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Corporate Minutes: What Not to Include to Avoid Legal and Business Risk

California corporations must have annual shareholder meetings and must have regular board meetings. In addition to holding the meetings, there is a legal requirement that "minutes" be taken of any corporate meeting. Other corporate entities, like limited liability companies, are permitted to have various meetings, but meetings may be waived in the operating agreement or similar documents providing for governance. If there are meetings, corporate minutes must be taken.

By |2019-08-06T12:14:39-07:00August 14th, 2019|

Corporate Governance: What is a “Board Observer”?

With startup companies, it is not unusual for there to be a person (or persons) designated to sit on the board of directors who is given the status of "board observer." Venture capitalists and other types of investors commonly seek to have a person affiliated with their investment company placed on the board either as an actual voting member or as an observer.

By |2019-08-09T10:31:09-07:00August 13th, 2019|

Rules for Forming Your California Professional Midwifery Corporation

Licensed midwives are now permitted to form professional corporations here in California pursuant to the California professional corporation act. Midwives were added to the act in 2017. See the Moscone-Knox Professional Corporation Act (the “Moscone-Knox Act”); Cal. Corp. Code, §13400 et seq. In terms of business form, midwife services can only be provided through a California professional midwife corporation.

By |2019-08-05T13:56:07-07:00August 12th, 2019|

Court Finds Text Message Exchange Was Sufficient for Contract Formation

Under California law, mutual agreement or assent is a necessary element of contract formation. That is, without an agreement, there can be no contract. Under case law and under the California Civil Code, assent may be "manifested" by written or spoken words or by conduct. This is one reason that most contracts are signed.

By |2019-08-05T13:45:30-07:00August 11th, 2019|

Non-Disparagement Clauses in Business-to-Business Agreements

Non-disparagement clauses in business-to-business contracts have become more and more common. Where a contract is subject to back-and-forth negotiation, non-disparagement clauses are enforceable and important. These clauses are typical in business purchase/merger agreements, shareholder agreements, commercial and office leases and, increasingly, in vendor and supplier contracts.

By |2019-08-09T10:30:30-07:00August 10th, 2019|

How Your Business Creditors Use Personal Guaranties to Avoid the Corporate Shield

The corporate shield that protects your personal and family assets is the most important advantage of forming a corporate entity through which to operate your San Diego business. When formed, a corporation or a limited liability company ("LLC") legally becomes a separate entity with its own rights and ability to enter into contracts.

By |2019-08-09T10:30:05-07:00August 9th, 2019|

San Diego Buy-Sell Agreements: Checklist of Discussion Points

A buy-sell agreement is essential for small San Diego closely-held corporations. Sometimes a buy-sell agreement is a stand-alone document; often the buy-sell provisions are part of a larger Owners Agreement that sets out the various duties, obligations, and restrictions related to ownership and management of the company. However, whether stand-alone or part of a larger agreement, it is important to seek the advice and guidance of an experienced San Diego corporate attorney when considering what needs to be in a buy-sell agreement.

By |2019-08-09T10:29:35-07:00August 8th, 2019|

More Problems With Off-the-Internet Form Contracts: Revisions Affect Validity and Proof

More Problems With Off-the-Internet Form Contracts: Revisions Affect Validity and Proof Using off-the-internet form contacts is dangerous, particularly if you are running a business. It is essential to retain an experienced San Diego corporate attorney who can ensure that your business contracts are validly formed and enforceable by the [...]

By |2019-08-09T10:27:30-07:00August 7th, 2019|

I Speak Spanish, But Signed a Contract Written in English: Am I Bound?

In brief, the answer is "yes" assuming that you had the opportunity to review the contract and seek out a translation or a translator. Generally speaking, parties are not required to translate a contract into another language for the other party. Parties are expected to use their own resources to read, translate, and understand a contract before agreeing to and signing it.

By |2019-08-05T12:42:47-07:00August 6th, 2019|

Ensuring Your Marriage and Family Counseling Clinic is Operating Correctly

As a business, however, you want to ensure that your marriage and family therapy practice is operating correctly under California laws. For example, you cannot run your practice as a general stock corporation, a limited liability company, or as several other corporate types. The only corporate entity available -- allowable -- for your practice is a California professional marriage and family therapy corporation under the rules of the Moscone-Knox Professional Corporation Act (the “Moscone-Knox Act”).

