Tag Archives: Business

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Selecting the “Right” Legal Counsel for Your Business

For many business owners and managers, selecting the right legal counsel can be intimidating. Many businesses, especially smaller ones, worry that the cost of working with an attorney will not be worth the benefit gained.

It is important for business owners to understand that having an experienced lawyer on your side can help ensure the success of your company. An attorney can protect your finances, intellectual property, and exposure to risks. Spending a little money now can save you thousands of dollars in the future.

When looking for the “right” lawyer for your business, consider the following tips:

Don’t believe the rumors about attorneys.

How many attorney jokes have you heard? There are a lot out there, as well as all the misperceptions regarding lawyers such as they are too expensive, self-interested and not to be trusted. However, most attorneys are dedicated to helping others and they will go out of their way to achieve your goals. When you work with the right attorney and utilize him or her correctly, it will be one of the most supportive relationships you have in your business.

Work with a lawyer who supports your vision.

There are a lot of law firms out there, so you want to pick one that believes in your business and that will proactively support your goals. It is important to pick an attorney that has significant legal experience in your industry and the areas of law that you need expertise in. You can discover a significant amount of information from reading the law firm’s website to help you understand the areas of law they practice in and whether they have the expertise you require.

Get “big firm” help at solo practitioner’s prices.

If your legal issue does not require an entire legal team, consider working with a solo practitioner with prior big firm experience. This way you can work with an attorney experienced in working with complex matters without paying the big firm prices.

Take full advantage of an initial consultation

During your initial consultation, don’t be afraid to ask a lot of questions. You will also want to explain the nature of your business and your goals for it. You will learn a lot about the lawyer in this type of discussion and the advice he or she gives you. Remember, your conversation is protected by the attorney-client privilege, so you can talk openly and honestly. A good attorney will focus on listening to you and be able to answer your questions, so you have a clear understanding of your options and the choices you need to make.

Finally, follow your “gut” when it comes to choosing your business’s legal counsel. You want somebody that you trust, your comfortable working with, and that provides you the guidance you need. In no time at all, you will soon realize just how valuable the relationship with your attorney is to your business.

If you have questions regarding business law matters, contact us today to schedule an initial consultation. Leslie S. Marell has been practicing business and commercial law for over 25 years. She is established in private practice and has extensive legal experience counseling companies in the areas of business contracts and transactions, purchasing, sales, marketing, computer and technology law, employment law and day to day legal matters. Let us provide your company the advice and guidance you need.

 

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Mirror Image Rule vs. Last Shot Rule

Depending on the industry, a certain percentage of business is conducted vis-à-vis signed contracts. However, my observation is that much of commerce is conducted by the seller submitting its quotation (with its terms of sale), the buyer submitting its purchase order (with its terms of purchase) and neither signing the other’s form. This is an effective practice, but what happens when both parties have not signed the same document? How do you know what the terms of the agreement are? Unfortunately, it is difficult to answer these questions until after the fact.

Battle of the forms

During contract negotiations, each party typically exchanges its form which contains very different terms from the other’s form. In fact, it is common for numerous forms to be exchanged with competing terms and no final contract to which the parties have agreed to all the terms is ever signed.

General contract law

Traditional contract law requires that an offer and an acceptance to that offer be exchanged in order for a contract to be formed. In the real world, the issues are: What happens if the offer and acceptance contain different terms? Has a contract been formed? If so, whose terms control?

Two approaches have evolved over the years to address these issues:

1.      Mirror image rule

The mirror image rule requires the offer to be accepted “as is” for a contract to be formed. Once an offer is accepted, the parties have a legal agreement. If the party accepts the offer but changes one term, a contract does not exist under the mirror image rule. Rather, the acceptance with the changed term becomes a counteroffer to be accepted or rejected by the other party.

In the context of commerce, if the buyer submits a purchase order with its standard terms and conditions, and the seller accepts it but submits its own standard terms and conditions that are significantly different, there is not a contract under the mirror image rule.

In that common scenario, the contract is formed when the parties begin performance.

