Consumer Law, Warranties Purchase agreement - long, but need lots of help!

[tango0124]

I entered into a purchase agreement about a year ago. I agreed to buy a restourant that was deeply in debt.
My agreement was that during a period of 2 years I will be an employee of the company, run the place and after all the debts were paid, the place will be mine.
6 months into the contract the restorant closed. The owners of the place were informed everyday of the situation of the restaurant. Needless to say that the purchase didnt happen since the restorant closed. The company was never put on my name, nor I was never the legal owner.
During those six months that I ran the place, some debts were adquired, one of them were sales taxes.
A few days ago a got a letter from the department of revenue letting me know that I had a tax warrant for 21k and if I didn't take care of it the would start the collection process.
I met with the department of revenue and I explained the situation to them. They were under the impresion that I bought the place and that's why they were after just me.

My contract states the following:Buyer hereby agrees to indemnify Sellers and hold Seller harmless from and against all debts, claims and liabiliyird incurred by, or arising out of, or relating in any way, to matter pertaining to the conduct of the business which have arisen or may arise because of, or as a result of, any fact, event or transaction existing, or occurring after the effective date of this agreement.


My questions is: Since the purchase never happened, are the sellers still responsable for the debts and sue me later for the demage or with this piece of paper they can transfer all the debts to my name?

Please help.

PS: Please excuse my writing, English is my second language.

 

[fredrikklaw]

How long is a piece of string?

I do not mean to sound pedantic, but in the future, before you put your signature to a contract like this, pay an attorney for an hour of his time to read it over to make sure that all is in order. Because any attorney worth his salt would have warned you against committing to this contract unless the ambiguity created by the language "effective date" was removed in favor of more certain terms and language.

And the question you should ask of the revenue department is why they were under "the impression" that you were the new owner of the restaurant, because revenue collection departments do not go by impressions. Sales tax is connected to a person's business license and the business license is issued once a fictitious business name has been registered at the county recorder office.

What I suspect has happened here is that the owners sent a letter to the revenue department with a copy of the "Agreement / Contract" stating the change of ownership of the restaurant and that you are now the owner and operator of the restaurant, which is where the surreptitious and underhanded insertion of the language "effective date" and indeed the entire clause come into play.

You operated under the assumption that the effective date of the contract was the end of the two years and upon your official purchase of the restaurant, while the owners falsely represented the effective date as being when the contract was signed six months ago, which is why you have been lumbered with the sales tax burden.

But despite all the above, you are very much in the clear and free of any tax obligation since the contract was never consummated and at the time the sales tax obligation accrued, you were not at the controls of the restaurant. The owners/sellers are still responsible for all debts obligations accrued to date and beyond and have no cause to sue you for reimbursement or damages and that "piece of paper" is not worth the paper it is printed on. If anything, you have a cause of action against the owner/seller for Breach of Contract and for specific Performance.

fredrikklaw

 

[tango0124]

Thank You.

Thank you very much for your help. And yes, you are right, it was mine mistake not to review this with a lawer.
There won't be a next time after this one, but for now, thanks again.