Who is a "Director" With Respect to Your San Diego Corporation? In general, San Diego corporations are run by a Board of Directors. The Board meets regularly to make important, strategic decisions. Among those decisions are hiring a chief executive officer ("CEO") and then authorizing the CEO to run [...]
Six Mistakes to Avoid When Running the Family Business A family-owned and family-run business in San Diego should be treated as seriously as any other business. In San Diego County, California, there are six mistakes to avoid when running your family business. Failure to Get Permits, Licenses, and Registrations [...]
When is a San Diego Contract Voidable Because of Mistake? There are many defenses to a breach of contract lawsuits in California. One of them is mistake. A mistake can be unilateral, made by only one party to the contract, or bilateral, made by both parties. Excellent and trusted [...]
What is the Parol Evidence Rule? If your San Diego business has signed a contract for, say, exploration and development of natural gas and oil on certain lands, but a dispute arises over the contract, then you will likely end up in court. The parol evidence rule is a [...]
Who can Sign Contracts for My San Diego Business? Most business contracts are made in writing and, occasionally, the question arises: Who can sign contracts for my business? In short, the answer is owners and anyone who the owners authorize to sign contracts on behalf of the business. In [...]
Can a San Diego Business Really Accept an Offer by Silence? As we have recently discussed here, the basics of contract formation are offer, acceptance, and consideration which creates a meeting of the minds. Generally speaking, "acceptance" is saying or writing or acting in some way that expresses agreement [...]
What is Vicarious Liability? In San Diego, businesses are liable for the acts of their employees when the employees are working. In general, employees are agents for their employers and all principals can be held liable for the acts or omissions of their agents when conducting the business of [...]
How is a San Diego "Fiduciary" Different from a San Diego "Agent"? In San Diego and all across California, businesses and even ordinary people hire and retain agents. Think, for example, about buying a house. You go online or make phone calls and hire a real estate agent. That [...]
San Diego Business Contracts: What is a "Time is of the Essence" Clause? You sometimes see a clause in a California business contract that simply says: "Time is of the essence." You may ask yourself: What does that mean? In basic terms, a contract provision stating "Time is of [...]
San Diego Businesses Trading With Mexico? What is The Convention for the International Sale of Goods? Many San Diego businesses are familiar with basic California business law and business contracts. Many are familiar with the Uniform Commercial Code. But what is CISG? That is an acronym that stands for [...]
What is a San Diego Joint Venture? Under California law, a joint venture is a type of general partnership. Like a partnership, California case law defines a joint venture as an undertaking by two or more persons or entities to jointly carry out a single business enterprise for profit. [...]
San Diego Corporations: The Importance of Board Minutes Many California corporations know that meetings of the Board of Directors are required at least once a year. However, some may not recognize the importance of board minutes. Here is a brief discussion of why board minutes are so important. To [...]
Expelling a Member of a San Diego LLC: You Should Revise Your Operating Agreement When you start your new business, everything seems perfect. But times change and now you have this troublesome member of your LLC. You ask yourself: How do I expel a member of my LLC? As [...]
Brief History of the LLC Have you been wondering: Should I form a corporation or an LLC? Here at San Diego Corporate Law, we can help you decide which type of entity will best meet your needs, and for many people means forming California limited liability companies ("LLC"). A [...]
Family Businesses: A San Diego LLC is a Good Choice Family-run businesses are unique and have their own special needs. Forming a San Diego limited liability corporation ("LLC") can help by: Protecting the family assets Clearly identifying management responsibilities Providing for succession of management Estate planning Family businesses are [...]
How are Government Contracts Different? Recently, we here at San Diego Corporate Law have written about various aspects of corporate and business law including the need for and importance of having written contracts. We occasionally get questions from clients about government contracts and how those contracts are different. Because [...]
E-Commerce and the Need to Incorporate As we here at San Diego Corporate Law have written on several occasions, there are many good reasons to incorporate. However, when contemplating starting a global e-commerce business or expanding your existing business into global e-commerce, incorporating is essential. There are just too [...]