2.      The last shot rule

Under the last shot rule, however, the acceptance does not necessarily have to match the offer word for word. In the example above, if the buyer submitted its purchase order with full payment and the seller accepted by sending its own terms and conditions, then the seller’s “acceptance” becomes a counteroffer with its terms and conditions applied. The buyer’s payment constitutes acceptance by performance and, since the seller’s form was the last document to be sent, it constitutes the contract under the “last shot rule.” In other words, the last shot rule provides that the last document sent before performance is the governing document.

The Uniform Commercial Code (UCC) overrules both the mirror image rule and the last shot rule, which will be discussed further in our next blog.

If you need assistance understanding if a contract has been formed or you have questions regarding your company’s contractual needs, contact Leslie S. Marell for help. We serve as general counsel to clients who do not require, or choose not to employ, a full-time lawyer in-house. Call today to schedule your initial consultation.

man wearing a suit sitting in a table ripping up a contract

Simple Steps for Preventing Contract Disputes

As a seasoned business attorney, I can tell you that a significant number of contract disputes can be prevented with strategic pre-planning during negotiations and drafting of the document. Regardless of the size of your business or your level of expertise, it is common for the same underlying issues to lead to litigation over contracts.

Make sure the contract reflects the Deal

When parties are entering into a contract, they typically want to get the transaction completed ASAP so they can get started on the new venture. Frequently, one party gives the other its “form contract” without ensuring that the deal points agreed upon have been included in the document. The perception is that contract bears little relationship to reality and is only useful if the parties go to court. However, this thinking is exactly what gets people into trouble.  Form contracts are useful tools and outline your company’s position. But, they must always be modified to include the deal points and agreements. If those deal points are not included, they will be considered outside of the scope of the agreement and not binding obligations.

Be clear about performance

The contract should be specific about deadlines that must be met and the performance requirements. Not only does setting forth the time-for-performance protect you by helping ensure you obtain the product or services in a timely manner, it may also provide you the ability to get out of the contract if the deadlines are not being met. Thus, use exact dates and avoid any general or vague time periods.

Establish expected level of quality

Your written agreement should set forth the level of quality that is expected, the criteria for meeting that quality level, and who will determine if it has been met or not. The contract should outline what will happen if the expected level of quality is not met and who bears the burden of rectifying the problem (within a certain period of time).

Escape clauses

It’s always important to include an escape clause in the contract. If one of the parties can no longer continue to perform under the contract or the product, equipment, services or subject matter is no longer needed, an escape clause can provide a way to mitigate the damages and avoid disputes and litigation. For example, if a party needs to get out of the contract, it can pay a certain amount of money for work in process, materials on order, and the like as a type of agreed upon consequence.

In sum, don’t rush into a contract even though your internal customer will often push you to do so.  Prepare a document that reflects the deal points. Draft a strong agreement that is clear on the specifics and deals with potential issues that may arise. This can save you a significant amount of time and money, as well as preserve the relationship with the other party.

If you need assistance negotiating and drafting a contract or you have questions regarding your company’s contractual needs, contact Leslie S. Marell for help. We serve as general counsel to clients who do not require, or choose not to employ, a full-time lawyer in-house. Call today to schedule your initial consultation.

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Basics on Dissolving Your Business

If you have decided to close your business, it is important to understand that it involves more than hanging out a “closed” sign and selling off your inventory. Business owners have a legal duty to pay the entity’s creditors before any of the business assets can be distributed to the owners. Failure to follow the proper procedures in dissolving a business can result in the owners being held personally liable for the business debts.

Each state has established its own business code that sets forth how individuals can form and operate different types of businesses within its borders. Each type of business has certain procedures that must be followed when shutting down and winding up its affairs. Owners must follow these procedures in order to protect against personal liability and to ensure all business obligations end on the day the entity is officially closed for business.

State laws typically require a majority vote of the owners to close down a business. The vote to dissolve should be properly recorded in the entity’s records and should appoint an individual to pay creditors, sell assets, and close accounts.