By |2019-08-05T12:11:52-07:00August 5th, 2019|

Dynamex Retroactive? US Ninth Circuit Says: “Let’s Ask the California Supreme Court”

Dynamex Retroactive? US Ninth Circuit Says: “Let's Ask the California Supreme Court” We wrote recently about the US federal Ninth Circuit's decision in Vazquez v. Jan-Pro Franchising International, Inc., 923 F.3d 575 (9th Cir. May 2, 2019). In that decision, the federal judges on the Ninth Circuit held that [...]

By |2019-08-09T10:34:54-07:00August 4th, 2019|

How and Why to Voluntarily Dissolve Your San Diego Corporation

Dissolution of a California corporation is the process of closing a legal entity. It is one of the steps taken when a business winds up and ceases to exist. Once dissolution is accomplished, the corporation (or limited liability company) will no longer exist as a legal entity. If you are thinking of closing up your San Diego corporation in the near future, an experienced San Diego corporate attorney can provide advice and counsel.

By |2019-08-05T11:56:18-07:00August 3rd, 2019|

Limited Partnerships Between Corporate Entities Have Advantages

When corporate partnerships are formed, the main disadvantage of partnership dissipates since the partners are legal entities that are already protecting the personal and family financial assets of the natural persons involved. For these reasons, a limited partnership might be the best business form for your next San Diego venture.

By |2019-08-05T11:48:39-07:00August 2nd, 2019|

Lessons From McDonald’s Special Sauce: Posting an Online Tutorial Video Disclosing the “Secret” Means There is No Trade Secret to Protect

Even if you are unaware of the fact, your San Diego business has trade secrets that are entitled to legal protection under both California and federal law. However, certain steps must be taken to protect the secrecy of your trade secrets. If you post an online video showing how to make your "special sauce," for example, the secret is out and there is no longer a trade secret to be protected. This is what happened with the special sauce that is on the Big Mac sandwich.

By |2019-08-02T14:06:37-07:00August 1st, 2019|

No Requirement to Reimburse for Slip-Resistant Shoes: Not “Necessary Expenditure”

The California Court of Appeals recently affirmed a trial court ruling that a restaurant did not have to reimburse employees for slip-resistant shoes. The court held that the slip-resistant shoes were not a "necessary expenditure" in the sense of being part of a unique uniform mandated by the restaurant employer

By |2019-07-31T12:22:20-07:00July 31st, 2019|

Formation of San Diego Contracts: Legal Lessons from Monster Energy

For a San Diego business contract to be formed -- to be enforceable in our courts -- the parties must come to an agreement. Most often, "agreement" is indicated by a signature or, with online contracts, by clicking on the "I agree" box. There are other methods of showing "agreement." One can indicate agreement with a contract by signing a different document, one that relates to and refers to the contract in question. That is one of the legal lessons from the recent California Supreme Court decision in Monster Energy Co. v. Schechter, Case No. S251392 (Cal. Supreme Court July 11, 2019).

By |2019-07-31T12:01:19-07:00July 30th, 2019|

An Overview of California Professional Corporations: Veterinarians

To form your San Diego veterinary professional corporation, you must file articles of incorporation with the California Secretary of State. This process is similar to how a regular corporation is formed. Veterinarians cannot form any other type of corporate entity, such as a limited liability company, for purposes of providing veterinary services. An experienced San Diego corporate attorney can provide advice and counsel with respect to forming your professional veterinary corporation.

By |2019-07-31T11:57:04-07:00July 29th, 2019|

Issues to Consider When Agreeing That Contract Obligations can be “Other-Sourced”

There are many benefits to allowing assignability in many circumstances. So there is no reason to always say "no" to allowing assignment. However, there are legal and practical issues to consider and you should seek advice and guidance from an experienced San Diego corporate attorney. Here are some of the considerations.

By |2019-07-31T12:24:10-07:00July 28th, 2019|

Thoughts on Backdating Contracts: Consumer Contracts

In part one of this series, we discussed pitfalls and problems with respect to backdating a contract among sophisticated parties. With sophisticated business parties and where the contract has been negotiated, backdating can be "okay," but there are pitfalls to avoid.

By |2019-07-31T11:48:12-07:00July 27th, 2019|

Thoughts on Backdating Contracts: Sophisticated Parties

There are some circumstances in which parties to a contract want to use a date on a business contract that is prior to the date that the contract is actually signed. This is the general meaning of "backdating a contract." As between sophisticated business parties and when the issue of the contract date is fully negotiated, backdating is not illegal.

