The issue

Our Corporate team acted for clients in the sale of a dental practice. Following settlement, the purchaser of the practice raised a dispute over the warranty provisions contained within the sale contract claiming large sums from our client for alleged breach of warranty.

The background

In this case, matters were complicated by the fact that the practice income derived not only from the patients, but also from non-clinical income earned by the sellers through personal contracts with the NHS.

During the sale of the practice, the accounts referred to (in accordance with accepted practice) had amalgamated non-clinical income with clinical income. Despite having been alerted to the distinction, the purchasers failed to take account of the fact that in acquiring the practice they would only acquire the clinical work (ie the patients) with associated income stream. They could not expect to acquire non-clinical income other than by their own personal arrangement with the NHS.

The purchasers claimed they overpaid by £100,000.

A successful outcome

The purchaser’s claim was ultimately dropped following our Dispute Resolution and Litigation team working closely with forensic accountants and colleagues from Lindsays’ Commercial Property and Employment teams. We were able to put forward a robust defence which achieved this successful result for our client.

Douglas Millar commented: “This case demonstrates the value of a well-negotiated and robust contract for sale of a professional practice, and the benefit of well-sourced advice on accounting practices.”