Strategies for Making a Handshake Deal More Legally Enforceable For many, "handshake deals" are the best kind of deals. They are based on the good people involved, the right kind of people who honor their promises without the need for writing, and such deals are quick and easy in [...]
Transferring Ownership of Small Businesses: Contract Considerations Most often, small businesses are transferred through a sale/purchase, but there other circumstances in which ownership is transferred that do not involve a sale/purchase. Such include: Transferring partial or full ownership of a family-run business to a spouse or new members of [...]
Reasons for Caution When Demanding Separated Employees Turn Over Control of Employee-Operated Social Media Accounts We wrote recently about whether a Twitter account could be considered the property of and a trade secret of the company that may have created it. That is the current dispute between the owners [...]
What is Quantum Meruit as a Quasi-Contract Measure of Damages? Quantum meruit is a legal doctrine that allows a person to sue and recover for the value of goods or services even though there might not be a specific business contract. As a simple example, your delivery truck has [...]
California Business Law: Retroactivity of Court Decisions and Dynamex As we have written, in April 2018, the California Supreme Court changed the test for determining whether a worker is an "employee" or an "independent contractor." The new rule essentially makes all workers "employees" unless strictly defined conditions are met. [...]
Revisiting "Unconscionable Contracts": California Usury Law In general, usury laws forbid lenders from charging interest in excess of the rate listed in the applicable statute. California has a usury law that caps interest rates, but the law only applies to non-bank consumer loans that do not exceed $2,500. See [...]
New Study: Trademark Registration Helps Your Business Grow The US Patent and Trademark Office ("USPTO") just published a new study that found a higher growth and success rate for businesses that register trademarks. See study here. Highlights of the study include: Trademark registrants statistically tend to have higher revenue [...]
M&A: No-Reliance Contract Clauses and Avoiding Post-Closing Claims of Fraud A post-closing claim of fraud is one of the most common litigation risks associated with buying/selling a San Diego business or with a merger and acquisition. In general, this is a claim made by a buyer who has "buyer's [...]
Pay Special Attention to Provider Numbers When Purchasing a Medical Practice In general, one of the most valuable assets of a medical practice is its government-issued provider number(s). For those not in the industry, a provider number is a business identification number that is used to process payments from [...]
Cost Factors to Consider When Buying a Franchise One of the quickest methods of starting your own business here in San Diego -- becoming your own boss -- is to buy a franchise. There are many advantages of buying a franchise including knowing that you are selling products or [...]
How are "Qualified Purchaser" Investors Different From "Accredited Investors?" Both the US and California governments regulate the offering and sale of securities under various statutes such as the federal Securities Act of 1933 and the California Securities Act of 1968. In addition to those two statutes, there are many [...]
Buy-Back Agreements: Removing a San Diego Shareholder for Cause or No-Cause With small, closely-held San Diego corporations and limited liability companies, it is important that the shareholders, members, and owners get along at a basic level. Maybe not best of friends, but the ability to work together for the [...]
Outlining the Parameters of a Contractual Restraint on Trade: Golden v. CEP (9th Cir.) As we have written previously on this blog, California law does not allow noncompete or other types of agreements that prohibit or unduly interfere with a person's ability to work in his or her trade [...]
San Diego Commercial Leases: Nonconforming Use Clauses When your business enters into a commercial lease, there will likely be a clause related to "nonconforming use" of the property. These clauses often are limited to use of the leased premises that conform or fail to conform to governmental zoning, permit, [...]
Is a Company-Associated Twitter Account a Trade Secret? In the news recently is a fight between a local sports reporter -- Andy Bitter -- and his former employer, the owner of The Roanoke Times. Mr. Bitter was a sports writer for the media outlet covering sports events at Virginia [...]
Selling a Medical Practice? Transitioning is Often Better Than Abrupt Termination Selling a San Diego medical practice is different and more complex than selling another type of business. With a medical or other healing arts practice, two somewhat competing goals are in tension - the desire to maximize the [...]
Three Essential Agreements Needed When Hiring Employees Even if your San Diego business chooses not to have employment contracts with your workers, there are still other essential agreements that you must have your employees sign before they begin working. These are needed to protect your business and its assets. [...]
