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Action for breach of share purchase agreement dismissed; purchasers entirely responsible for failing to investigate.
The plaintiffs purchased an HVAC business from the defendants and subsequently sued for breach of contract, alleging the defendants failed to operate the business in the ordinary course prior to closing.
The plaintiffs claimed the defendants failed to disclose slumping sales, employee layoffs, and deteriorating customer relationships.
The court dismissed the plaintiffs' claim, finding they failed to prove the changes were outside the ordinary course of business or not the result of a general deterioration in the HVAC market.
The court further held that even if a breach occurred, the plaintiffs were entirely responsible for their damages because they failed to exercise their contractual right to investigate the company's financial affairs before closing.
The defendants' counterclaim for the balance owing on a promissory note was allowed.