By |2019-07-31T12:14:29-07:00July 26th, 2019|

Another Federal Agency Says: “Paid Influencers Must be Disclosed”

The Federal Drug Administration ("FDA") joined a growing list of federal and state agencies that are intending to punish companies and businesses that pay social media influencers without fully disclosing the relationship and the payments.

By |2019-08-02T14:09:21-07:00July 25th, 2019|

Just One Shareholder: Do I Really Have to have Corporate Board and Shareholder Meetings?

The short answer is "yes." Even if you have only one shareholder in your California corporation, you must hold annual shareholder and board of directors meetings. That is what California law requires. There are also a host of practical reasons -- good business reasons -- to have shareholder and board "meetings."

By |2019-07-31T11:04:42-07:00July 23rd, 2019|

Questions to Answer When Forming Your California Professional Nursing Corporation

California professional nursing corporation is a corporation that provides services which are generally considered part of the nursing profession. California professional corporations, including California professional nursing corporations, must be formed and maintained annually with the California Secretary of State. An experienced San Diego corporate attorney can provide advice and counsel with respect to forming your professional nursing corporation.

By |2019-07-31T10:45:26-07:00July 22nd, 2019|

San Diego Business Contracts: What Happens if There is a Conflict Provisions?

With longer business contracts, there is a potential for conflict between the provisions in the contract. Indeed, the more provisions and the more pages, the more likely there may be a conflict among the provisions in the contract. This is the reason that it is important to retain an experienced San Diego corporate attorney to review and customize your business contracts.

By |2019-07-31T10:57:40-07:00July 21st, 2019|

First Steps for Forming Your California Limited Liability Company

Forming a California limited liability company ("LLC") is similar to forming a California corporation. There are some important differences, however, and an experienced San Diego corporate attorney can provide advice and counsel if you are in the process of setting up a corporate entity for your business.

By |2019-07-31T10:57:18-07:00July 20th, 2019|

Corporate Governance: Can We Change the Bylaws to Eliminate a Shareholder Lawsuit?

In general, corporations are governed by their bylaws. The bylaws are adopted by a vote of the shareholders when the corporation is formed and, generally speaking, the shareholders can change the bylaws at any time by a vote of the controlling shareholders. However, there are some limitations.

By |2019-07-31T10:56:53-07:00July 19th, 2019|

San Diego Business Contracts: Using 30-Day Termination Provision to Limit Potential Damages

One of the most important reasons to use written contracts for your San Diego business is the ability to use the contract to help eliminate risks in the event of breach. Generally speaking, the measure of damages for breach of contract here in the Golden State is "benefit of the bargain."

By |2019-07-31T10:56:17-07:00July 18th, 2019|

San Diego Employers: Ninth Circuit Holds Employees Must be Paid for All Time Worked

Last year, the California Supreme Court decided the case of Troester v. Starbucks Corporation, 5 Cal. 5th 829 (2018). In Troester, the court broadly held that the California Labor Code required that workers must be paid for all time worked, even for required tasks that only take a minute or two each day.

By |2019-07-30T12:21:18-07:00July 17th, 2019|

The Essential Components of Your San Diego Employee Handbook

Every San Diego business that has employees should consider having an employee handbook. There are many state- and federally-mandated notices that must be provided and a host of company policies that must be summarized for your existing and new employees.

By |2019-07-30T12:06:09-07:00July 16th, 2019|

How to Start a San Diego Professional Pharmacy Corporation

If you are considering forming a California pharmacy corporation, you should retain an experienced San Diego corporate attorney to provide advice and counsel. Here is general information on how to start a San Diego pharmacy corporation.

By |2019-07-30T13:12:57-07:00July 15th, 2019|

San Diego Business Contracts: The Difference Between an Indemnity and Damages Cap

San Diego Business Contracts: The Difference Between an Indemnity and Damages Cap Without the assistance of an experienced San Diego corporate attorney, it can be difficult to distinguish different parts of a business contract. For example, many confuse the legal meaning and purpose of an "indemnification" clause, particularly if [...]

By |2019-07-30T11:46:07-07:00July 14th, 2019|

Protecting San Diego Intellectual Property: What is “Trespass to Chattels?”

"Intellectual property" includes assets like trademarks, patents, and copyrights but also includes trade secrets. Indeed, trade secrets are the most common form of intellectual property owned by California businesses. Intellectual property is protected under both California and federal law.