Does Your Family-Run LLC Need an Operating Agreement? In brief, "Yes." Even a family-run limited liability company ("LLC") needs a well-drafted and solid operating agreement. One of the most common mistakes made by family-run businesses is assuming that normal business practices are "not necessary because we are family." The [...]
Can I Fire an Employee Who Lied on Their Resume? An employee who lies on his or her resume or on his/her employment application has committed a form of fraud because he or she has provided false information. This is true even if the employee has worked at your [...]
Thoughts on Handling a Dissident Director Under California law, the board of directors of a San Diego corporation is charged with the management of the company. See Cal. Corp. Code, §300 which states that "... the business and affairs of the corporation shall be managed and all corporate powers [...]
Nine Changes in Your Business That Necessitate Hiring a Good San Diego Corporate Lawyer One can conceive of a business as a living, growing organism that migrates through various changes and evolutions. We here at San Diego Corporate Law have discovered that there are natural growth points and retraction [...]
Three Often Overlooked Steps for Maximizing the Value of Your Business When Selling Like preparing a house for sale, when you are preparing to sell your San Diego business, there are many well-known preparatory steps to take. Many of those steps include various strategies for cutting costs and enhancing [...]
Thoughts on Buying an Existing Business or Starting a New One Owning and running your own San Diego business can be a dream come true. Fortunately, there are many ways to accomplish this goal. Two of the most common methods are starting your own brand new business, or buying [...]
When a Joint Venture Might be a Better Alternative to a Merger or Acquisition Mergers and acquisitions ("M&A") can be effective methods of expanding your San Diego business into new markets and customer bases. However, merging with or buying another business are both risky endeavors. Depending on the circumstances [...]
Corporation Classes of Stock, Control, and Money: Lessons From Facebook On July 26, 2018, Facebook, Inc. lost nearly $120 billion in market capitalization value as stock prices plunged more than 19%. According to news reports, that was the largest total single-day drop in market value ever recorded. See here. [...]
California Corporations Law: Board is the Boss, CEO is the Employee Many people get confused about how corporations are run. We are used to seeing the Chief Executive Officers of a company in the news and the media. It is tempting to see that person as the "boss" and, [...]
San Diego Business Contracts: Anti-Assignment Clauses When it comes to ongoing and long-term business relationships, the person with whom a business partner interacts with is often very important. Business runs on personal connections, loyalty, and trust. This means that many ongoing business relationships are built on reputations and integrity. [...]
California Business Forms and Structures: An Overview If you are just starting your new San Diego business, California law provides you with many choices as to the form and corporate structure of your business. There are advantages and disadvantages for each form/structure, and a good corporate attorney can help [...]
Can You Void a Contract by Claiming You Were Too Drunk? For a valid and enforceable contract to be formed under California law, there must have been: An Offer Acceptance Consideration and A meeting of the minds -- that is, both parties understood the subject matter of the contract [...]
FAQs Regarding Forming a California Medical Corporation In California, physicians, nurses, and other healing arts practitioners are permitted to form professional corporations pursuant to the Moscone-Knox Professional Corporation Act (“MKPCA”). See Cal. Corp. Code, §§ 13400 et seq. Other professions, such as lawyers and accountants, can also form professional [...]
California Contracts: Are No Oral Modification Clauses Enforceable? Many written business contracts contain what are commonly called no oral modification clauses. In general, such no oral modification clauses state that any modification of the contract must be in writing and signed by the parties. However, business owners should take [...]
Can My San Diego Teenager Form a Corporation and Start a Business? Some have probably heard that Kylie Jenner may soon become a billionaire at the young age of 20 years old. See here. In the new economy, young entrepreneurs are increasingly using technology and online marketing/sales platforms to [...]
Signs That a Partnership Fight is Looming Forming a partnership is often an excellent way of starting and running a business. There are tax advantages, mutual help and assistance is created, different skills sets can enhance the chances of success, etc. However, as with any relationship, conflict can result [...]
Serving on a Board of Directors: What You Need to Know A California corporation is governed at the highest level by its board of directors. The day-to-day operations of the company are conducted by the corporate officers, who carry out the policies made by the board. This article discusses [...]