If possible, a dissolving business must pay all of its creditors before any of the remainder can be distributed to the owners. Additionally, the law requires the entity to set aside an adequate amount of money to pay any unresolved debts. Most dissolutions laws provide that the business can publish notice in a local newspaper and establish a deadline for claims to be submitted. Proper notification in some states can prevent creditors from filing lawsuits against the business after a certain number of years, while other states provide that the notice serves to limit claims to any remaining assets that were distributed to the owners.

Your business must also file the appropriate paperwork in the same state registration office where the formation document was filed. This is commonly referred to as filing an article of dissolution or a certificate of dissolution, which establishes the date that the business closed down as part of the public record.

A dissolving business must cancel any licenses or permits that it has been using. Annual reports and tax returns should be filed, as well as any other final reports that may be required by state or federal agencies.

Dissolving your business can be complicated and it is important that it is done correctly. The above is a simplified outline of some of the factors that must be considered, but every case is unique. For more detailed information on how to properly dissolve your business, contact Leslie S. Marell today.

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What You need to Know about the “Automatic Renewal” Clause

If you have entered into a contract that is no longer meeting your needs and you call to cancel the agreement, you may be surprised to learn that you are bound by the contract to continue paying the other party for the same amount of time as the original term of the contract. How does this happen? The terms and conditions of certain contracts contain an “automatic renewal” clause. This type of provision is also referred to as an “evergreen clause.”

An example of an automatic renewal clause is something along these lines:

All terms contained herein will automatically renew for the same length of time as the initial term of the contract unless either party provides the other with at least thirty (30) days written notice of termination of the contract prior to the expiration of the current term.

In other words, unless you notify the other party in writing at least 30 days before the current contract term expires that you do not want to renew the contract, the agreement is automatically renewed. An evergreen clause can be found in a variety of types of contracts, especially service, supply and distribution agreements.

So, is an automatic renewal enforceable? Like most things in life, “it depends.” Many courts strictly construe this type of contractual language in commercial contracts that do not involve a consumer. If the language is clear and unambiguous, the court is likely to consider it enforceable and extend the agreement for another term if proper and timely notice to cancel is not given.

Several states have passed laws attempting to make the use of automatic renewal clauses more difficult. Many require the evergreen clause to be in all bolded and capitalized letters in order to make the provision more conspicuous. Some states go further and require the party attempting to enforce the automatic renewal to provide an advance reminder to the other party that the automatic renewal date is approaching. Failure to comply with the statutory requirements can render an automatic renewal clause unenforceable.

If you have questions regarding business law matters, contact us today to schedule an initial consultation. Leslie S. Marell has been practicing business and commercial law for over 25 years. She is established in private practice and has extensive legal experience counseling companies in the areas of business contracts and transactions, purchasing, sales, marketing, computer and technology law, employment law and day to day legal matters. Let us provide your company the advice and guidance you need.

 

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How a Business Attorney Increases Your Bottom Line

All business owners look for ways to cut costs and save money. You may think that handling legal issues on your own will save your entity money, but working with a business lawyer to safeguard your business’s best interests will save you in the long-run. For example:

  • Legal structure. Having an attorney help you pick the most advantageous legal entity for your business is one of the most important things you can do. There are a variety of entity types available and each has its own pros and cons. Choosing the right legal structure for your business impacts your personal exposure to liability and taxes.
  • Transactions. Contracts can be complex and extremely difficult to understand. Negotiating the best deal for your entity can feel overwhelming, especially if the other party has their own attorney. Working with your own business attorney can ensure that all negotiations are handled fairly and that the contract is drafted in a way that unambiguously reflects what the agreement was. A seasoned lawyer can also anticipate certain obstacles and take action to decrease your potential liability as well as reduce the likelihood of any disputes going through costly and time-consuming litigation.
  • Employment practices. Before your entity hires its first employee, you should confer with a lawyer. It is essential that employers verify that their employment practices (such as hiring/firing employees, providing benefits, classifying employees versus independent contractors, and other similar matters) comply with federal and state laws. Failure to do so can result in your business being sued or being assessed penalties by the government.
  • Lease agreements. Leasing commercial space is often a commitment that lasts for a long period of time. Leases often cover numerous complicated matters, so it is essential that you understand what you are agreeing to before you sign the contract. Failure to confer with a lawyer regarding a commercial lease could lock your entity into an agreement with over-reaching or unfair terms that can negatively affect your business’s chance of succeeding.

