Breached contract

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Popart

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Jan 13, 2011
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I recently posted a thread regarding moving business premises as the current salon is way expensive, too expensive to cope. Our first contract was for a year just so we could see how we got on. The next contract was for 3 years. All seemed well. 1 year into the contract things are getting very tight with recession and so forth.
So long story cut short... spoke to landlord to see if he would decrease the rent and the answer was No. A month after we told him it isn't working out. He said he would talk to his solicitor regarding the contract and talk to us. So after this was done he told us with a great big smug face and said, girls seek legal advice from your solicitor.
So we did this, turns out we have to pay 29 grand to cover the next two years even though we will not be in the premises. This also includes his legal fees and advertising costs to get the said premises rented out again. We have a guarantor also on the contract so one of us may be chased. However none of us have money, none of us have assets. The man is a **** who would not help us. He isn't doing to well himself so money is money.
I worked as a legal secretary for 4 years how in gods name did I not pick this up??? Stupid yes i know, but back then when I signed it things wer great.
There is no back out clause, there is no partnership agreement to dissolve. Does anyone have advice for me as im at my wits end. 29 grand seriously WTF!!!!!!!!!

HELP ME xxx
 
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Sounds awful.

Are you LTD or trading as a sole trader?
Did you have a solicitor review your contract as these are pretty significant issues for someone to overlook?
Have you (are you allowed) to sublet? This might be an option..
In terms of worst case scenario (or not) have you considered selling the business?

Just some initial thoughts. Hope you're ok, must be pretty daunting.
 
Agree with Beansy above re: subletting or selling the business.

Also, contact your local Citizens Advice. Usually, larger branches will have specialist advisers who can offer free initial advice.

You say 'we'. You need to be clear about what your personal liability is if the others moved abroad etc. or became bankrupt....

Try to determine all the options available before you make any further decisions.

Above all - don't panic and don't act too hastily. The £29K isn't due to be paid in one go, presumably.
 
Not limited or sole, its a partnership. We are not allowed to sublet as states on the contract.
We have been to a solicitor, not much good cause we have broke a contract. The solicitor didgo over this but said it was fine,

We are already loosing a 2k deposit don't want to give him anymore. I haven't been well since.
 
Arson? No only joking, is there spare space in there? Could you take in a self employed renter starting straight out on a set weekly rent rather than % split? Maybe it would take some of the financial burden off you xoxo
 
Trying to think outside the box for you hun, could you sell the business and that person would take on the lease? I know of people who have been in similar situations and they have practically given their business away but walked away not having to go bankrupt, have sleepless nights and their life ruined in the process!!
 
Trying to think outside the box for you hun, could you sell the business and that person would take on the lease? I know of people who have been in similar situations and they have practically given their business away but walked away not having to go bankrupt, have sleepless nights and their life ruined in the process!!

My ex boss did this, she signed a 2 year lease and had a grant awarded so couldn't just leave as she would have also owed thousands, she brought someone else in, handed everything over to the new person, and walked away. The new owner had to keep the business name the same until the grant terms finished but after that she was free to do as she wanted.

Might not sound ideal but it could be an option hun. Good luck xx
 
Thank you. Only thing is we are changing premises and need our name. If I sold everything this would mean I have to start buying everything from scratch. So heavy heartening. I just want to throw the towel in and leave for good.
The only reason we are leaving is because the building is so expensive and I don't want to give him another penny. Surely he can't pluck feathers off a frog as the saying goes.

Arson, yeah thought of that lol
 
Sounds awful.

Are you LTD or trading as a sole trader?
Did you have a solicitor review your contract as these are pretty significant issues for someone to overlook?
Have you (are you allowed) to sublet? This might be an option..
In terms of worst case scenario (or not) have you considered selling the business?

Just some initial thoughts. Hope you're ok, must be pretty daunting.

Being a limited company doesn't get you off the hook anymore like you could years ago. Everything is guarantor based. I've enquirer about this type of stuff myself.

I know someone who regularly kept in touch with their landlord about their business problems and in the end she wrote a letter to the landlord asking for his kindness to get out of a 10 year £20k a year lease without him chasing her for the other 7 years not completed. There was no get out clause she just put her case forward and a week later she had a letter from him saying he agreed and wished her every success to rectify her business in a cheaper property. she had previously shown the letter to an IVA company who laughed in her face that it wouldn't work.

I think you will have to show evidence that your landlord is not cooperating as mine has given me about 3 different times delayed rent periods to kick start from tough times over the last 6 years. He is an accountant by trade and believes that every little helps from all angles. Citizens advice won't help businesses, but there are companies out there who should be able to advise small businesses like FSB.

