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Buying & Selling a Business

Can I claim against the seller if a licence turns out to be non-transferable and the business can't operate?

TSL Written by the Treadstone Law team· Updated August 2026

Whether this supports a claim depends heavily on what the seller represented about the licence and whether its transferability was addressed as a closing condition in the first place. If the purchase agreement represented the licence as transferable, or the parties treated its successful transfer as a condition of closing, and that turns out to be wrong, discovering this after the deal has already closed can support an indemnity claim, subject to the negotiated survival period, cap, and basket.

If this comes up before closing instead, it's typically addressed as an unsatisfied condition, letting you delay or decline to close rather than proceeding and relying on an indemnity claim afterward — generally the safer route where the licence is genuinely critical to operating the business at all. A non-transferable licence discovered only after closing, leaving you with no functioning business as a result, is a serious situation that warrants prompt legal advice on both the indemnity claim itself and how to actually address the operating licence problem.

Key takeaways

  • Whether there's a claim depends on what was represented about the licence's transferability.
  • Caught before closing, a licence problem is usually an unsatisfied condition instead.
  • A post-closing discovery generally shifts this toward an indemnity claim.
  • A non-operating business from this issue needs prompt advice on both the claim and the licence itself.
This is general information, not legal advice. It doesn’t create a lawyer–client relationship, and the rules can change. For advice on your situation, a Treadstone business lawyer can help.
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