Business Law Newsletter
What is "Good Will"
The “good will” of a business is an intangible asset, like the reputation, skill, or experience that is associated with the business. It also refers to the rate of recurring patronage that a business has developed over time with the general public.
Ownership
The good will of a business belongs to the business owner. It might be owned by either an individual or a corporation, but not by stockholders. The representative of a business is not personally connected to the business’ good will.
The ownership of good will may be transferred when the business is sold, but it cannot be sold apart from a business’ physical property. Good will ownership may also be transferred even when it is only implied and not specified in a contract. For example, the good will of a business trade name or trademark would be automatically transferred upon the sale.
Unfair Competition
The former owner of a business may conduct a similar business and even draw in former patrons. But it is not fair play if the former owner purposely confuses the public into thinking that a new business is the former business. This is unfair competition, and the new owner may be able to take action.
Remedies
An injunction may be imposed upon the former owner, disallowing any further activity that would cause public confusion and loss of profits to the new owner. If fraudulent activity has occurred, monetary damages may be awarded.
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