Executive Employment Agreements Require Special Attention With San Diego employment contracts for regular employees, there are the standard provisions regarding job duties, dress code, anti-harassment and discrimination provisions, etc. However, with executive level employees, a well-drafted and well-considered employment agreement is essential both to protect your business and the [...]
What is a Letter of Intent? In general, a letter of intent is a shortened version of a longer contract that is expected to be written covering all the aspects of a complex deal. Sometimes, the letter of intent can become the actual final contract and, if all the [...]
Be Careful Using Endorsers and/or Influencers to Promote Your San Diego Business The hottest trend in advertising is the use of social media endorsers (aka "influencers"). Caution is warranted, however, because if you and your San Diego business fail to properly disclose pertinent information, your business will run afoul [...]
What is a California LLP? We recently wrote about the features of general partnerships and also about limited partnerships. Under California law, there is one more type of partnership that can formed: a California limited liability partnership (a "California LLP"). A California LLP can only be formed by and [...]
Tips for Starting Your Own San Diego Holiday Pop-Up Shop The holiday season is upon us. Along with everything else cheery and bright, the holiday season brings an infusion of pop-up shops. Some San Diego bars are converting to themes for the winter holiday and New Year’s and national [...]
Is Reverse Corporate Veil Piercing Allowed in California? In August of 2017, in the case of Curci Investments, LLC v. Baldwin, 14 Cal. App. 5th 214, the California Court of Appeal for the 4th Appellate District approved a reverse piercing of the corporate veil. This is new law, since [...]
What is a "Security" Under California Law? Many people are aware that the offer and sale of securities are governed by federal and California law. The applicable California law is the Corporate Securities Law of 1968 ("CSL"). See Cal. Corp. Code, §§ 25000-25707. In general, § 25110 of the [...]
San Diego Law: What is the Business Judgment Rule? (Part I) The business judgment rule provides personal immunity to directors of a corporation from being sued by the shareholders and/or investors if a decision made by the directors turns out to be a bad one. The business judgment rule [...]
San Diego Startups: What's in a Business Name? When you think about starting up a new business, the first thing most people think of is a name. Usually, people choose a name for the business that is special to the people starting the business. Maybe something about father and [...]
The Duty to Mitigate Damages The duty to mitigate requires a party suffering a breach of contract to take reasonable steps to mitigate those damages. In general, if you or your business suffers a loss or is damaged because a third party has breached a contract, you have the [...]
An Action Plan for Protecting Your Trade Secrets As we discussed here, trade secrets are often the key to seizing and maintaining marketshare in a fiercely competitive marketplace. Trade secrets are protected under the California version of the Uniform Trade Secrets Act ("UTSA"). See Cal. Civ. Code §§ 3426, [...]
When is "Lack of Consideration" a Defense to Breach of Contract? As we wrote more fully here, a legally enforceable contract requires three main ingredients: offer, acceptance, and consideration. "Consideration" is something of value exchanged to make a contract legally binding. "Lack of consideration" is a valid defense to [...]
What is a Release? As the name would imply, a "release" is a legal document, or sometimes a paragraph in a contract, that releases or gives up some legal claim or right. Releases are used in many areas of the law: Litigation: settlements and release of claims Property law: [...]
Impossibility as a Defense to Breach of Contract Sometimes events happen that make it impossible for a business to meet its obligations under a contract. In true situations of impossibility, impossibility becomes a defense to a claim for breach of contract; that is, the courts will say that [...]
The Implied Covenant of Good Faith and Fair Dealing Every business contract -- indeed, every contract -- contains an implied covenant of good faith and fair dealing. Breaching this implied covenant can subject your business to litigation and to damages. A good business lawyer can help. What is the [...]
The Importance of Written Contracts: Avoiding Vague and Uncertain Terms Any good business lawyer will counsel a business owner on the need for written contracts. One important reason for reducing your agreements to writing is to avoid vague and uncertain terms that will not or cannot be enforced [...]
