advice tailored to your individual circumstances before acting on anything related to this podcast.

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