By |2019-07-30T11:32:42-07:00July 13th, 2019|

San Diego Earn Out Provisions: Tips on Avoiding Post-Acquisition Litigation

San Diego Earn Out Provisions: Tips on Avoiding Post-Acquisition Litigation When a small-to-medium sized San Diego business is acquired by another business, often the new owners want to retain the previous owners in an employment capacity. This can be beneficial to both sides of the bargain. The new owners [...]

By |2019-07-30T11:12:57-07:00July 12th, 2019|

San Diego Copyrights: Knowingly Including Inaccurate Information in Your Copyright Application Will Invalidate Your Copyright

The US Ninth Circuit Court of Appeals recently affirmed that knowingly including inaccurate information in your copyright application will result in your copyright being held invalid. See Gold Value International Textile, Inc. v. Sanctuary Clothing, LLC, Case No. 17-55818 (US 9th Cir. June 4, 2019). The case provides an example where seeking the advice and counsel of an experienced San Diego corporate attorney during the copyright application process would have helped achieve a more desirable result.

By |2019-07-30T11:06:44-07:00July 11th, 2019|

San Diego Trademarks: Supreme Court Nullifies Ban on “Scandalous” Trademark Registrations

Trade and service marks are some of the most powerful tools that a San Diego business can use to protect and expand its market share. The process of establishing a trade/service mark is essentially one of creation and use. Once in use, the mark can be registered with the US Patent and Trademark Office ("USPTO") under the provisions of the federal Lanham Act. An experienced San Diego corporate attorney can help with the legal requirements and the registration process.

By |2019-07-30T10:27:01-07:00July 10th, 2019|

San Diego Business Contracts: Can You Have a Perpetual Contract?

Under California law, the simple answer is, “Yes, you can have a perpetual contract.” The more complicated answer is, "Yes, if that is what the parties agree to and they express that intent unambiguously in the contract." An experienced San Diego corporate attorney can help draft your business contracts to reflect what you and your contracting partners want with respect to termination.

By |2019-07-30T13:14:02-07:00July 9th, 2019|

Steps for Forming Your Professional Optometry Corporation

Optometrists cannot practice optometry as a limited partnership or as a limited liability corporation in California. An experienced San Diego corporate attorney can help you form your California professional optometry corporation and can help with the other necessary tasks such as drafting custom corporate bylaws and drafting an Owners Agreement or Buy-Sell Agreement.

By |2019-07-30T13:17:48-07:00July 8th, 2019|

San Diego Business Contracts: More on Contract Formation for Online and Phone Apps

The US District Court up in San Francisco recently handed down a decision with respect to an Uber user on the issue of contract formation.

By |2019-07-30T09:46:23-07:00July 7th, 2019|

San Diego Business Contracts: Using Insurance Clauses can Help Avoid Litigation and Reduce Costs/Risks

San Diego Business Contracts: Using Insurance Clauses can Help Avoid Litigation and Reduce Costs/Risks The main function of business contracts is to set out the mutually-agreed obligations of the parties. Business contracts can also be used for secondary and tertiary purposes including reducing the likelihood of litigation and the [...]

By |2019-07-29T12:15:58-07:00July 6th, 2019|

Three More Reasons to Never Use Off-the-Internet Form Contract

Buying goods and services off the internet has become commonplace. But extreme caution is in order with respect to using and buying form/template contracts offline. Bluntly, it is just not a good idea and making a mistake will be expensive both in terms of a potential loss of your bargain and litigation costs if there is a lawsuit.

By |2019-07-29T12:05:43-07:00July 5th, 2019|

California Federal Court Enforces Website Browsewrap Terms Based on “Constructive Knowledge”

In general, San Diego businesses and consumers can only be bound to a contract if they agree to the contract. This is the essential element of entering into a contract knowingly. With online contracts -- like a website Terms of Service Agreement -- consumers often argue that "I did not know I was agreeing to anything."

By |2019-07-29T11:54:40-07:00July 3rd, 2019|

San Diego Business Contracts: Rescinding a Contract

Most contracts are enforceable as written and, once entered into, failure to perform one's obligations can lead to a lawsuit. However, there are a few circumstances in which a party may rescind a contract. Rescinding is like revoking the contract. As California Civil Code section 1688 states: "A contract is extinguished by its rescission." (Civ. Code, § 1688.) Rescission of contract is governed by California statutes.