What is the Difference Between the Duty to Indemnify and the Duty to Defend? Many business contracts include duty to indemnify and duty to defend provisions. The question arises: What is the differences between the two duties? This article delineates important differences. In short, the two duties are [...]
What is New with California Social Purpose Corporations? On October 11, 2011, to great fanfare, California enacted the Corporate Flexibility Act of 2011 creating two new corporate forms called “flexible purpose corporations” and “social benefit corporations.” In 2014, those were combined and renamed as “social purpose corporations.” The [...]
What is a California Limited Partnership? In simple terms, a California limited partnership is a partnership with one or more partners who are "limited" in terms of management and liability. A California limited partnership can be best understood in comparison to a California general partnership. California General Partnership: [...]
What is a Breach of Contract? In every aspect of running your business, you are constantly dealing with contracts. So, what is a “breach of contract?” In theory, the legal concept is common-sense: You have breached the contract if you fail to do what you agreed to do. [...]
How a Good Business Lawyer Helps You Survive in the Marketplace Starting any business is risky. According to one report, eight out of 10 new businesses fail within the first 18 months. As the article says, that is a "whopping 80% crash and burn" rate. However, there are [...]
Advice on How to Avoid False Advertising Claims Both federal and California law prohibits unfair and deceptive business practices including making false statements in advertising and on your packaging. Here is a brief description of the legal issues and some advice on how to avoid false advertising. What [...]
What Should be Included in a California Partnership Agreement? Being in business with friends and/or colleagues can be highly rewarding, both personally and economically. You and your partners share a common vision, share similar values, and work together to build self-worth and achieve business success. But, disputes arise [...]
Medical Practice Breakups: Are Patient Records Trade Secrets? Some of the most acrimonious business "breakups" are ones involving medical practices. When a physician separates from his or her former practice, there is a natural tendency to want to migrate the patients to the new practice. That raises the [...]
A Checklist for Hiring Your First Employee Starting your own business is exciting, but also challenging. One of the most daunting tasks is formally hiring your first employee. This task is risky, too. Here is a checklist of steps to take before you officially become a boss. Define [...]
What is a California General Partnership? A California general partnership is a simple and intuitive concept. When two or more people own and operate a business without a formal corporate structure, they are a general partnership. Put another way, a California general partnership is very similar to a [...]
Advantages for California Businesses Using Arbitration Clauses As a mechanism for alternative dispute resolution, arbitration has many advantages for California businesses. Serious consideration should be given to including arbitration clauses in all California contracts. What is Arbitration? Arbitration is an out-of-court process for settling disputes that might commonly [...]
Using a California Employment Contract to Achieve Non-compete Goals It is well-known that non-compete agreements in California are unenforceable outside of a couple of limited circumstances. However, a well-drafted California employment agreement can accomplish many of the goals that businesses seek to achieve with a non-compete agreement. Most [...]
Five Steps for Preventing Raids on Your Employees Staffing talent is often one of the most valuable assets for California companies. Preventing raids on your employees is important, particularly when a high-level, managerial employee is departing. The last thing you want is a flood of other employee departing, [...]
What is a Fictitious Business Name? When you conduct business in California under any name other than your name or the exact name of your California corporation or California LLC, you are operating under a “fictitious business name.” For example, if you incorporated as "ABC Smartphone Store, Inc.," [...]
Can a California LLC Have an Oral Operating Agreement? Sometimes, new business owners are leery of forming a California Limited Liability Company ("California LLC") as opposed to a California corporation or California partnership because they are daunted by the need for an operating agreement. Most good operating agreements [...]
The Importance of a Custom-Drafted Operating Agreement for a California LLC California Limited Liability Companies ("LLCs") are governed by their operating agreements. California LLC operating agreements do not have to be formalized or even in writing (however, it is a good idea to do so!). The California Corporations [...]
Basic Differences and Similarities Between a California Corporation and a California LLC When forming your California corporate entity, you have many options including forming a California corporation or creating a California limited liability company (" California LLC"). Most people are familiar with the idea of how California corporations work [...]
