Friday 29th April 2022 from 9am

Wills & Estates Senior Associate Debbie Sage will join Robyn Hyland to talk about the importance of planning for end-of-life care and what options are available.

Elon Musk v Twitter: Who’s in the wrong when a business takeover falls through?


Twitter has commenced proceedings against billionaire Elon Musk over his alleged abandoned $44 billion takeover offer of the communications company. It is not uncommon for business acquisitions to fall through, however, when they do, disputes can arise as to whether one party has the right to revoke the deal or walk away from the contract, explains Attwood Marshall Lawyers Commercial Litigation Senior Associate Jade Carlson.


In April 2022, Elon Musk made a deal to purchase American communications company Twitter for approximately $US44 billion ($A63.7 billion) after a night of negotiations with the social media company’s board members.

The deal, one of the most significant buyouts of a listed company, was settled less than two weeks after Musk put forward his initial bid.

Unexpectedly, in July 2022, Musk abandoned the deal, citing concerns about the number of spam-bot accounts on the platform.

As part of the disclosure, Twitter had claimed that spam bot accounts made up less than 5 per cent of more than 200 million Twitter users. Musk, however, has insisted that the number is much higher and has allegedly accused Twitter of withholding information.

Twitter is suing Musk, arguing that he violated his commitment to buy the company and that the termination of the deal was invalid and unlawful. A trial is set for October 2022.

The biggest question will be to determine who was responsible for the agreement failing.

Backing out of a business sale agreement

In Australia, once a business sale agreement is signed by all parties, the buyer will be unable to back out of the sale unless certain circumstances permit the buyer to terminate the agreement. 

A business sale agreement is legally enforceable. The agreement stipulates price, the type of purchase, payment method, and the seller’s involvement following the sale, which generally includes conditions on restraint of trade for the seller.  The agreement also provides for contingencies where the seller provides inaccurate or false information and material changes in the business occurring before the transaction has been completed.

The most common reasons business transactions fail, resulting in one party terminating and/or attempting to terminate the contract, usually consists of:

  • a seller trying to hide problems from potential buyers;
  • lack of resources to prepare for the transaction and the process being unreasonably delayed;
  • the buyer getting cold feet;
  • last minute surprises during due diligence.

Whether or not a buyer can terminate a contract depends on two main factors; the stage of the sale process; and the terms of the sale agreement.

If you are a seller, and the buyer unlawfully terminates the contract (or repudiates the contract), it is important to consider whether it would be commercial for you to commence legal action to:

  1. seek damages against the buyer for any associated losses (usually calculated as the difference between the amount the former buyer had been contracted to pay and the amount ultimately paid for the business); or
  2. where damages are an inadequate remedy, seeking an order compelling the buyer to perform the contract.

In some instances, where the quantum or amount of loss is nominal, it may be more cost-effective to simply forfeit the deposit and put the business back on the market and accept any associated losses.

If you are a party who wishes to terminate a contract and want to understand whether or not you are entitled to lawfully terminate, or what consequences may follow by doing so, it is imperative to seek advice from an experienced Commercial Litigation Lawyer who will be able to quickly determine and advise you of your rights and obligations.

If you are the seller of a business and the buyer is seeking to terminate the contract and you want to understand if their action is lawful and what action you are entitled to take including any commercial consequences that may arise, again it is imperative to seek advice at the earliest opportunity from a lawyer who is experienced in contract dispute resolution to identify your rights and obligations and the best way forward.

Most contractual disputes go beyond what is in the written terms and conditions of the agreement and things can get quite complicated. This is why so many disputes end up in litigation before the Courts. It can be particularly uncertain with pre-contractual ‘offers’ made by the parties without legal advice. Sometimes an ‘agreement’ can be inferred by the conduct of the parties through emails, phone calls, texts, and social media posts! However, getting early legal advice from an experienced lawyer in this complex area of law can potentially save you hundreds of thousands of dollars.

How can a contract dispute be resolved?

A business sale agreement will often contain dispute resolution clauses which deal with the parties’ obligations when there is a dispute during the transaction. Each party must adhere to the provisions in the agreement before resolving the dispute through alternative measures.

A business sale agreement may require the parties to observe a process where:

  1. One party must give notice to the other party of their dispute or concern;
  2. The parties must meet and attempt to negotiate and resolve the dispute in good faith within 14 days of notification having been given;
  3. If the dispute has no resolution within 21 days of that meeting, the parties must attend mediation with a neutral third party agreed between the parties;
  4. If the dispute remains unresolved, the parties may commence court proceedings.

This is just an example of what the dispute resolution process may provide, and each business sale agreement is tailored to suit the parties entering the agreement.

If the dispute has been unable to be resolved following the dispute resolution method set out in the agreement, the next step is to seek advice from an experienced commercial litigation lawyer to discuss any possible outcome and whether to commence proceedings.

Attwood Marshall Lawyers – experts in resolving disputes

When one party to a contract does not meet their end of the bargain, it can become an extremely stressful and costly matter to resolve.

When commercial disputes arise, you need someone on your side to identify the issue and put a strategy in place to resolve the dispute as quickly as possible, reducing the impact on the business and allowing all parties to move forward. What you want to avoid is having the dispute interrupt the operation of the business and ultimately impact the business financially.

At Attwood Marshall Lawyers, we have a dedicated team of lawyers who practice exclusively in commercial litigation and dispute resolution, led by Partner and Law Society Accredited Specialist in Dispute Resolution, Charles Lethbridge. Our team are highly experienced in assisting clients with class actions, lease disputes, defamation claims, debt recoveryproperty-related disputesbuilding and construction disputes, professional negligence claims, disputes with banks and insurance companies, and disputes over contracts. Our goal is to keep our clients informed throughout the process, take the stress out of the equation, and apply the best strategy to suit the nature and intricacy of each matter.

If you are in a commercial dispute and want to be supported by a highly-skilled team, please don’t hesitate to contact our Litigation and Dispute Resolution Department Manager, Amanda Heather, on direct line 07 5506 8245, email or free call 1800 621 071.

Additionally, our experienced Business and Commercial Lawyers can oversee business owners and savvy investors through the complicated sales process when buying or selling a business to ensure they are adequately informed and protected against any issues that may arise.

Read more:

Attwood Marshall Lawyers Dispute Resolution Team announced as a Finalist in the Australian Law Awards

Business Partner Fallouts – Why early intervention is key to resolving business disputes

Economic challenges cause a rise in director and shareholder disputes


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Jade Carlson graduated with a Bachelor of Laws (with Honours) and Bachelor of Business from Griffith University in 2012. After completing her Practical Legal Training through the College of Law, she was admitted to the Queensland Supreme Court in 2013 and to the High Court of Australia in 2016.

Jade Carlson

Senior Associate
Commercial Litigation

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The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

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