HTH xx
 
Thank you. Only thing is we are changing premises and need our name. If I sold everything this would mean I have to start buying everything from scratch. So heavy heartening. I just want to throw the towel in and leave for good.
The only reason we are leaving is because the building is so expensive and I don't want to give him another penny. Surely he can't pluck feathers off a frog as the saying goes.

Arson, yeah thought of that lol

If he is a complete git like you said then you may find it cheaper to start again, 29k plus your 2k deposit - lots of money, if you're looking for a smaller premises I take it it's not going to cost that much to set up. Do you even have the money to pay the landlord, if you don't you could end up bankrupt and then have no way of getting another business up and running.

Sometimes it's easier to cut your loses, learn by your mistakes - they make you stronger and wiser AND remember, it's not life threatening and you will get through it:hug: xxx
 
Being a limited company doesn't get you off the hook anymore like you could years ago. Everything is guarantor based. I've enquirer about this type of stuff myself.

No, but the legal status does determine the level of liability and also what the options are.

Things seem to have gone downhill quite quickly. If you signed the lease in April (?), what's changed? Can you renegotiate & try & turn it around? Is it worth reviewing how you work (your model) & changing it to meet what the need is?

If not, I would agree with CarlaLouise who said about maybe starting off from scratch. Within the business sale, you can specify what's included so you could always take some equipment & maybe specialise in one area initially...?

You might need to take a hit to then build yourself up again. It's in no way ideal but it might just take the pressure off. Have you done a financial breakdown of what you need to bring in to ensure you have sufficient to cover all costs? Could you work from home or do mobile to reduce overheads?

To be fair to the landlord, I can only assume that he knows in this economic climate he might be concerned about being able to fill the space. Chances are, if you're struggling with costs then this might put others off. I'm sure he realises this.
 
Well we handed in our months notice today. We said we went to him several times asking to reduce the rent slightly on quiet periods he replied 200 is cheap enough I could get that building filled tomorrow. Obviously he doesnt give a damn. We can't go bankrupt as we have no assets or monies at that rate to become bankrupt (I looked into this as an option). Thr new building I am looking at is twice the size and only 65 a week rent and rates. I am currently paying 225 rent and rates weekly. Such a massive difference. I went through my accounts today and the only thing that's killing us is the building as the money coming in is good. As u all know it's what comes out. Our business has been ours for 3 years now. It was not our intention to leave but when u look at ways to save money ur gona take it to survive in these hard times.
 
Good luck and I wish you all the best. Hope this move takes away the stress you have had. Onwards and upwards xxx
 
He does seem like a pig, I can understand he wants a set amount but now he has to try and fill it, and that isn't easy! I hope he doesn't start county court proceedings to get the £29k, that would be horrendous for your credit score for a long time, even though you can't pay it if you have nothing but they can still demand you pay x amount a week until the debt is re-paid.

What a nightmare!

If the new place is bigger have you taken into consideration the higher utilities costs?
 
I had a year to go on a lease 12k and I just closed the doors and negotiated with the land lords agents and negotiated on paying I think it was about 2k by close of business in full and final settlement. I am not sure where you stand but if you have no assets etc the landlord Wd have to go to court to get an order on you both and with no assets economy in dire straits I cannot see how he Wd be able to execute anything ? Also if you and your business partner offer smthg and keep saying the same offer I cannot see how he can get the cash only issue might be your guarantor. I did sublet too with no sublet agreement. Good luk been there it is dire xxx
 
Yeah I took all bills into consideration also. Thanks everyone for ur support means a lot and thank goodness I can talk to u all regarding this. There will defo be court proceedings. The EGO building will look for all statements belonging to us all. My brother and father share the same name. The landlord thinks my father is the guarantor but it is in fact my brother, so that will be a nice surprise for the *******. My father is a businessman himself and this ***** thinks he's loaded. Solicitor told us to keep it up our sleeve until court but it was a smart move. This contract was signed in front of the landlords solicitor. Mohahaha
 
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He sounds horrible! My landlord is my dad, it's easier to negotiate lol
 
Hiya hunni

This sounds horrible and I hope you manage to come up with a solution. Ring this company. I'm sorry I don't know the name of them my mum found them for me when I had an issue with some business phone contacts and they were amazing! So knowledgable. Didn't charge me a penny and talked me through every step of the way.


01289 309431 ask for Marie or Sarah. I only ever spoke to those 2 and they were fantastic. The others may be just as good but only had need to speak to these 2 as they knew exactly what to do immediately.

All the best

Xxx
 

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