Checklist of Licenses, Registrations, Permits, and Tax Numbers to Operate Your Business in California As we wrote recently here, nearly every business needs some kind of business license or permit to operate in California. Here is a checklist of licenses, registrations, permits, and tax numbers that you might need. [...]
Commercial Leases 101: What New Business Owners Need to Know Starting your own business is both exciting and nerve-wracking. You are exerting a tremendous amount of energy and creativity, but there are so many details. Finding your perfect retail or office space is just as important and involved. It [...]
Laws You Must Consider When Advertising in California Your new startup has to advertise and market in order to seize market share. If your business wants to retain market share, you are going to need to market your products or services and advertise as well. Marketing is supposed to [...]
Personal Guaranties Put Your Personal Assets at Risk Almost every company has financing, particularly small companies. Almost as often, the lender requires that the company owners -- the principals -- sign personal guaranties for the loan amounts. Some personal guaranty agreements are quite onerous and give the lender: The [...]
Pros and Cons of Buying a Franchise If you have been thinking of starting a business or buying a business, it is likely you have also thought about buying a franchise. A franchise is a type of business where you pay a franchising fee and the owners or "franchisors," [...]
How to Verify “Accredited Investor” Status for 506(c) Offering As we discussed here, using Rule 506(c) under Regulation D has some significant advantages, the most important of which are the ability to engage in general solicitation and advertising and the non-requirement that the investors have a preexisting relationship with [...]
Checklist of Legal Issues When Buying or Selling a Business There are many legal issues to consider when buying or selling a business. It is a complicated and confusing process. You are going to need a talented and skilled corporate attorney to help. Here is a quick checklist of legal issues [...]
When to Create a Corporation for Your Child’s Business My first foray into entrepreneurship was a retail business selling designer sunglasses, windproof lighters, and just about any other $10-$100 items I could get my hands on back in the early 1990’s. Before the internet, there was a special telephone [...]
Merger and Acquisition Lessons from Walgreens and Rite Aid There are two important lessons to be learned from the recent efforts by Walgreens to buy Rite Aid: Never give up. You have options; if you cannot accomplish a stock purchase, then go for an asset purchase. Background As recently [...]
Bad Actors Under Rule 504 of Regulation D Regulation D provides an exemption from registration under the Securities Act of 1933 for the offer and sale of securities. As you may know, the Securities and Exchange Commission made significant changes to Regulation D that took effect in 2017. [...]
Six Good Reasons to Sell Your Business NOW Running your own business may have been a lifelong dream, but there is no denying that running your own business is a lot of hard work. Frankly, the charm may have worn off for your business, your business may have [...]
Are You an Accredited Investor? Accredited investors are a unique category of investors who are allowed to invest in certain types of securities that preclude unaccredited investors. The federal government regulates the sale of securities under the Securities Act of 1933. Many people think of "securities" only as [...]
What is the California Franchise Tax? Under California law, all corporate entities must pay an annual franchise tax. The minimum amount due is $800. The tax is collected by California Franchise Tax Board and applies to the following: LLCs (Limited liability companies); S-Corps (Subchapter S corporations); Corporations; Professional corporations [...]
Formalize Your Business Structure to Avoid an Accidental Partnership When you work with another person or a group of people, if you do not formalize your business entity (as a corporation or otherwise), then, by default, you may unknowingly create a partnership under California's Uniform Partnership Act (“CUPA”). [...]
Mergers and Acquisitions: Assignment of Contracts If you and your company are planning to acquire or merge with another company, one of your main due diligence tasks will be to review all the various company and business contracts to ensure that they are assignable to the new business entity. [...]
Does Your Business Need Employee Non-Disparagement Agreements? Businesses are increasingly dependent on having a good reputation in the market-place. Moreover, as the labor market tightens, having a good reputation as an employer and as a place to work is becoming increasingly important. As such, many businesses are now [...]
For Group Practitioners: Tips for Selling Your Part of the Medical Practice When selling any medical practice, including solo practices, there are many important steps to take such as getting an appraisal, advertising, getting your financials in order. For group practitioners, there are some extra considerations. Here are a [...]
