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John, a greeting card wholesaler, and Bill, an owner of a retail greeting card store called “Hallway”, had been doing business for the past 10 years. Over that time they had many different contracts in which John sold greeting cards to Bill. John decided to expand into the retail sector and Bill agreed to sell his greeting card store to John. The parties signed a written contract that contained all the terms they had agreed upon. One of the paragraphs said:

“In addition to the real estate being transferred as described above, Bill agrees to transfer to John the following pieces of personal property as part of the sale:

1. all card stock and materials listed on schedule A;

2. all non-card stock inventory located on the store premises at the time of the transfer of possession;

3. all equipment located on the store premises at the time of the transfer of possession;

4. all accounts receivables outstanding at the time of the transfer of possession.”

Four months after John paid for and took possession of the store, Bill opened up a card store called “The Hallway” within two miles of John’s store. This store attracted many customers that used to shop at the store now owned by John. To make matters worse John has discovered that Alice, Bill’s bookkeeper, inflated the profit of the store for the previous three years by 25% per year. Alice, at the request of Bill, showed these figures to John several weeks before John and Bill reached an agreement. John thinks he can prove that Alice, at Bill’s request, intentionally changed the profit figures. John relied on the profit figures Alice gave him in deciding to buy the business and would not have purchased the store if he had been given an accurate accounting.

John comes to you and asks if you think there is any way he can get out of this deal and get his money back, and maybe some extra since he believes he was defrauded. What is your answer?

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