Incorporation Assistance: Reasons to Hire an Experienced Corporate Lawyer to Help We here at San Diego Corporate Law emphasize the need to form a corporate entity such as a corporation or a limited liability company to run your business. There are many reasons why this is important. It is [...]
San Diego Corporate Law: Beware No-Poach Provisions in Franchise Agreements Employer no-poach agreements have made news headlines lately. See CNN-Money report here. It has been reported that, in mid-July 2018, seven fast food restaurant chains agreed to end their franchise rules that prevented or prohibited franchise employees from being [...]
Amended Corporations Code Section 1601: Right to Inspect Corporate Records Under the California Corporations Code, San Diego corporations are required to allow inspection of "accounting books, records and minutes" by shareholders of the corporation. See Cal. Corp. Code, § 1601(a). This right to inspect is one of several rights [...]
San Diego Business Law: When to Have Signatures Notarized Sometimes, with particularly important contracts and agreements, it is useful and beneficial to ask that the signatures of the parties be notarized. If you have ever bought a house, then at some point during the transaction, you participated in the [...]
What Should be in Your San Diego Distribution Agreement? If your San Diego business produces goods, then you likely need help with distribution. Many businesses handle distribution and sales in-house, but distribution can be done through agents, resellers, distributors, and other business partners who help get your goods to [...]
San Diego Business Law: What is the Doctrine of Laches? In general, the doctrine of laches is a defense to various claims that might be asserted against your business -- such as a breach of contract or a claim for reinstatement by a terminated employee. The doctrine of laches [...]
Buy-Sell Agreements for California Professional Corporations While Buy-Sell Agreements are incredibly valuable tools for any small business to have, they are particularly important for professional corporations. The best time to have a Buy-Sell Agreement drafted for your California professional corporation is in the beginning, after the corporation is formed [...]
What the California Consumer Privacy Act of 2018 Means for San Diego Businesses On June 28, 2018, California passed the California Consumer Privacy Act of 2018 (the “CCPA” or the "Act"). See news report here. Here is a quick rundown of the CCPA and how it will affect your [...]
Are You at Risk for Being Sued for Negligent Hiring? If your San Diego business has employees, there is always the risk of being sued because of actions taken by those employees. The legal concept of respondeat superior dictates that an employer is usually responsible for the negligent acts [...]
Checklist for California Corporation Articles of Incorporation Finding a good and experienced corporate attorney to assist you in forming your corporation the right way is important. At San Diego Corporate Law, we believe in doing things right the first time. While each business is unique, there are some items [...]
What Does Dynamex Mean for San Diego Copyrights and Ownership of Creative Works? The distinction between "employee" and "independent contractor" is not only important for employment law, but also for copyright law. With respect to the former, the category in which a worker is placed determines whether the worker [...]
Dynamex and Grubhub: San Diego Employee or Independent Contractor? We wrote recently about the California Supreme Court's decision in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. Supreme Court April 30, 2018). See our discussion here. Dynamex established new rules in California with respect to how [...]
California Makes 2018 List of Top 10 States for Launching Startups The website wallethub.com just published its list of the top 10 states for launching a startup. California makes the list coming in at number eight, and Texas was number one. See here. California would have ranked higher, but [...]
California's Proposed Gender Quota Law for Corporate Boards San Diego and California corporations are governed by their respective boards of directors. Lawmakers in Sacramento are getting close to passing a new law that would require gender diversification on corporate boards of directors. The proposed law is currently designated as [...]
Defining “Default” or “Event of Default” In San Diego Business Contracts A good San Diego business contract will define the concepts of "default" and "event of default.” With a simple contract, default is probably failure to deliver or failure to pay. These terms should be defined for more complex [...]
Avoiding Family-Owned Business Pitfalls: Minority Shareholder Oppression Claims It is often the case that many family-run businesses emphasize the "family" part of the business, providing jobs, money, and resources for members of the family. In fact this is often among the main reasons to start a family-run business - [...]
"As-Is" Contracts Part IV: Avoiding Claims of Fraudulent Concealment In this article, we discuss another aspect of "as-is" contracts here in San Diego and in California. In previous companion articles, we discussed two necessary components of well-drafted “as is” contracts, namely language with respect to a buyer's due diligence/inspection [...]