The above list is not exhaustive, but it gives you an idea of how a business attorney can save you time and money. To learn more about starting a new business or how we can assist you with other business-related matters, contact Leslie S. Marell today.

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What You Need to Know About Registering Trademarks

Whether you are the owner of a start-up business or one that has been operating for a while, it is important to ensure that your company’s intellectual property is protected. Intellectual property can include items such as your business name, inventions, logo or trade secret. Ideally, you should register your business’s trademarks as soon as possible

Many business owners overlook the importance of registering their entity’s trademarks. However, there are numerous advantages gained by registering with the United States Patent and Trademark Office:

  • Your business will save time and money by researching the trademark earlier in the process before investing heavily in it
  • The quicker your register the less likely you are to violate an existing trademark
  • Registration provides notification to the public that you claim ownership of the mark
  • Your entity will have the ability to use the federal registration symbol (®) which creates a legal presumption of your entity’s exclusive right to use the mark
  • Once you have registered your trademark, you have the right to bring a lawsuit in federal court in matters related to the mark
  • Having your mark registered in the United States can make it easier to obtain registration in foreign countries
  • Your trademark can be filed with the U.S. Customs and Border Protection Service to prevent foreign goods that infringe on your mark from being imported
  • Once your mark has been registered, infringers cannot claim ignorance of the protected mark

If you are starting a new business, we can assist you with filing an “intent to use” trademark application for your entity name and/or logo. This will protect your marks while you are working to start business operations.

If you have questions regarding starting a new business or registering your entity’s trademarks, contact Leslie S. Marell for help. We serve as general counsel to clients who do not require, or choose not to employ, a full-time lawyer in-house. Call today to schedule your initial consultation.

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5 Important Tips for Your New Business Venture

When you are starting a new business, it is easy to feel overwhelmed by all of the decisions you have to make. The decisions you make now can have lasting consequences, so it is important to get them right. Below are five important tips to help ensure that your new business gets off to a successful start:

Legal Structure

There are several different types of business entities to choose from, each with its advantages and disadvantages. To learn more, please read our blog titled “Which Legal Structure is Best for Your Start-Up?” It is important for you to confer with a business attorney to ensure you select the legal structure that is most beneficial for your business.

Written Contracts

New business owners often fall prey to relying on oral promises that aren’t fulfilled. Getting your agreements in writing is the best way to protect your interests. This includes creating a written agreement between the founders of the business which outlines each owner’s percentage of ownership and how the daily business decisions will be made.

Intellectual Property

Intellectual property can include anything from your company name, to its logo, to the type of products you sell. All business owners should take the initiative to legally protect their intellectual property. If your entity fails to obtain the proper patent, trademark or copyright, it could result in you have no legal recourse if another party infringes on your rights. One important step in protecting your private information is to require all employees to execute a non-disclosure agreement.

Employees

There are a wide variety of laws governing an employer’s relationship with its employees. It is imperative that you educate yourself regarding the laws, rules and regulations that apply to your industry and your specific business.

Get help

When your business is first starting out, you will likely be tempted to try to save money and handle things on your own. Unfortunately, this approach can end up costing you significantly more than the cost of retaining a professional. One mistake could be the end of your business before it even gets off the ground. Don’t let that happen – get the legal assistance you need.

If you have questions regarding business law matters, contact us today to schedule an initial consultation. Leslie S. Marell has been practicing business and commercial law for over 25 years. She is established in private practice and has extensive legal experience counseling companies in the areas of business contracts and transactions, purchasing, sales, marketing, computer and technology law, employment law and day to day legal matters. Let us provide your company the advice and guidance you need.

 

 

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Which Legal Structure is Best for Your Start-Up?

