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.

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 [...]

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.

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.

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.

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”).

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 [...]

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.

. 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.

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 [...]

Business contracts can be confusing at times. That is one reason that is important to consult an experienced San Diego corporate attorney to review contracts that you are being asked to sign, and/or to draft contracts that you want to present for signature. One confusing aspect of business contracts is the difference between an "amendment" and an "addendum" to a contract.

In general, for a contract to be binding and enforceable, a person or San Diego business must consent to the contract. In other words, a person or business must agree to be bound. However, it is possible for a person or business to agree-after-the-fact. This is called "ratification" of a contract.

Personal brands are just like all brands -- they identify you as a unique commercial source of whatever goods or services or creative innovations in which you specialize. Part of the rise of personal brands is driven by the rise of the freelance labor market. Brands help you market, apply your skills creatively, engage with your existing and potential customers, and supercharge the growth of your market share

Every San Diego business with employees needs to have an employee handbook. An experienced San Diego corporate attorney can help draft the contents of your employee handbook and can offer advice and counsel with respect to what should be included and what mistakes to avoid.

Joint employer situations are common in today's marketplace. Joint employer circumstances are driven by several factors. First, San Diego businesses have long been using temporary staffing and flex-schedule agencies to find workers to fill work gaps left by full-time employees.

In general, when your San Diego business enters into a contract, the obligations that are imposed are the ones written in the contract -- the obligations to which the parties have agreed to bind themselves. Normally, if something is not written in the contract, then neither party is bound to that obligation. There are, however, a few exceptions to the rule where, by action of California law, certain obligations are implied.

A recent California Court of Appeals decision reaffirms that the duty to defend under a contractual indemnity clause is immediate. See Centex Homes v. R-Help Construction Company, 32 Cal. App. 5th 1230 (Cal. App. 2nd Dist. March 11, 2019).

Solving the "Liquidity Problem" is One Key to a Successful Business Divorce When you start your San Diego business with colleagues and friends, everyone hopes that the business will succeed and the friendships will last forever. Sadly, this is not always the case. For various reasons, business partners and [...]

"Materiality" Not Relevant When Contract Specifies Grounds for Termination As a general rule under California law, a breach of contract must be a "material" breach. That is, the breach must be important and relevant to the core purposes and intents of the contract. As an example, assume there is [...]

What is a Compliance with Law Provision and Why do I Need it in My San Diego Contracts? A "compliance with laws" provision requires that both parties to a contract must comply with the applicable laws with respect to some core aspect of the contract. These types of provisions [...]

What is a Writ of Attachment? A writ of attachment is a mechanism that San Diego business owners can use when a lawsuit has been filed to help collect on debts and ensure that monies are available from the debtor when a judgment is obtained. In this respect, a [...]

Consumer Privacy Act: Could the Courts Expand the Private Right of Action Under the CCPA? It has recently been reported that the California Senate failed to pass Senate Bill 561 which would have allowed a broad private right of action to consumers in the event of violation of the [...]

San Diego Commercial Leases: Who Pays if The HVAC Goes Out? Who pays if the HVAC — heating, ventilation, and air conditioning — stops working depends on what was negotiated in the lease. Repairing or replacing an HVAC system can be very expensive. Consequently, you should have an experienced [...]

Am I Bound by a Contract That I Signed Even if I Did Not Read it? In brief, "yes." A person who signs a contract is bound by the contract even if the person does not read the contract before signing. As discussed below, this applies to any contract [...]

Piercing the Corporate Veil to Reach Assets of Non-Shareholders Generally, forming a San Diego and California corporation will provide a shield against a creditor attempting to reach the personal assets of the shareholders of the corporation. In general, a shareholder of a corporation is not personally liable for the [...]

What is a "Corporate Opportunity"? If you are a major shareholder or owner of a corporation or limited liability company, you owe certain fiduciary duties to your company and to the other owners. One of the fiduciary duties that is owed is the duty to not divert corporate opportunities [...]

Pro-Tips (Part 3) for a Good Company Telecommuting Policy: Data Security If your San Diego business allows or is contemplating allowing work-from-home or other remote employees, your business must establish an official company telecommuting policy. There are a host of legal and labor law issues that must be addressed. [...]

Does Your Letter of Intent Have a Copeland v. Baskins Robbins Problem? Under California law, letters of intent are problematic and should be signed only after careful review and counsel from an experienced San Diego corporate attorney. Businesses often use a letter of intent as a method of listing [...]

Corporate Governance: Breaking Board Deadlocks with a Provisional Director Like any human activity, running a business can be fraught with disagreements and disputes. Sometimes these disagreements are severe enough to result in deadlocks on the corporation's board of directors. This is possible if your corporation has an even number [...]