California Businesses: Are Your Websites ADA, Unruh Act, and DPA Compliant? Nearly every successful business has a website and an internet presence. Arguably, no business can succeed in today's competitive marketplace without a web presence. Recent case law and legal trends demonstrate that businesses must now consider whether [...]
The Importance of Paying Your California Franchise Tax Every year, companies that are organized as California corporations, California S-Corps, California limited liability companies (LLCs), and California limited partnerships (LPs) must pay taxes to the California Franchise Tax Board. Failure to do so causes your company to lose its [...]
California Business Contract Basics Offer, Acceptance, and Consideration The basics of contract formation are offer, acceptance, and consideration. These are the three components of what is called a "meeting of the minds”. An offer is an expression by words or action to another person or entity of your [...]
Intellectual Property for California Companies Intellectual property (IP) rights are often the most valuable asset possessed by a California company. As we previously discussed here, almost every aspect of your business has legally protectible and valuable IP characteristics including: Your business name; Distinctive packaging; Logos; Source codes; Sales literature; [...]
Will Midwives Soon be Able to Form California Professional Midwife Corporations? California State Senator Jerry Hill has introduced new legislation, SB 798, that would add a licensed midwives corporation to the list of permitted professional corporations in California. The bill would also add licensed midwives to the lists of [...]
Conflicts of Interest in Small Businesses Conflicts of interest arise often in small businesses, so identifying them and having a policy in place to prevent them are crucial. Generally, a conflict of interest refers to a situation where a principal in the business, such as an officer or director, [...]
When Businesses Owners Face Personal Liability for Corporate Actions Directors and officers of a corporation who participate in or personally direct tortious conduct can be found personally liable, rather than being shielded from liability by the corporation. To be personally liable, the director or officer must “authorize, direct, or [...]
Risks and Rewards of Taking a Political Stance for You and Your Business Businesspeople today often take political stances and air their views in the news media, but doing so may negatively affect their businesses. When considering whether you or your business should express political views to the public, [...]
California Business Licenses and Permits: Which Ones Do You Need? Nearly every business needs some kind of business license or permit to operate. Which licenses you need may vary depending on your location, type of business, products sold, customer base, and more. In California, the state government runs some [...]
The Advantages of Limited Partnerships Limited partnerships offer many advantages over other entity types, especially for businesses in which one partner wants to provide funding but not run the business on a daily basis. A limited partnership differs from a standard partnership because it has at least one general [...]
Do You Owe a Duty of Care to Investors in Your Business? Many California business owners owe duties of care to their investors under California law. Generally, the duty of care requires business owners to act in good faith and in the best interests of the business. It is [...]
Professional Corporations in California Californians employed as professionals and seeking to start a business should consider incorporating as professional corporations. You may have seen the initials “P.C.” at the end of a doctor’s office or lawyer’s firm name, which indicates that the firm is a professional corporation. Professional corporations [...]
California Startups Must Disclose Financial Information to Shareholders Many startups organized as private corporations keep the value of corporate shares a well-protected secret. Telling the public that share values have soared in recent years or that they recently dropped after a new product announcement could greatly affect a company’s [...]
Introduction to Privacy and Business Ownership Many first-time business owners worry about the privacy of their personal information. For a savvy entrepreneur, running a business does not have to mean disclosing everything about your life to the public. Instead, use a variety of legal, financial, and common sense strategies [...]
Payment of Finder’s Fees for Securities Sales in California California’s new law permitting payment of finder’s fees to middlemen in securities purchases creates new business incentives within the state. However, the law contradicts a long-held Securities and Exchange Commission policy against finder’s fees. Essentially, California has legalized payment of [...]
Employment Contracts for Savvy Techies Who Want to Hit It Big Technology companies who want to make it in an already cutthroat industry can gain an edge by learning what to look for and what to include in employment contracts. Negotiating salary and starting a new position mean plenty [...]
