February 28, 2021

Volume XI, Number 59

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February 26, 2021

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I Can't Explain The "Good Will" But California's Business & Professions Code Does

According to the Stanford Encyclopedia of Philosophy, Immanuel Kant believed that "good will" is the only unqualified good thing.  The Encyclopedia explains that "In Kant’s terms, a good will is a will whose decisions are wholly determined by moral demands or, as he often refers to this, by the Moral Law".   

The California Business & Professions Code provides a far simpler, albeit fundamentally different, definition of good will: "The 'good will' of a business is the expectation of continued public patronage."   Cal. Bus. & Prof. Code § 14100.  The Code then provides three simple rules concerning good will:

  • The good will of a business does not include a right to use the name of any person from whom the business was acquired.

  • The good will of a business is property and is transferable.

  • The person transferring the good will of a business may transfer with it the right of using the name under which the business is conducted.

Cal. Bus. & Prof. Code §§ 14101-14103.  While straightforward, these rules may be cause for dispute.  In Balesteri v. Holler, 87 Cal. App. 3d 717 (1978), for example, the plaintiff sold a fishing vessel and various items of personal property.  Included in the sale contract's list of property being sold was  "The use of the name Sam's Fishing Fleet for a period of ten (10) years or until said amount due and owing is paid".  The buyer subsequently sold the business and paid off the seller.  When the transferee refused to stop using the name, the seller sued.  The Court of Appeal, citing Section 14101, found that the "only reasonable conclusion"  was that "the parties contemplated the reassumption and use of the trade name [by the Seller] . . .".  

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© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 27
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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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