When you are starting a new business, it is normal to be eager to get the doors open and see your ideas put into action. However, don’t skip over one of the most crucial steps in ensuring the success of your entity, which is choosing the most advantageous legal structure for your business. Each type of legal entity has its advantages and disadvantages, so it is important to confer with a knowledgeable business attorney to determine which type will benefit your company the most. Below are the three most common forms of legal entities:

  • Limited Liability Company. Many new businesses select the limited liability company (LLC) structure for their new entity.The LLC offers similar protections as does a corporation, but one distinct advantage is that the LLC does not require the same formalities as does a corporation. The LLC permits the members to own and manage the company jointly, while also sharing in the profits and losses. Additionally, the members of the LLC can take advantage of pass-through tax treatment. It should be noted that every business situation is different, so you should confer with a lawyer or other tax advisor regarding the tax treatment in your individual circumstances, but the LLC typically offers several benefits. Lastly, and importantly, the LLC provides the business owners protection from personal liability. In other words, the owners’ personal assets are usually protected from debt collection efforts and judgments against the LLC, except where fraud, misrepresentation or other egregious situations occur.
  • C-Corporation. The C-corporation (C-Corp) is a complex and expensive legal structure to create, but it can provide a wide variety of benefits. A C-Corp is taxed as a separate entity and the owners are only obligated to pay taxes on the profits received from the business. Also, a C-Corp usually falls in a tax-bracket that is lower than individual tax rates. A C-Corp is often used if the company expects to be acquired and can be a beneficial structure for fundraising purposes. You can sell shares in the entity and also create different classes of stock.
  • S-Corporation. The S-corporation (S-Corp) has some important similarities to the C-Corp, but most business owners select it for the tax treatment it receives. The S-Corp is a pass-through entity, which permits the profits and losses from the entity to flow directly to the shareholders. You can only have 100 investors in a S-Corp, and they must all be individuals who are legal residents of the United States.

The above is a very brief summary of three of the business structures available for new entities. There are many other factors that should be considered as well as the other business formations available. Contact Leslie S. Marell to determine which type of entity is the most beneficial for your new business.

Corporate Water Mirrored

Four Agreements Your Business Should Have

Every business is unique and has its own legal needs. However, in my experience, four important contracts which are needed to safeguard an entity’s interests include:

Non-Disclosure Agreement

A non-disclosure agreement (also called a “confidentiality agreement”) is important to every company in every industry. This type of contract obligates third-parties to keep your private information confidential and limits the use of it to only permitted purposes set forth in the agreement. Without such a document, there are no restrictions on how or what the third party does with your confidential information. If the third-party breaches a non-disclosure agreement, it entitles you to recover remedies such as an injunction to stop the unlawful disclosure and/or damages. Even if the non-disclosure agreement is never used in litigation, it has a powerful effect by informing the third-party that they are privy to non-public information and there will be legal consequences if they violate the trust you are putting in them to safeguard it.

Purchase Order

When a transaction involves a buyer and a seller of goods or services, the purchase order (PO) becomes part of a contract between them. The PO should set forth the description, quantity, price, applicable discounts, payment terms, date of shipment, authorized signature, and any other important information relevant to the purchase. A buyer can implement PO tracking to manage inventory, improve clear communication, and create a sales history.

Sales Terms & Conditions

Outlining the sale terms is vital to protecting your business. It is a necessary document when you are doing business with your customers who issue you a PO. The terms and conditions of a transaction include topics such as exclusion of warranties, limiting remedies and narrow indemnification language. It is important to work with your legal counsel to identify issues that could have a detrimental impact on your business and properly address them in the sale terms of your contracts.

Intellectual Property Assignment Agreement

An Intellectual Property Assignment Agreement should be signed by all applicable independent contractors and vendors that work for your company when they are hired. Don’t make the mistake of believing that your business automatically owns the work produced by an independent contractor simply because you are paying them for it. An independent contractor is treated differently under the law than one of your full-time employees. To ensure that your entity owns the independent contractor’s contributions, you must have a written agreement that transfers the copyright to your company.

If you need assistance creating any of the above contracts or you have questions regarding your company’s contractual needs, contact Leslie S. Marell for help. We serve as general counsel to clients who do not require, or choose not to employ, a full-time lawyer in-house. Call today to schedule your initial consultation.