How Can I Prevent Employees from Leaking Ideas? “Loose lips sink ships.” This common saying describes the fate of businesses whose employees, either inadvertently or on purpose, share ideas with others without permission. Competitors may learn of the ideas or even pay employees for them and then use them [...]
My Investor Is Being Too Hands On. Is There Anything I Can Do? Investors getting very involved in the business can cause problems for business owners who want to retain control. On one hand, without the investor, the business would not have the money to fund its operations. On [...]
What to Promise Investors and What to Keep to Yourself If You Want to Stay Out of Court Promoting your business to investors could land you in court if you run afoul of the detailed and complicated California and federal laws surrounding sale of securities. This post focuses on [...]
One of My Startup Partners Wants Out - and Wants His Investment Back. What Do I Do? Learning that your startup partner no longer wants to work with you and wants back the money they invested in the startup is not easy. It is also often not easy to [...]
I Don’t Need a Lawyer to Start a Corporation - Or Do I? Many new business owners start out forming a corporation with the idea that they can do all the paperwork themselves and save on legal fees. It is true that the California Secretary of State provides a [...]
Changing Your Startup’s Product Midway Through - and How It Could Cause Legal Troubles If you work for a startup, you know that your target audience’s needs can change on short notice, and so you may need to adapt your product or service to fit the market. You may [...]
Examples of Biotechnology Agreements and Why They are Important The growing biotechnology industry can be a minefield of legal issues for scientists and the companies they start, seeking to protect their investments and grow their business. One common topic that every biotech founder should consider is how to prevent [...]
What Is the Difference Between Federal Securities Laws and California Securities Laws, and How Do They Apply to Me? Both the state of California and the federal government have laws about securities on the books, but the two sets of laws differ significantly. Federal and California securities laws cover [...]
Protect Your Business from Data Security Breaches After hearing about the many data security breaches in the past few years, you may have wondered how breaches can be prevented, either at a business you own or the ones you patronize. Though hackers are becoming more sophisticated, smaller businesses need [...]
Beginning a Business Relationship with a Vendor In the rush to court a new vendor, companies may be tempted to quickly sign a standard form agreement and begin work immediately. If you find yourself caught up in the rush, take a step back, properly investigate, and negotiate your relationship [...]
Fair Use of Copyrighted Material Generally, the owner of a copyrighted work has the exclusive right to reproduce, distribute, perform, and display the work, and to prepare derivative works based on it. 17 U.S.C. § 106. Fair use is a broad exception to this exclusive right. It allows the [...]
Director and Officer Liability in the Corporation Corporations shield their directors and officers from liability for corporate actions, unless a director or officer personally directed or participated in tortious conduct. See, e.g., Frances T. v. Village Green Owners Ass’n. (1986) 42 Cal.3d 490, 503-504. The term tortious conduct refers to [...]
What Are the Most Important Contract Terms for Tech Companies? Technology companies, especially those with active websites or e-retail portals, will want to have a well-drafted set of contracts in place to keep their business running smoothly from a legal perspective. These contracts cover a variety of topics: terms [...]
California Law on Non-Competition Agreements In California, both a state statute and numerous court decisions say that non-competition agreements are not enforceable, and delving into the reasons why can help business owners understand how to work around needing them. The term “non-competition agreement” generally refers to a contract between [...]
How Does the San Diego City Business Tax Affect Me? Businesses operating in the city of San Diego, California, must obtain a business tax certificate and pay the city business tax. San Diego Municipal Code § 31.0101, et seq. The law applies to any person engaging in a business [...]
Out-of-State Corporations in California Corporations that are incorporated in another state and are doing business in California should be mindful of compliance with California law. For example, out-of-state corporations must ensure they are properly registered to do business, that they familiarize themselves with laws regarding company employees working in [...]
Can I Use Electronic Signatures on a Contract? Whether you can use electronic signatures to bind parties to a legally enforceable contract in California depends on the parties’ agreement and the method of signature. Be careful to fulfill the below requirements, or a court might find that the agreement [...]