Pro-Tips (Part 2) for a Good Company Telecommuting Policy: Safety and Workers’ Comp In part one of this series, we discussed how to write a well-considered and effective company telecommuting policy with respect to meal and rest breaks. Even if you have employees who work from home or otherwise [...]

What to do if a Contract is Lost or Destroyed? Sometimes it happens that a contract gets lost or is destroyed. The contract might not be filed properly among your business records, or the contracts might have not been boxed up during the most recent relocation, or the box [...]

Top Solutions for "Fixing" Unfinished Contracts It is not unusual for a business contract to end up being "unfinished" or incomplete in its final form. This is particularly true with longer contracts that might have been subject to extensive negotiation. An example might be when the finished signed contract [...]

San Diego M&As: Assignability of Confidentiality Agreements Under California law, most contracts and contractual rights can be freely assigned. Legally speaking, an assignment is a transfer of the rights (and obligations) of a contract held by one person/entity to another. Assignments are common when there is a business acquisition [...]

Top Reasons for Avoiding Unwritten Contracts Here in San Diego and the rest of the Golden State, certain types of unwritten contracts can be enforced in the courts. Certain contracts, like contracts for the sale and purchase of real estate, must be in writing, but a lot of other [...]

Pro-Tips for a Good Company Telecommuting Policy: Dealing With Rest/Meal Breaks Many San Diego employers have workers that prefer to work from home and, if the job duties can be effectively accomplished from a remote location, many employers like the concept, too. However, if you have work-from-home employees or [...]

San Diego Business Law: Is Advertising a Unilateral Contract? As discussed below, under most circumstances, advertisements are not considered "unilateral contracts" in California. When most San Diego business owners think about "contracts," what comes to mind is probably the standard bilateral contract. As the name implies, "bilateral" contracts are [...]

What are Implied Contracts? Implied contracts are specifically allowed under the California Civil Code, §1621. That provisions defines an implied contract as "... one, the existence and terms of which are manifested by conduct." In interpreting this provision, California courts have held that the standard rules with respect to [...]

Some Legal Lessons as Uber Reportedly Settling Most Arbitrations: $146-$170 Million It has recently been reported that Uber is in the process of settling most of the arbitration claims that have been filed by its drivers. According to the reports, the settlements will total between $146 million and $170 [...]

Should You Designate Your Employee Handbook as "Confidential?" NLRB Says "No" Employee handbooks are a useful way of bundling together various information and notices that an employer needs and wants to provide to employees. Handbooks are particularly useful for newly-hired employees. Occasionally, the question arises whether an Employee Handbook [...]

Five Top Reasons for Not Using Off-the-Internet Form Contracts Business contracts have important and sometimes expensive legal consequences. Contracts should be taken seriously and be treated as seriously as every other aspect of your business. A good contract can make the difference between a successful business transaction and a [...]

Acceptance of a Contract by Silence, Inaction, and Subsequent Action An interesting case out Texas recently came to our attention showing an intriguing example of how silence and subsequent actions can be deemed by a court sufficient to create a contract. Normally, we deal with California cases, but, occasionally, [...]

Reverse Morality Clauses are Becoming More Common Hollywood celebrities have long been required to sign agreements containing "morality clauses." These generally state that the celebrity will not engage in various activities or make various public statements that "materially damage or injure" the reputation of the film/entertainment studio and/or production [...]

Strategies for Renegotiating Value-of-Contract Limitation of Liability Clauses Limitation of liability clauses have long been upheld as valid by courts in San Diego and elsewhere in California. However, serious caution is in order if your business is being asked to sign an agreement that contains a limitation of liability [...]

U.S. Department of Labor Issues Guidance on "Employee-vs-Independent Contractor" Question Adding more confusion to San Diego and California labor laws, on April 29, 2019, the US Department of Labor ("DOL") issued a Guidance Letter on the question of "employee" versus "independent contractor" with respect to the federal Fair Labor [...]

San Diego Business Contracts: Arbitration Agreement Held to Have Retroactive Effect If a business contract is written correctly and broadly enough, then the contract can have a retroactive effect. This is the holding of a recent California Court of Appeals case with respect to an arbitration agreement. See Salgado [...]

Dynamex Applies Retroactively Says 9th Circuit: Businesses Now at Risk Back to 2014 The US Court of Appeals for the Ninth Circuit recently held that the Dynamex decision applies retroactively. See news report here. Dynamex was decided in April 2018 and changed the rules on how California businesses are [...]

Protect Your Company's Twitter/Social Media Accounts With "Claim and Delivery" (Replevin) Clauses When an employee separates from a business — voluntarily or involuntarily — one of the thornier problems crops up if the employee exits with a Twitter handle or social media account. Speed is of the essence in [...]