Can I Use GPS or Phone Apps to Track My San Diego Worker's Movements? In brief, yes, a San Diego business can use a GPS device or a smartphone app to track the geo-spatial movements of its workers as long as it informs those employees BEFORE beginning such tracking. [...]
San Diego Business Contracts: What is a "Condition Precedent?" In San Diego and California, for a business contract, a "condition precedent" is simply some obligation that one party to the contract must perform before the other must perform his, her, or its obligation(s). A simple example would be a [...]
"As-Is" Contracts Part III: Dealing With the "Sophistication of Parties" Problem In two companion articles, we have discussed a couple of important aspects of “as is” contracts. "As-is" contracts are among the most vulnerable contracts to an eventual court challenge if the buyer has remorse after the transaction is [...]
Employee Handbooks: National Labor Relations Board New Guidance A good corporate attorney helping and advising with respect to drafting and updating employee handbooks must be on the constant lookout for new and changing laws. Such might be found in new statutes, caselaw, and in new rulings from labor administrative [...]
"As-Is" Contracts Part II: Avoiding Claims of Fraud In a companion article, we discussed some aspects of an “as is” contract including the importance of the buyer's due diligence/inspection requirements. As noted in that article, “as-is” contracts are enforceable in San Diego and California. In this article, we discuss [...]
Due Diligence With Respect to "As-Is" Contracts in California Sometimes, San Diego businesses and individuals agree to what are generally called “as is” contracts. In general, such contracts are enforceable under California law as California law favors the idea of "freedom to contract." However, "as-is" contracts present a host [...]
Revisiting Website Accessibility for California Businesses in Light of Wayfair, Inc. Not too long ago, we discussed the fact that San Diego and California businesses must ensure that their websites are compliant with the Americans With Disabilities Act ("ADA"), with the Unruh Civil Rights Act ("UCRA"), and with the [...]
US Supreme Court: San Diego E-Commerce Businesses Have to Collect Sales Taxes A new US Supreme Court decision has reversed long-standing precedent and now, e-commerce businesses must collect taxes for sales transactions made with residents of other states under some circumstances. See South Dakota v. Wayfair, Inc., Case No. [...]
Using Contract Language to Avoid Litigation Over Claims of Mistake-in-Fact Under California law, a contract can be defeated if a party can prove there was a mistake-in-fact. For a contract to be enforceable by California courts, there must be a "meeting of the minds" between and among the parties [...]
US Supreme Court Declares Railroad Stock Options Not Taxable Many San Diego and California businesses offer their employees stock options as a form of compensation. Sometimes (rarely) the stock option is without cost; more often, the option is a right to purchase company stock at a set price. Assuming [...]
San Diego Business Contracts: What is Fraudulent Inducement? There are many possible defenses to a claim of breach of contract. One such defense is a charge of fraudulent inducement. Under California law, there are two types of fraudulent inducement with respect to contracts - fraud in the "executing of" [...]
New SEC Guidance: Cryptocurrencies are Not "Securities" (but Sometimes They are) In mid-June, 2018, William Hinman, Director of Corporate Finance for the Securities and Exchange Commission (“SEC”), offered new guidance on the question of whether cryptocurrencies are "securities." See news report here. Previous guidance and SEC enforcement actions had [...]
How Detailed Job Descriptions can Help Avoid Employee Lawsuits If your San Diego business has employees, you want to put your business in the best position possible to avoid employee litigation and to help win those lawsuits if they are filed. One often-overlooked aspect of avoiding employee litigation is [...]
Dealing With Avoidance of Executory Contracts Under the Bankruptcy Code In this article, we discuss another aspect of the US Bankruptcy Code (the "Code") as it relates to business contracts. In a previous article, we discussed the automatic stay, which limits your rights to continue efforts to collect debts [...]
Trademark Basics: Coexistence Agreements and Consent Agreements As many know, in San Diego and in California, you and your business are not allowed to infringe upon the trademark rights of another person or business. Infringement will bring expensive litigation and hefty civil penalties. As with many commercial dealings, there [...]
Using Contract Provisions to Shorten Statute of Limitations and Reduce Risk In San Diego and elsewhere in California, there are certain statutes that limit the amount of time in which a lawsuit can be filed. These are generally known as statutes of limitation. With respect to contracts, for example, [...]
