Archive for Napa Mediation

Reading a Contract

Let’s assume you have received a draft contract for a particular transaction you are interested in doing. How should you read it? What should you look for and what should you leave for your lawyer? If you have outside general counsel on retainer, you could immediately share your agreement with your outside general counsel. The retainer would cover that service so there is no reason not to have your outside general counsel immediately involved. If you don’t have an attorney on retainer, what should you leave for your lawyer? Does the contract contain definitions? Does the contract clearly state what you will do and what the other party will do? Are the dollar amounts correct? Does the contract contain conditions? Does the contract provide remedies? Does the person who actually signed the contract have the authority to do so?

Do not assume that if something is not in the written contract it is still understood just because it was discussed. “Standard” contracts rarely exist.

Types of Business Insurance

TYPES OF BUSINESS INSURANCE

  • Business Property Insurance (buildings, loss of income, earthquake and flood)
  • Liability Insurance
  • Workers Compensation Insurance
  • Auto Coverage Company Vehicles
  • Health Insurance
  • Excess Liability Coverage
  • Employment Practices Liability Coverage
  • Fidelity Bond
  • Life Insurance

 

Intellectual Property Protection / Trade Secrets

If you want the opportunity to stop your employees from competing against you once they leave your business, you must have a strong non-competition agreement, as well as an agreement that deals with the company’s trade secrets.  Trade secrets don’t need to necessarily be the secret formula of a soft drink, but can simply be your customer lists.  This is an area where an expert needs to be consulted.

Buy-Out Agreements

Whatever form of business organization is selected, if there is multiple ownership, a buy-out agreement should be considered.  This will help avoid an unwanted and often disruptive change of ownership.

Employment Agreements

Employees who work exclusively for one business will typically have an “at will” agreement that is terminable by either side at any time.  While this is adequate is most cases, some employees come with special skills for more complex financial rewards which deal with benefits and conditions for termination.  It is these arrangements that warrant a written employment agreement.

Contracts Within Your Own Business

Just as a business needs contracts to protect against its dealings with third parties, a business must also protect relationships within the business with employees and investors.

Business Legal Issues

In business, it is usually clear when a contract exists.  When you receive a pre-printed form, terms and a place to sign, it’s pretty clear you have a contract in front of you.

The question is:  Can that contract be negotiated to improve the terms or must you sign it because it is pre-printed?  If someone has, in good faith, began performing the contract before it’s been signed, is it too late to back out?  How a court would apply the law of contracts depends on the facts of each case, so it’s wise to consult an expert before you or the other side takes any expensive or irreversible steps.

Small Business Legal Issues

What makes a contract?

A contract is basically a series of mutual promises.  Promises may be clearly stated or may be implied.

Generally contracts require an “offer,” a promise by one person in exchange for a promise by another person, and an “acceptance,” which is the other person’s agreement to the proposed deal.  Sometimes these terms can be implied by actions alone.  Sometimes validly formed contracts will not be enforced, for example, when one party is a minor.  In other cases, it may be uncertain whether the parties had a contract at all.  Each case should be evaluated by an attorney on an individual basis.

ALWAYS READ THE FINE PRINT

As a small business owner, you have likely received plenty of advice, solicited or not.  One of the most erroneous pieces of advice preached to small business owners is to delay incorporating until getting an income or personal net worth threshold.

Common Business Legal Issues

1. Not having good written agreements
2. Unclear expectations and rules for employees
3. Not getting an experienced business attorney
4. Not keeping proper corporate records
5. Not clearly documenting partners’ rights and responsibilities
6. Starting a business as a general partnership instead of a Limited Liability entity
7. Getting involved in litigation
8. Ignoring intellectual property issues