Assemblymember Lorena Gonzalez (D., San Diego) Introduces Bill to Codify Dynamex Decision State Assemblymember Lorena Gonzalez, elected from here in San Diego, has recently introduced a bill -- known as AB 5 -- that would convert the Dynamex decision into statutory law. See news report here. As we have [...]

"No" to Implied Class Action Arbitrations Says SCOTUS In another sure-to-be-controversial decision, the US Supreme Court, by a 5-4 margin, recently held that class action arbitrations cannot be compelled unless explicitly agreed to. The case is Lamps Plus, Inc. v. Varela, Case No. 17-988 (US Supreme Court April 24, [...]

San Diego Mergers & Acquisitions: Are No-Shop Clauses Valid in California? In a merger and/or acquisition agreement, often the parties agree to what is called a "no shop" clause. A typical "no shop" clause prohibits a seller from soliciting or considering new or alternative bids for the business for [...]

Thoughts on Legal Risks Re: Your CCPA Data Collection and Use Notices The California Consumer Protection Act ("CCPA") is going into effect at the beginning of 2020. There are various statutes being proposed right now in the State Assembly intended to make the CCPA even more protective of consumers. [...]

Mergers and Acquisitions: Attention to Detail is Essential During Due Diligence A recent California Court of Appeals decision gives a good illustration of the importance of paying close attention to every detail of important contracts during merger and acquisition due diligence. See Triyar Hospitality Management, LLC. v. WSI (II) [...]

What is a Suit for “Trade Contract Price” When your San Diego business delivers goods, but you are not getting paid, you have several options in terms of filing a lawsuit. First, you can sue for breach of contract — hopefully, a lawsuit based on a written contract. Here [...]

False Advertising/Labeling: Ninth Circuit Holds That Standard for "Literally False" is Lenient Two recent opinions handed down by the US Ninth Circuit in San Francisco have clarified that the summary judgment legal standard for "literally false" labeling and advertising is a lenient standard -- preponderance of the evidence. See [...]

Confidentiality and Nondisclosure Agreements: Three San Diego "Must-Use" Circumstances Confidentiality and nondisclosure agreements are essential to any San Diego business. A confidentiality and nondisclosure agreement is an agreement that protects the confidentiality of your company's data and trade secrets. These agreements are not just for inventors or for those [...]

The Importance of Checking Corporate Status Before Contracting If your San Diego business is entering into a contract with another business, it is important to investigate the status of the corporation or other entity form with which you are about to enter a relationship. An experienced San Diego corporate [...]

Lessons From FTC v. UrthBox: Do Not Use Undisclosed Paid Online Reviews If your San Diego business is currently using online endorsers and is offering some sort of free trial, seek counsel and advice from an experienced San Diego corporate attorney to ensure compliance with federal and California statutes. [...]

More on the Doctrine of Standing: Ninth Circuit Says Inaccurate Credit Reporting Not Sufficient for Standing In good news for San Diego businesses, the US Ninth Circuit Court of Appeals up in San Francisco recently held that, without more, a claim that credit information was inaccurately reported was not [...]

Low Cost, Finality, and Speed: The Three Main Advantages of Arbitration For San Diego businesses, there are many advantages to using arbitration as the dispute resolution mechanism in business contracts. The three most prominent advantages are low costs relative to court litigation, finality, and speed. These advantages are connected; [...]

Websites Must be Accessible to the Blind, Says US Ninth Circuit: Robels v. Domino's Pizza The US Ninth Circuit recently issued its opinion in Robels v. Domino's Pizza, Case No. 17-55504 (US 9th Cir. January 15, 2019), holding that websites and mobile phone apps must be accessible to the [...]

San Diego Business Contracts and Unjust Enrichment There is a legal doctrine here in California called "unjust enrichment." This is a cause of action that can be brought in a San Diego court where the plaintiff — the person suing — claims that he or she has incurred some [...]

What if You Receive a Text Message as "Written Notice" Under a Contract? Recently, we discussed some of the legal implications of sending a text message to deliver a notice that is required under a contract. As we discussed in part I of this series, unless notice-via-text-message is listed [...]

San Diego Business Contracts: What is a Mutual Release Agreement? A "mutual release agreement" is an agreement by which two or more parties agree to settle a dispute and to release each other from any future legal liability going forward. An experienced San Diego corporate attorney should be consulted [...]

Due Diligence and Business Divorces Business divorces happen all the time. A business divorce has three things in common with a personal divorce: The divorce can span the spectrum from hostile and acrimonious to cordial and peaceable; The divorce can be caused by simply losing interest or because of [...]