Selling a San Diego Business: Minimizing Contractual Indemnity Obligations If you are selling a San Diego business, almost certainly, the contract for purchase/sale will contain provisions requiring various indemnifications. In a companion article, we discussed the definition and general basics of indemnification clauses. In this article, we discuss how [...]
San Diego Business Law: What is Contractual Indemnification? Typically, a business sales/purchase contract will contain provisions imposing indemnification obligations. These are often called "hold-harmless” provisions. In general, one party to a contract indemnifies the other party by agreeing to “hold them harmless” by paying for the legal fees, litigation [...]
San Diego Joint Ventures: Limiting Risk and Capital Exposure With many types of business efforts and potential market exploitations, joint ventures offer many advantages such as: Cost sharing, which can be particularly useful if none of the joint venturers can independently fund the enterprise Sharing of divergent talents, skills, [...]
Employee or Independent Contractor? California Supreme Court Might Have Established a New Test Under long-standing California law, the test for whether a person working for a business is an "employee" or an "independent contractor" has focused on the right to control the methods/means of the work. As one court [...]
FAQs About Forming a California Corporation Starting your own San Diego business can be exciting, but can also generate a lot of questions. Among the most common questions that we get here at San Diego Corporate Law are questions about forming a corporation, whether to form a corporation, when [...]
Nullifying a Contract Before it Forms: Revocation of an Offer San Diego business contracts must have an offer and an acceptance to come into existence. However, there are some circumstances in which a contract can be nullified before it actually forms. This is the legal concept of revocation of [...]
Stock Price: Majority Shareholders Owe Fiduciary Duties to Minority Shareholders Under California law, majority shareholders of a corporation owe various fiduciary duties to the other shareholders. This has long been the case. See Jones v. H.F. Ahmanson & Co., 1 Cal.3d 93 (Cal. Supreme Court 1969). In general, majority [...]
San Diego Business Contracts: What is the Concept of "Novation?" Generally speaking, contracts are agreements between people and/or businesses. Assuming the legal formalities are met, an agreement is a "contract." As with any agreement, the parties can change their minds and make a new agreement. This is at core [...]
What are the "Reasonable" Efforts Needed to Protect Your San Diego Trade Secrets? California law protects the trade secrets of every San Diego and California business. Trade secrets do not have to be extra-special technology locked in a high security vault. Trade secrets are normal everyday things like customer [...]
Seven FAQs Regarding Securities in San Diego and California Everyone generally thinks of "securities" as shares of stock in a corporation. But, beyond that, there is a great deal of confusion. When you are starting a new business and if you are thinking of issuing shares, you should consult [...]
You Must be a Shareholder to Sue for Breach of Corporate Fiduciary Duty An interesting case out of the US District Court for the Southern District of California reminds us that, in order to sue officers and directors for breach of fiduciary duties, one must actually BE a shareholder. [...]
Can I Stop Performing Under a Contract if the Other Side Cannot Perform? Under California contract and business law, a party to one side of a contract can stop performing if the other party to the contract either stops performing or cannot perform. This is known as the legal [...]
Differences Between California Corporations and LLCs: Alter Ego Doctrine California law has a number of alternative corporate forms for businesses to use with respect to running their businesses. Each form -- such as a corporation vs. a limited liability company -- has advantages and disadvantages compared to the alternatives. [...]
San Diego Mergers and Acquisitions: Avoiding a De Facto Merger When buying a business in San Diego or elsewhere in California, one key consideration is whether you, as the buyer, are intending to accept any or all of the liabilities of the target business. As we have discussed, there [...]
Director/Manager Personal Liability for Health and Safety Violations In general, forming a corporation or a limited liability company will shield the officers and directors of the company from personal liability for corporate debt and obligations, including obligations that are violations of laws. However, there are some circumstances in which [...]
Bankruptcy Basics for San Diego Businesses: The Automatic Stay As a San Diego or California business, occasionally you deal with customers or clients who have gotten so far underwater in terms of debt and financial obligations that they are forced to file bankruptcy. Bankruptcies are governed by federal law. [...]
