united-states licensing california business new-york-state
Does prospect of sale price being paid in full determine validity of sale?
<p>I’ve been offered to sell my business to another business in what appears to me as a lease or licensing agreement with royalties, but the contract’s language says “purchase”.</p>

<p>In short, the buyer wants to obtain ownership of my business and pay the full purchase price of USD X to me gradually over time, by paying me 25% of the monthly profits each month until USD X have been paid in full.</p>

<p>Regardless of whether this sounds reasonable or not, my only fear is that the buyer may not operate the business successfully enough to pay USD X to me in a reasonable time. Without a time limit or minimum payment per month defined in the contract, would the sale be “valid” if I had not received more than, say, USD 100 after two years?</p>

<p>To put this differently, could you argue (after two years) that the purchase is not valid or has no effect (anymore) since it is not realistic that the purchase price will ever be paid in full in a lifetime?</p>

<p>(Location: California, USA, or New York, USA)</p>

<p>Parties can agree payment terms however they like: it is only unlawful if the terms are so onerous as to be <a href="https://www.merriam-webster.com/dictionary/unconscionable" rel="nofollow noreferrer">unconscionable</a>. On the face of it this does not appear to be so irrespective of if it takes 5 months, 5 years or 50 years to settle.</p>

<p>Land is sometimes leased for <a href="https://en.wikipedia.org/wiki/999-year_lease" rel="nofollow noreferrer">999 years</a> and countries and companies issue <a href="https://www.wsj.com/articles/a-100-year-bond-for-a-99-year-old-country-1505236293" rel="nofollow noreferrer">100 year bonds</a>. The initial lease/bondholder may well be dead before these mature, however, their heirs and assignees will still be around (maybe).</p>

<p>Obviously, such long and unsure payment terms increase the risk of a default, however, the law is happy to let you price that risk into whatever deal you make.</p>