Good News for San Diego Not-For-Profits: Expressive Trademarks Protected by First Amendment A federal court here in the Golden State recently held that expressive trademarks are protected by the First Amendment of the US Constitution. In general, trademarks and service marks are considered commercial — a designation of the [...]

California Court Says Business Cannot Use Sham Lawsuit to Defeat Fraudulent Transfer Action Under California law, a San Diego person or business cannot avoid paying its creditors by transferring property or items of value to someone else. Such transfers are voidable — that is, the creditor can file a [...]

San Diego Business Law: Legally Speaking, What is Standing? Recently, the U.S. Supreme Court reversed the U.S. federal Ninth Circuit Court of Appeals in San Francisco in the case of Frank v. Gaos, No. 17-961 (US Supreme Court Mar. 20, 2019). The case involved an allegation by various plaintiffs [...]

San Diego Securities Fraud: Disseminating a Statement That You Know is False is Fraud Says SCOTUS San Diego companies and those involved in the offer and sale of securities know that making false statements will create potential legal risk — both the risk of civil and criminal liability. Making [...]

San Diego Employers: Do I Have to Pay Workers Who do Company-Sponsored Volunteer Work? A recent employment and social activism trend is to encourage workers to participate in volunteer and non-profit work programs. Many San Diego employers have jumped on the bandwagon. An example would be an accounting or [...]

San Diego Vehicle Dealerships and the Doctrine of Unclean Hands Like many jurisdictions, California has a legal doctrine called "unclean hands." This doctrine applies as a defense to a lawsuit filed by another. The doctrine requires that, in the lead-up to a lawsuit, the plaintiff act fairly in the [...]

Of Sour Gummies and Starbucks: California Federal Court Dismisses Misleading Labeling Case Any San Diego or California company that makes or sells any consumer product must be very careful with packaging and labeling. A massive number of false advertising and improper labeling cases have been filed over the last [...]

Merger & Acquisition Data Issues: What Data Does the Target Have and What About Consents and Notices? The California Consumer Protection Act ("CCPA") becomes effective January 1, 2020. See Cal. Civ. Code, § 1798.100 et seq. The CCPA imposes on businesses that collect personal data a long list of [...]

Slack Fill Update: Chicago Federal Judge Dismisses Junior Mints Case Slack fill laws are in the news again. A federal judge in Chicago has just dismissed a claim by an Illinois woman that her box of Junior Mints was not full enough. See news report here and here. The [...]

San Diego Mergers and Acquisitions: Real Estate and Title Insurance Issues If real estate is a component of a San Diego merger and/or acquisition, then special and careful attention must be paid to title insurance issues. Retaining an experienced San Diego corporate attorney is essential. As most know, title [...]

Another Case Nullifies a Non-Solicitation-of-Employees Agreement A few months ago, we wrote about the case of AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., Case No. D071924 (Cal. App. 4th Dist. November 1, 2018). See here. In that case, we discussed how the court found an employee non-solicitation agreement [...]

San Diego Copyrights: Careful How You Register Photos When a San Diego business registers photographs for copyright, there is a choice between registering them as individual photos or as a compilation. The most common issues are cost, as fees are charged per registration, and practicality, as one registration form [...]

San Diego Mergers and Acquisitions: What is a Reasonable Termination Fee? A typical merger purchase agreement will contain various termination rights and will also include termination fees (also called "breakup fees"). The idea behind termination fees is to protect both parties to the merger agreement if the merger is [...]

Employees are a Huge Threat to Your Data: Strategies for Reducing Risk Recently, Verizon published a report on cybersecurity and data breaches. See full report here. It is an interesting report focusing on the threat to data posed by insiders such as employees and third-party "partner organizations." According to [...]

The Case of Elon Musk: Securities Fraud and Being Careful with Your Tweets Last year, Elon Musk, the CEO of Tesla, Inc., got himself in hot water with the Securities and Exchange Commission ("SEC") about some statements he made and some tweets he sent. The SEC regulates securities in [...]

San Diego Employers: Do We Have to Allow Emotional Support Squirrels? San Diego and California employers are familiar with the idea that "reasonable accommodations" are necessary when an employee claims a disability. Under the Americans With Disabilities Act (ADA), "disability" includes an emotional disability. A recent trend in treating [...]

Can a Text Message be Considered "Written Notice" Under a Contract? Many business contracts have what are generally called "notice provisions." These generally state that, for some particular issue related to the contract or breach of the contract, one party must notify the other side. Examples include a "notice [...]

Franchising News: FTC Proposes New Franchisor Disclosures The Federal Trade Commission (“FTC”) recently requested public comments on its proposed changes to what is known as the FTC's “Disclosure Requirements and Prohibitions Concerning Franchising” (the “Disclosure Requirements"). Here in San Diego, franchising is regulated by both the federal government and [...]