Choice of Law And Waiver of Jury Trial Provisions: California Law Prevails In general, under the California Constitution, individuals and businesses in San Diego and California have an inviolable right to a jury trial. The right is so strong that, in 2005, the California Supreme Court held that individuals [...]
Can You Fire an Employee for Tweeting Something Offensive? In general, a San Diego business can fire an employee for tweeting something offensive, although there are some precautions if you are dealing with an employee under contract. A good corporate lawyer can help. Here are a few thoughts. San [...]
Supreme Court’s Decision in Epic Systems: Employees can be Required to Arbitrate and Waive Their Right to File Class Actions The US Supreme Court recently handed down its opinion in Epic Systems v. Lewis, 584 US (2018) holding that employers can require their employees to agree to mandatory arbitration [...]
San Diego Nondisclosure Agreements: Protecting Against "Compelled" or Privileged Disclosure San Diego and California nondisclosure agreements are essential to protecting your company's valuable trade secrets and confidential information. As we have noted many times on this blog, intellectual property is one of the most valuable assets owned by any [...]
Social Media Reviews/Criticisms Are Not Advertising for Purposes of Deceptive Business Practices and False Advertising As we discussed on this blog here, San Diego and California businesses must avoid false and deceptive advertising. There are a number of laws that prohibit deceptive and false advertising including these: Federal Trade [...]
Company or Workers: Who Owns Rebates and Frequent Flyer Mile Rewards? One of the more contentious issues that has arisen in the last few years involves the question of who owns frequent flyer miles ("FFM") rewards for airplane trips flown for company business and paid for with the company [...]
Written Contracts 201: Intermediate Level Recently, we wrote about the basics of written contracts -- the "bare minimums," so to speak. In this article, we offer a more detailed discussion expanding on those basic requirements and adding others. You need a good corporate lawyer to properly draft written contracts. [...]
KCD Financial: SEC Says Press Releases are Advertising for Purposes of Rule 506(c) In general, securities offered or sold in San Diego and or in California must be registered unless there is an exemption to registration. See US Securities Act, 15 U.S.C. § 77b; Cal. Corp. Code, §§ 25000 [...]
Non-Conforming Goods or Services: What to do? Occasionally, when your San Diego business makes a contract, the other party to the contract delivers non-conforming goods and/or services. Here is a quick rundown on your options if this happens to you. First, you should retain and consult with a good [...]
The Dangers of Using "Industry Standards" in Your Business Contracts Often those drafting contracts will make reference to "industry standards" when identifying the level of quality that is expected with respect to obligations under the contract. Typical examples of such contracts include: Home building and other construction projects Creation [...]
California Contracts: What is "Lack of Capacity?" In general, to form a contract, both -- or all -- parties to the contract must have the capacity to enter into the contract. "Capacity" is legally defined, or more accurately, California law defines when legal capacity does NOT exist. Of relevance [...]
Forgery With Respect to San Diego Business Contracts When most people think of "forgery" and business contracts, an image comes to mind of a forged signature on a contract or maybe a forged signature on the back of a paper check. Indeed, most of the case law with respect [...]
The Basic Requirements of a Written Business Contract What comes to mind for most people when they think of the word "contract" is a formal written contract that has signatures on the final page. Beyond that, what is required in a written contract is murkier. In this article, we [...]
Separation of Home and Business: Thoughts on Starting a San Diego Business with Your Spouse Statistics show two things - the majority of businesses in San Diego and in California are family owned and run, and the divorce rate in the US is about 45% (but higher in California). [...]
Commercial Lease Renewals: Should I Stay or Should I Go? Commercial lease renewals are, in many respects, more complicated and present more legal and business issues than signing the lease originally. If you did not have competent and experienced legal counsel review and provide advice on the lease at [...]
How California Courts Interpret Contracts: What is the “Construction Against Drafter” Doctrine? Recently, we wrote a quick description of how California courts interpret contracts. In this follow up article, we discuss the concept of "construction against drafter." This is the final step used to interpret contracts, or the "tie-breaker," [...]
What is a Third-Party Beneficiary of a San Diego Contract? In general, if there is a dispute about a contract, the only parties that are able to file a lawsuit for breach of contract are the parties that entered into the contract. Occasionally, however, there is a so-called "third-party [...]
