THE BOTTOM LINE
- Fixed purchase prices are binding: In an asset sale, a clearly stated purchase price will be enforced, even if it’s “based on” a percentage of turnover. The court interpreted this as a calculation method for a fixed price, not a variable earn-out based on the buyer’s future performance.
- Buyers assume inherent business risks: The risk of clients going bankrupt, having payment issues, or simply leaving after an acquisition is considered a normal entrepreneurial risk. This risk transfers to the buyer unless the seller provides specific guarantees to the contrary.
- A seller’s duty to disclose is not limitless: The court rejected the buyer’s claim that the seller should have warned about every potential client issue. The duty to inform does not extend to future, unforeseeable events or to minor issues that would not have been deal-breakers.
THE DETAILS
This case revolved around the sale of an accounting firm’s client portfolio. The buyer agreed to a purchase price of €60,000, which the contract stated was “based on 85% of the turnover of the portfolio to be taken over.” After the takeover, the actual revenue generated from the clients was disappointing. The buyer refused to pay the full amount, arguing the price should be recalculated based on the revenue she actually earned in the first year. The seller sued for the outstanding balance, arguing the €60,000 was a fixed price calculated from her historical (2023) turnover. The court sided with the seller, emphasizing that pre-contractual emails clearly established the price was capped at €60,000 based on the 2023 revenue figures. Vague wording added by the buyer to the final agreement was not enough to transform the fixed price into a variable, performance-based earn-out.
The buyer also attempted to nullify the agreement on the grounds of dwaling (a fundamental mistake or error). She argued the seller had failed in her duty to disclose crucial information, such as the poor financial health of a major client who later went bankrupt, other clients who were leaving, and the “messy” state of some client administrations. The court systematically dismissed these arguments. It ruled that the buyer had purchased a client list, not the seller’s historical work, and that the seller remained liable for any past errors. Furthermore, risks like a client’s sudden bankruptcy or payment difficulties are considered part of the normal course of business that a buyer assumes upon acquisition. The court noted the buyer had been given access to financial data before the sale and could have performed her own risk assessment.
Finally, the buyer sought to terminate the contract for breach, claiming the seller’s past work for the clients was subpar, forcing the buyer to perform “free repair work” to retain them. The court swiftly rejected this, drawing a clear line between the sales agreement (between buyer and seller) and the service agreements (between the firm and its clients). Any shortcomings in the seller’s past work would be a breach of her agreements with those clients, not a breach of the sales contract for the portfolio itself. The buyer’s decision to perform unbilled work was her own business choice and could not be blamed on the seller. The court ordered the buyer to pay the outstanding €31,999.35 plus interest and costs.
SOURCE
Source: Rechtbank Midden-Nederland