By |2019-07-29T11:46:04-07:00July 2nd, 2019|

What is “Conspicuous?”: Guidance From the Federal Trade Commission

What is "Conspicuous?": Guidance From the Federal Trade Commission With respect to certain types of consumer contracts and various types of notices, California statutes and case law often impose the requirement of "conspicuousness." As an example, if you have a provision in your website Terms of Service that requires [...]

By |2019-07-29T11:39:10-07:00July 1st, 2019|

Top Reasons Why You Should Form a California Psychology Corporation

If you are a licensed -- or soon-to-be licensed -- San Diego psychologist, it may be beneficial for you to form a California psychology corporation taxed as an S-Corp through which to operate your professional practice.

By |2019-07-29T11:24:48-07:00June 30th, 2019|

California’s Division of Labor Standards Enforcement Says Dynamex Applies Broadly

As many San Diego employers know, in April 2018, the California Supreme Court changed the test for when a worker is to be classified as an "employee" or an "independent contractor." The new test is called the "ABC test" and essentially makes most workers "employees" here in the Golden State.

By |2019-07-29T11:17:09-07:00June 29th, 2019|

Hard Rock Hotel Update: Buying a Condominium Unit is NOT Buying a “Security”

A US federal judge has recently ruled -- again -- that buying a condominium unit is not buying a "security" as defined by the California Corporate Securities Law of 1968.

By |2019-07-29T11:08:16-07:00June 28th, 2019|

Corporate Buy-Sell Agreements: “Look-Back” Clauses can Help Get to “Yes”

Buy-sell Agreements are essential for San Diego businesses. This is true whether the business is a general partnership, a small closely-held corporation, a limited liability company, or another corporate form. A buy-sell agreement sets the terms and conditions under which the ownership of a business can be sold or transferred. The goal of a well-drafted buy-sell agreement is to provide the owners with "exit strategies" and to limit the expense of litigation when the need for "exiting" is looming.

By |2019-07-29T11:01:34-07:00June 27th, 2019|

Website Accessibility Update: Fixing the Problem Equals “Case Dismissed”

In good news for San Diego businesses facing lawsuits about website accessibility, at least one court has recently dismissed a case because corrective actions were completed. As we have discussed before, blind and deaf users of internet websites have filed numerous lawsuits alleging that various websites are inaccessible, in violation of the federal Americans with Disabilities Act (“ADA”).

By |2019-07-29T10:55:28-07:00June 26th, 2019|

San Diego Corporations: Commercial and Election Chatbot Statute

San Diego Corporations: Commercial and Election Chatbot Statute In September 2018, the California State Assembly passed a chatbot disclosure law (SB-1001). Then-Governor Brown signed the law, and it goes into effect on July 1, 2019. Essentially, the law requires that a website disclose to the user whether the user [...]

By |2019-07-30T13:20:15-07:00June 25th, 2019|

Corporate Governance: What is Ratification of Corporate Action?

The legal concept of "ratification" is most commonly raised and used with respect to contracts. However, the doctrine of ratification also has application in the corporate world. An experienced San Diego corporate attorney can provide advice and guidance with respect to corporate ratification.

By |2019-07-29T10:21:51-07:00June 24th, 2019|

California Professional Corporations: What Happens if an Owner Loses Their License?

Because a California professional corporation can only have owners who are licensed, one question that occasionally arises is: What happens if one of our owners becomes disqualified by, for example, losing his or her license?

By |2019-07-29T10:04:46-07:00June 23rd, 2019|

Understanding the Parts of a Written Contract (Part I): What are Recitals?

. In this article, we begin a series of articles describing the "parts of a contract." Let us assume, for example, that you hire an experienced San Diego corporate attorney to form a California professional corporation for you and your professional partners. As part of that process, you may want one or more agreements among owners to detail the understandings among you and your colleagues with respect to how the California professional corporation will be run, payment and bonus structures, buy-sell provisions, and more.

By |2019-07-29T09:58:06-07:00June 22nd, 2019|

San Diego Asset Purchases and Avoiding Successor Liability: “Adequate Consideration Paid” is “Fair Market Value”

San Diego Asset Purchases and Avoiding Successor Liability: "Adequate Consideration Paid" is "Fair Market Value" In general, under California law, if a person or business buys the assets of corporate entity, the purchaser does not assume any of the liabilities or obligations of the selling corporation. This is the [...]

By |2019-07-29T09:53:23-07:00June 21st, 2019|